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

To: Clarksterh who wrote (24441)	9/20/1998 1:25:00 AM
From: Ian@SI	Respond to of 70976

Clark, At the recent rate of progress, I wouldn't be surprised to see your prediction come true within 2 years. Less than 2 years ago, I bought a 200MHz Pentium MMX machine (at or near top of the line at the time I bought it) for more than double what a more powerful machine costs today. 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 1. We still have the capacity glut 2. Pentium class chips are becoming or may already be commodity items. 3. Powerful processors are showing up in 2-way paging systems priced under $200 today. It's not a major leap to see voice recognition replace the keyboard in a low cost system in the time frame you're talking about. FWIW, Ian Ian

To: Clarksterh who wrote (24441)	9/20/1998 1:27:00 AM
From: Katherine Derbyshire	Read Replies (2) \| Respond to of 70976

>>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.<< But I think you may be saying the same thing in a different way. If prices drop because no one will buy at the current price, then you have a demand shortage rather than a supply surplus, but it's still too much capacity. And the net effect is the same: lower selling price at constant cost = lower margins. >>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.<< I'm speculating a little bit here, but I think we're actually seeing something more fundamental. I think the PC's position as chip market driver is eroding. I don't want a PC as such in my kitchen. No room, and it's too delicate. But I'd love to have a touch screen that lets me order groceries as I run out of them, or an alert that tells me my husband has opened the garage door, or a smarter-than-normal oven that tells me the roast will be done in 10 minutes so it's time to put the veggies in the microwave. And none of this should be any more complicated than programming a microwave, or cost more than a small premium over chipless appliances, or I won't bother. I don't want to go too far down the garden path in this scenario, but it's worth noting that I probably won't be buying any of these gadgets from Intel or Microsoft, but from GE and other household appliance giants. Katherine