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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Katherine Derbyshire who wrote (24440)	9/20/1998 12:57:00 AM
From: Clarksterh	Read Replies (2) \| Respond to of 70976

Katherine - Ultracheap computers have lower margins. That has been stated as a fact by both the box makers and the chip makers, and the statement is supported by the recent financial results of these companies. I am in no way disputing this, nor am I denying its impact on current equipment orders. But I am disputing that it ( lower priced PC's always cause lower margins) necessarily must be so. I think the current drop is computer prices is at least partly driven by over capacity, and hence there is a drop in margins as their always is in an over-capacity situation. But, if the drop in prices occurs because no one needs the extra computing power, but instead they want an extra computer for their kids, or, ... then you could get a drop in price without an over-capacity problem with its attendent drop in margins. I think this is part of the pricing dynamics, but I'll admit I lack good data to back it up. In other words, I could see (and in fact expect) a situation where 5 years from now the average computer will sell for $500 but the margins will be approximately the same as now because they are selling 3 times as many of them (one for the kitchen, ...), each only a little more powerful than todays top-of-the-line machine. Clark

To: Katherine Derbyshire who wrote (24440)	9/20/1998 12:58:00 AM
From: tony	Respond to of 70976

Need to remember that there is not much difference between toyota camry V6 and Lexus ES300 but there is 10K diff. So, performance is very much subjective. I read somewhere that both pentiumII 300 and celeron 300 perform equally in most of the applications. I see new fabs start hitting the ground in late 2000. Next year is wash out, too many world wide problems.

To: Katherine Derbyshire who wrote (24440)	9/20/1998 1:23:00 AM
From: zsteve	Read Replies (1) \| Respond to of 70976

RE -- >>Ultracheap computers have lower margins<< believe it or not, as i remember, CPQ came out and said a couple months ago that the sub-$1000 PCs were their best performers( or something like that). my guess is that their (box makers') margins were ok, but not good for component makers. after they squeeze out the last drop of blood from NSM,AMD,WDC,QNTM,MU..., they will have a hard time to keep the margins of the sub-0 pcs if they can not raise the prices when component prices firm up.