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http://www.insanely-great.com/news.php?id=534
Apple and the PC Replacement Cycle
By Remy Davison, Insanely Great Mac
June 13th 2002
No signs of growth in slow PC market - but how will Apple fare?
How do you get people to replace their PCs? That the question a story at TheStreet.com
raises.
After a poor 2001, the PC industry optimistically forecast better growth in 2002.
Instead, almost 6 months down the track, the soft PC market hasn''t shown Lazarus-like
signs of recovery.
The Street qucites Credit Suisse First Boston figures which predict a flat market
globally for PC sales this year. Instead of 5% growth CSFB had originally forecast,
they''ve revised these figures to a 3% decline for the second quarter.
CSFB made its revisions on the back of Intel''s announcement of lower than expected
shipments for Q2, and a pessimistic assessment of prospects in Q3.
Intel is probably closer than anybody else in the industry to a true picture of these
figures. Much more so than Microsoft, which is a downstream software supplier, Intel
manufactures the lion''s share of the processors which live inside desktop PCs. The
have a serious grasp on the number of P4s, Celerons and Mobile PIIIs going out the
door.
RAM manufacturers also have a pretty good sense of demand, but their figures are
skewed by the aftermarket upgrade cycle. In this respect, Intel has a better idea of
the numbers that are really getting into consumers'' hands. But, as TheStreet notes,
Intel sneezes and nVidia get a cold, with stock downgrades due to falling demand for
graphics cards.
How does this affect Apple? TheStreet argues that consumer-oriented companies, like
Apple and Gateway, are dependent upon the consumer market, and that makes them more
vulnerable to ebbs and flows in the consumer upgrade cycle.
We would disagree. Apple, as many analysts note, really occupies its own consumer
space. This doesn''t make it invulnerable, but it does have a core market of
repurchasers in the consumer sector who do not make a switch to other brands. Whereas
a Gateway buyer could, say, get a Dell next time, or a Sony Vaio after that, Mac
buyers largely stay within the fold.
In flat markets like 2001, hit products like the iBook keep buyers turning over their
old machines. The iMac did this big time in 1998-99, and also brought new buyers in,
due to its price/performance ratio. The Cube and lightly-recolored iMacs didn''t do
this in the second half of 2000, and Apple subsequently experienced a loss.
The question is whether the company at some stage reaches a saturation point and sits
on small $40-50 million profits. This is why Jobs & Co. have started seriously
marketing Macs to the Great Unwashed and XServe at enterprise.
Because, in the end, they can''t expect us all to keep upgrading every 3 years
forever. Much as we''d all like to. After all, how often do you upgrade?
Post your comments at:
http://www.insanely-great.com/news.php?id=534
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