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PageMyths about Sub-100000 PCs1Industry Trends5Shift to On-Chip Cache Pays Off6How Far Can Intel Go9Intel Seeks Salvation on Internet11Socket Strategy Challenging for AMD 14The emergence of the sub-1000 PC market reflects an inexorable trend toward less-expensive systems that will surely doom Intel in the long run You could easily be convinced of this argument by the recent stories on low-cost PCs These stories however are based on myths not facts and the emergence of this new market is not likely to upset the status quoMyth Sub-1000 PCs represent up to 40 of the PC market This gem is based on misinterpretations of a survey by Computer Intelligence that shows an increasing percentage of PC sales below 1000 during the course of 1997 Sales in this category peaked at nearly 40 in August but this survey measures only the US retail desktop PC market which represents less than 10 of the worldwide PC market and has specific characteristics that make it unusually receptive to sub-1000 PCsIn particular it is mainly a consumer channel two-thirds of all PCs are still bought by businesses where the sub-1000 concept is far less popular Many business users seek faster systems to increase productivity Others shun low-end systems to avoid rapid obsolescence Although low-cost PCs run todays software adequately firms looking to upgrade to Windows NT and other advanced software in the future might not be able to afford the limitations of a sub-1000 PC These systems also lack expansion slots in some cases giving new meaning to the term fixed assetThe survey also doesnt include worldwide demand While the sub-1000 PC is popular in emerging markets such as China the large markets such as Europe and Japan have been slow to change their focus Finally the survey excludes mobile systems which make up more than 20 of the total PC market but are not available for less than 1000 We believe total sales of sub-1000 PCs were perhaps 5 million units
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