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To: Amy J who wrote (75673)	3/7/1999 2:29:00 PM
From: gnuman	Read Replies (1) \| Respond to of 186894

Amy, thanks for the input. Lot's of good recommendations on modifying the model, and I'll look in to it. I focused on clients because that was the task. Obviously there are many associated industry benefits to rapid client PC growth. The exercise was to come up with a "what if" model that generated "1 Billion Connected PCs." The definition of PC being a Wintel box. (I changed that to just 1 billion PCs. I felt "connected PC" was unreasonable considering W/W demographics). I chose a price elasticity of $300 for a year 2008 box, also influenced by demographics. This at first seems low, but consider the time frame, competitive forces and the volumes and it could happen. (Had I chosen a $600 PC, I would use lower unit volume, and the time to 1 billion PCs would push out). The key indicator is that the business becomes more and more commoditized with time. This pretty much started in late ‘97 early ‘98 with the advent of real competition for Intel. The real impact is just starting to be felt. Consequently we don't have a lot of historical data for this new competitive era so I can only surmise what may happen with time. There are other historic commodity industries that have similarities, especially in personal and entertainment electronics. These have similar trends. Penetration rates are very much demographically related. While currently only 2.5% of W/W, it's much higher in developed countries. No one has a monopoly in the PC business anymore. (Something for the FTC to consider). These are only my opinions, of course, and the thing about "what if" is you can make it come out any way you want. I tried to be realistic about the forces shaping the industry going forward.