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From: fiatlux@ucscc.UCSC.EDU (David Vangerov)
Newsgroups: comp.misc,misc.headlines,misc.jobs.misc,talk.rumors
Subject: Re: Doom and Gloom, as they say, revisited (computer market failures)
Message-ID: <1902@saturn.ucsc.edu>
Date: 9 Feb 88 04:08:36 GMT
References: <1177@polyslo.UUCP> <2197@isis.UUCP>
Sender: usenet@saturn.ucsc.edu
Reply-To: fiatlux@ucscc.UCSC.EDU (David Vangerov)
Organization: Apathetic Surf Club (we don't surf and we don't care)
Lines: 96
Keywords: cars, pc's, markets
Summary: I don't see doom and gloom ahead.

In article <2197@isis.UUCP> aburt@isis.UUCP (Andrew Burt) writes:
>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.

I see the computer industry as being somewhat analogous to the
the automobile industry. A low end-car goes for about as much as
a high-end PC (like the Mac II or IBM PS/2 Model 80). Here is a
market whose products are much more expensive than what a PC goes
for, yet continues to sell very well. Why? Well one reason seems
to be that our lives and lifestyles depend heavily on the use of
a car. How many cars/trucks/busses are out there in the US? 200
million? 300? More? And what's the typical lifespan of a car?
5 years? 6 years? More? 

The computer industry is starting to become like the auto
industry. Our lives are becoming more and more dependant upon
those little slabs of silicon. We use them to get money out of a
machine, make flight reservations, generate payroll, control your
car's ignition/fuel-injection/etc, keep your house warm/cold, write 
a paper for a class, do your calculus homework and so and so on.

The auto industry does not have just one consumer market, it has
many of them. It sells not only to your average american (like me
and you and the family next door) but also to corporations
(bussiness), universities (education), moving companies, etc.
Similarly, the computer industry does not just cater to the
bussiness end of the market. There is a huge amount of money to
made by selling to universities, both in terms of PC's and
higher-end system. The home market is still out there. And as
computers become more and more prevalent in society the market
will continue to expand. If you look at the number of people who
are entering college with a computer (or graduating with one in
hand) you'll see that the educational market is a rather huge and
potentially lucrative one. Just as most of us can't live without
the car, others are discovering just what the computer can do for
them and are becoming dependant upon it to do those tasks.

I don't buy the line that the useful market for PC's is only 20
or so million. Which market? Bussiness? Technical? Home?
Educational? Which one? I find it quite hard to believe that the
total market for PC's is only 20 million units. There is more
than just the bussiness market out there. PC's are inching their
way into some very interesting areas, like the television
industry. There are some products out for the Mac II that allow
you to do some very intersting stuff.

I tend to agree with John up there. The market is out there and
there is more to the PC industry than just the bussiness market.

+----------------------------------------------------------------------------+
|		     	        David Vangerov				     | 
|    Just your average Theater Arts major with a weird thing for computers   |
| fiatlux@ucscc.BITNET || fiatlux@ucscc.ucsc.EDU || ...!ucbvax!ucscc!fiatlux | 
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