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To: gnuman who wrote (75662)	3/7/1999 2:12:00 PM
From: Amy J	Read Replies (1) \| Respond to of 186894

Gene: "When you consider that only 2.5% of the world population is currently connected, ... 1 billion PCs by 2010" - 2.5% is a very low penetration rate. Translates into: market opportunity for Intel. Re:"2/3 of world wide" - may want to factor in growth of population into the calculation, which happens concurrently. Re : "what if" spread sheets that showed 1 billion PCs by 2008. Used 10% annual growth in PC ships with an arbitrary attrition of older units. The problem with that model is it disregards demographics." - How about using: 15% or 20%, w/ a % of attrition at 3.5 years, and two ASPs (lower-ends and higher-ends.) Re: "In one model I have 170 million PCs shipped in 2008 at an ASP of $300. Probably not an unreasonable assumption for 2008. But that's a crummy $51 billion PC business. (Less than half of 1998)." - 170M units is way off (too low). Also, I'd make 2 ASPs. Also, I'd factor in the new e-commerce, website, etc. Server sales. Re: "Isn't that the nature of a commodity business?" - Gene, a complete commodity market at only a 2.5% penetration rate would be quite unusual - usually complete commodity markets occur when the penetration rate is much, much, much higher. 2.5% is just starting out. More importantly, in your calculations, I'd include the PC Server business: imagine how many servers (website servers, etail processing servers, telephony and multimedia servers) are required for 2.5% of population with connected PCs. Take that number and multiply it by: How many servers will be required when the 2.5% penetration rate becomes 50%? Seriously. Consider the following analogy: many software companies would essentially give away for free their client software in order to make a killing on the server software sale. More software clients, more clients connecting to the server, which translates into more server software sales. The more the clients, the more the servers. Your calculations seem pretty focused on the client PC machine. I wouldn't focus exclusively on the consumer PC calculations, but I'd take a look at the enterprise server PC sales, especially as the 2.5% number changes to 50% and consider how this will impact server sales (e.g. e-commerce server, website server sales, etc.) I'd also factor in two demographics on the client/consumer PC. Amy J p.s. Let AMD take the low-end market. Let them give away their product at cost. It'll hurt their margins and it'll proliferate a fabulous high-margin Server market. For Intel. Got to love AMD - they keep making it better for Intel.

To: gnuman who wrote (75662)	3/7/1999 3:05:00 PM
From: Jeff Fox	Respond to of 186894

Gene, re:"that's the equivalent of 1/6 th of every man woman and child on earth having a connected PC, or about 2/3 of world wide households/family units being connected." A rather sobering thought. Of course it won't be spread this thinly. In the developed world the PCs per headcount will expand. A knowledge worker accounts for several at home, work, and in the infrastructure (servers and shop floor units). But your point is that saturation is looming on a visible horizon. In one model I have 170 million PCs shipped in 2008 at an ASP of $300. Probably not an unreasonable assumption for 2008. But that's a crummy $51 billion PC business. (Less than half of 1998). And the semi content is minuscule. All depends on the success at finding new compelling applications. If not then your right on, and things will go the way of the one chip calculator. You will buy your PC in 2010 packaged in shrink wrap hanging on a peg in the grocery store. But we don't use PCs today like we used them 10 years ago. No reason to believe that the PCs of 2010 will be used like we do today. Jeff