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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Peter Singleton who wrote (45378)	2/2/1999 10:19:00 AM
From: Knighty Tin	Respond to of 132070

Peter, The only note I read was an old Dataquest note that pc ASPs dropped 7% from October to November last year. I'm sure the customers got in their face for telling the truth in public, so there has been no repeat for December. <G> Business boxes declined much more in price than consumer boxes. That is why the workstation and large server markets had down revenues despite unit growth of over 20%. Even the pc server market had huge downward pricing, but IBM's channel stuff helped put revenues up temporarily in that small category. The business market was much weaker on units sold and its buyers are obviously much savvier and much more able to negotiate a good price. We don't have definitive numbers on pcs yet, but my guess is closer to 30% than 20% down for the year with 4Q at a steeper rate of decline than the rest of the year. As I've said before, I have no idea how the official ASP is calculated. How do you account for "incentives" given the channel to overstock boxes. From everything I hear, the rebates and cost sharing don't count at all in the box revenues numbers. So, if Compaq sells a $1000 box to Ingram, and then gives Ingram a $150 rebate, it is a $1000 piece of revenue in the CPQ and industry reports, not what it really is, an $850 box. And I certainly don't know how they finesse the free printers and monitors given away to make the box a good deal. My guess is those items were not found on the street. <G> So, I am certain revenues were down for the fourth straight quarter and for the year. I'm just not certain by how much they will fudge it so it doesn't look quite as bad. Or, if like what is going on now, they just totally ignore it. After all, that's the way the media handles other industries. Nobody asks how many dollars the steel industry takes in. Just how many ingots they shipped. And we hear the talking heads emphasize how many bottles of pills the drug industry shipped to pharmacies, not the dollars involved in those sales. <VBG> As always, the tech touts have been able to cut their industry a separate deal with the media to cloud the real results. MB

To: Peter Singleton who wrote (45378)	2/2/1999 10:28:00 AM
From: Mike M2	Respond to of 132070

Peter, in the world of hype lies and manipulation if there was something positive to say about PC revenue growth you would hear it . Sometimes no comment means more than a comment. Analysts have no trouble coming up with a forecast for what will happen 3 years into the future ( although the they consistently err on the side of optimism -sometimes closer to nirvanna) I should think they could give a rough estimate with regards to what has happened . Mike

To: Peter Singleton who wrote (45378)	2/2/1999 9:19:00 PM
From: Earlie	Read Replies (2) \| Respond to of 132070

Peter: Re PC global revenues. The topic has grown complex because of the masking games. The "counting" (IDC, etc) represents boxes as they leave the box-builder's back door. Unfortunately, this is not a valuable stat. If the box just moves into the channel and sits, it just plugs the channel. If one is trying to determine what things are going to look like some 6-12 months out, the final sale situation is what counts. Channel stuffing stats are not available on the web or at the library. The producers hate it when this gets out. The esteemed chief of CPQ lied openly and frequently about this last Fall. Fortunately he was caught out in his fabrications in a most embarrassing way. Contacts in the channel and prowling give one a feel for it. The actual degree becomes evident to the public only in the follow-on quarter or two, due to non-orders. The lag is considerable before it shows up in the earnings reports (as much as 2 quarters). Pc's used to be just PCs, but in the last few years, the box-builders have migrated up market as their PC margins have been cratered. Don't blame them, but : - is a router or a server a PC? - even at this level, the margins quickly eroded as the whole rink filled in with more skaters. It is interesting how the stats are played with. I find it interesting to see how last year's number has suddenly been reduced to make the comparison look better. Servers counted one year but not in another? Asian producers usually provide inflated figures. At least they are constant in this practice. MB hit the incentives well. Another example that was played heavily last year was,..."we'll ship you 6 PCs, you pay for 5,...and payment isn't required until end of Feb". Not hard to see how this skews the counted boxes. An incontrovertible fact is that at retail, the prices have been flattened well beyond what any participants would have dreamed of two years ago. $599 bought what would have cost well over $2,000 two years ago. Yes, components and BTO account for part of this, but the lion's share is ASP. ASPs that include routers and servers will obviously compare well with preceding years that may not have included same. Nevertheless the prices received per PC is way down. Many box-builders "buy revenue". That is, they buy competitors (using bloated stocks as a fiat currency). We've had a ball factoring out the acquisitions. Typically, actual internal growth looks emaciated when this is done. "Revs are up 30%" says the headline, but 22% was bought. Stores did not experience consequential unit growth this year, and the results of the various chains show this. Many converted floor and shelf space over to audio, home theatre, white goods, etc to survive. This modulates the actual perceived reductions in PC sales .Some cut back to a single supplier (reduces inventory costs) to survive. Others used a kiosk approach, where the inventory, staff, etc was supplied by the box-builder. At the corporate level, it was an unfolding disaster. As the year wore on, it just got worse. This should be obvious when their results are studied, particularly when one factors in the 6 month lag before the actual impact shows in the numbers. Few would dispute the corporate sector problems as they are just so visible. Most box builders counted on big sales to Asia,...at least until it blew up. The list of countries where PC sales will be shrivelled grows daily. Hard to grow even unit sales when the clients continue to be concerned with food and shelter. Hope this is helpful. There are several other factors that also impinge. Best, Earlie