Xref: utzoo comp.misc:1862 misc.headlines:2327 misc.jobs.misc:1073 talk.rumors:1031 Path: utzoo!mnetor!uunet!nbires!isis!aburt From: aburt@isis.UUCP (Andrew Burt) Newsgroups: comp.misc,misc.headlines,misc.jobs.misc,talk.rumors Subject: Re: Doom and Gloom, as they say, revisited (computer market failures) Message-ID: <2197@isis.UUCP> Date: 8 Feb 88 05:51:38 GMT References: <1177@polyslo.UUCP> Reply-To: aburt@isis.UUCP (Andrew Burt) Organization: Math/CS, University of Denver Lines: 107 In article <1177@polyslo.UUCP> jbass@polyslo.UUCP (John L Bass) writes: >The problem statement is basicly this: > We have sold in the US something between 15 and 20 million PC's > in the last few years. > Based on some off-the-cuff population estimates I guess the > US PC market installed base will stop about 20 million units. You have still failed to back up your "off-the-cuff estimates. Given that your original posting assumed 200 million Americans when in fact the figure, as I pointed out before, is 240 million, I am hardly willing to believe your back-of-the-envelope numbers unless you explain what they are -- in *detail*. >Another way to view the problem is: > The replacement market equilibrium level for PC's is the > market size divided by the useful life of the product. > If we assume the US market size is about 20 million units for > PC's, then the US market equilibium level is about 5 million units > per year with a 4 year useful life. > If we accept this market size of 20 million units, then shipments > MUST fall from the current level of 10 million to 15 million > PC's per year (50% decrease or more in unit volume, much larger > decrease in $$$ volume). Ok, let's make some small changes in your numbers (within the error range for your numbers? I dunno, don't know anything about your numbers!) So assume a 25 million unit market, 3 year useful life, and current shipment of .8 million units/month current shipping, then we are talking about a drop from (.8 M/mon * 12 mon) 9.6 million units/year now to a replacement market alone of (25M/3) 8.3 million, a decline of only 13.5%. Surely there will be SOME market for first time buyers. I seriously doubt that the roughly 110 million households in the US all have computers; some will not want them, but who's to say? My personal experiences indicate even lower income households purchase VCRs for example. What's to say PCs won't suddenly interest them this way? The more powerful the machines become the more markets they open up. Who'd of thought of the publishing market for PCs when Apple II's and TRS-80 model I's were the state of the art in micros, for example? And this clearly ignores the business markets -- new businesses start, old businesses find new uses for PCs. ># first time buyer sales >* replacement sales (3-5 yr delay of first time curve decaying to equilibrium) >= market equilibrium level (market size divided by replacement interval) > Volume > ^ > | # > | > | > | # # > | > | # > | * * > | # * * * > |=============#=====#==============*==#==============*= > | # # * * * # > -----#--#--*--*--*--*--*--*-----------------#--#--#--#-> TIME > 78 80 82 84 86 88 90 92 94 I have several problems with this graph... (a) it lacks units on the Y axis; (b) it lacks sources for the data; (c) are you trying to say that "#" (number new sales) will be ***0*** by 1991??? > 1) the crash in 1982 took the analysts/industry COMPLETELY off guard. > (no one did accurate market size projections - myself included!!) So why are your numbers suddenly more accurate this time??? > 2) Companies only buy analyst reports that project a rose colored > view of the industry for their prospective investors and bankers. Any well run company is not going to want rose-colored projections. Maybe the companies you've worked with have only wanted the good news, but only a fool would plan this way; and a company with billion$ in sales such as IBM is not run by fools. We may disagree with them, but they aren't stupid. In general, I think you lack sufficient data to make so bold a claim. While I am no marketing whiz, my understanding of demand curves is that they tend to slowly reach a peak, then decline slowly, except with fads, which peak and decline rapidly. I seriously doubt PCs are fads. You are also ignoring the effect a drop in unit price has on demand. Your market of "20 million" may grow to "30 million" if the price for the same functionality drops 25% (hypothetical numbers). Your figures ignore this. Again, I ask -- no, challenge! -- you to document your data and the algorithms used in arriving at your figures. If you want anyone to believe you then you must justify your assertions. Otherwise why bother to post at all? Just for attention? I suspect you're ignoring many factors, but I won't even listen to your claims until you give me some reason to. -- Andrew Burt isis!aburt Fight Denver's pollution: Don't Breathe and Drive.