Doom and Gloom, as they say, revisited (computer market failures)
John L Bass
It seems that some people could not follow the train of thought
in my first posting ... here it is a little slower ...
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.
For various reasons this number might be as much as 25 million
or slightly more ... I was hoping someone could make a sound
case for a larger market size.
At the current sales rate of about a million PC's per month it
is simply a matter of months before new sales slow down.
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).
In both cases we are talking major crash ... 50% or more ... not just
some major slowdown due to the general economy.
If some bright person out there has a convincing argument that more than
doubles the estimated market size I would like to hear it.
For you visual folks, here is a simple picture:
# 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)
(not to scale)
Volume
^
|
|
| #
|
|
| # #
|
| #
| * *
| # * * *
|=============#=====#==============*==#==============*=
| # # * * * #
-----#--#--*--*--*--*--*--*-----------------#--#--#--#-> TIME
78 80 82 84 86 88 90 92 94
The date line is my rough guess based on off-the-cuff estimates of
shipments and market sizes.
Because of the sharp increase in sales during '86 and '87 it doesn't really
matter if my market size estimate is off by a factor of two -- we are
shipping that many units a year. Thus the estimate of the crash date has
about a 1 year window summer 88 to summer 89.
Because of the sharp increase in sales during '86 and '87 most of the
installed base will be less than 4 years old if the crash occurs in
the next year. Thus relatively few replacement purchases will be made in
1988 and 1989.
I got a lot of hate mail on the first posting, little of which addressed the
issue properly ... most people just tried to delare that the crash could not
happen because they did want it to ... best of luck to them ...
As for the wise cracks about posting from an educational site,
I recieved my BS in Computer Science from here a number of years
ago and I've been taking a few classes reciently for the fun of it.
I have been working in the industry for 15 years, working with UNIX
since 1975, and did UNIX systems work in the industry at SRI International('76),
ONYX('80) as a startup, and Fortune Systems('81) as a startup. Since 1984 I have
consulted for a living with the DBA: DMS Design.
The early UNIX record locking code started here at CalPoly as a
semaphore/memory manager in the Lundy Display V6 UNIX driver, became
locking at ONYX with a rewrite, and lockf during the /usr/group standards
effort. My office system (dmsd) lost its disk during Dec, and not everything
worked after reconfiguring the system and upgrading to latest releases of
things ... postnews still doesn't work right.
As for the less than interesting quotes on rose colored market projections
consider two things ...
1) the crash in 1982 took the analysts/industry COMPLETELY off guard.
(no one did accurate market size projections - myself included!!)
and
2) Companies only buy analyst reports that project a rose colored
view of the industry for their prospective investors and bankers.
(doom and gloom doesn't sell well -- how do you present it in a
POSITIVE way to banking, marketing and sales types??)
plan ahead with open eyes ....
Have Fun ...
John L. Bass
DMS Design
(805)541-1575
Email polyslo!dmsd!bass
The above is copyright 1988 by John L. Bass, and may be distributed freely
without any change or modification provided this notice is included in
all copies.
Larry Campbell
I can't stand it. There are two MAJOR misconceptions here:
1) "The PC industry" is *NOT* synonymous with "the computer industry".
2) You completely ignore upgrades. Example: every company big enough
to need a mainframe probably had one by 1965. Did the mainframe
business die in 1965? Hardly. It's still probably, what, a
$50 billion a year industry, and going strong (despite all the
smug predictions of extinction by the PC geeks five or six
years ago).
People will continue to buy PCs because the old ones get obsolete. This
continues to be forced by two functions:
1) The manufacturers will cease to support them. No sane businessperson
will build their business on hardware that can't be repaired, quickly
and relatively cheaply.
2) Software marches on, and the old hardware is too small and slow to
run the new software. Try running OS/2, or Windows, or Microport
System V with DOS Merge, on an 8088-based machine.
Now, it's true that we probably have seen the end of the boom years of the PC
industry, and it's a good thing, too. The dizzying growth and pell-mell
embracing of PC technology has permitted far too many shabby products and
shady companies to succeed in the short term. When the market slows down,
the marginal players should, and will, fail, leaving only the quality outfits.
--
Larry Campbell The Boston Software Works, Inc.
Internet: camp...@maynard.bsw.com 120 Fulton Street, Boston MA 02109
uucp: {husc6,mirror,think}!maynard!campbell +1 617 367 6846
Andrew Burt
>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.
Michael J. Farren
>
>in my first posting ... here it is a little slower ...
Most of the reply postings I saw seemed to follow your train of thought
perfectly well - they just didn't agree with you. You now seem to be
on your own dead-end line :-)
> We have sold in the US something between 15 and 20 million PC's
> in the last few years.
True.
> Based on some off-the-cuff population estimates I guess the
> US PC market installed base will stop about 20 million units.
Untrue. I have worked in offices where the PC to personnel ratio was
greater than one. I have worked in offices where everyone had their
own PCs in the office, and most had them at home. I know many people
who own several PCs. Your estimate is NOT based on fact, but on
suppositions, which I believe to be wrong.
> If we accept this market size of 20 million units
But I do not, in any way, accept your market size offhand. You don't
provide any data on how you arrived at this figure, and without that
I can't comment on its accuracy. My feeling is that it is demonstrably
low - if we are approaching saturation, why is it that so many people
who don't have PCs are buying them now (I have at least 10 friends in
the PC market as I write this), and why is it that so many small businesses
are just now beginning to use them (due to plummeting prices), along
with other groups who, up until very recently, could not afford them?
Until you offer some rational reason why this should be so, and still
support your theory that the market is approaching saturation, I
reserve the right to believe that your theory holds little water.
--
Michael J. Farren | "INVESTIGATE your point of view, don't just
{ucbvax, uunet, hoptoad}! | dogmatize it! Reflect on it and re-evaluate
unisoft!gethen!farren | it. You may want to change your mind someday."
gethen!far...@lll-winken.llnl.gov ----- Tom Reingold, from alt.flame
Kurt Guntheroth
1. Your argument rests on a number of unjustifiable assumptions.
1. The useful life of a PC is 4 years.
2. The total number of PCs needed is 20 million.
3. Each user needs at most 1 PC.
4. The market is limited to domestic users.
5. Demand for PCs is based totally on the existing uses of PCs.
6. Domestic manufacturers are most vulnerable to a decline in the
market size.
7. Computer makers only make IBM PC compatible computers for home and
office use.
I could write ten thousand words on each of these cases. I will restrain
myself. Nevertheless...
In my experience, both at work and at home, the useful life of a
computer has been less than three years. Computers die of old age or use in
5-10 years. They become obsolete much faster and replacing them is more
economical than expanding them. As the basic technology improves, the rate
of o0bsolescence will stretch out, but I don't think this issue is being
addressed.
As to total numbers, I have a PC at home, and one at work. At work, video
terminals are being replaced by workstations. At home, my wife and I
have begun to compete for computer time. I think demand has not levelled
off yet. This is just my opinion, but I am not making a public prediction of
gloom and doom. I think the claim that 20 million is the total size of the
market forever amen needs more than a back-of-the-napkin justification.
I also think that measuring the market base based solely on today's uses of
computers is a serious mistake. If we'd done that five years ago, would we
have gotten a market size of 20 million units? Seems unlikely. New
technology enables new uses. We don't know the impact of such emerging
technologies as very high capacity disk storage, smart data cards, and parallel
processing on computer use.
The analysis seems reasonable, but only if the assumptions are correct. I
think this is the point where you part company with everybody else.
Rick_R...@cup.portal.com
In <10...@maynard.BSW.COM> camp...@maynard.BSW.COM (Larry Campbell) says:
> [stuff deleted]
>
> 2) You completely ignore upgrades. Example: every company big enough
> to need a mainframe probably had one by 1965. Did the mainframe
> business die in 1965? Hardly. It's still probably, what, a
> $50 billion a year industry, and going strong (despite all the
> smug predictions of extinction by the PC geeks five or six
> years ago).
>
Excuse me. I assume you did not read Mr. Bass' posting at all. Your first
attempt at making a point (ignores upgrades) pretty much set the tone for
your somewhat babbling discourse. The issue of upgrades was discussed in
both of Mr. Bass' postings, and to some depth in the most recent. Again I
assume you missed this 1/4 of the article.
>People will continue to buy PCs because the old ones get obsolete. This
>continues to be forced by two functions:
>
> 1) The manufacturers will cease to support them. No sane businessperson
> will build their business on hardware that can't be repaired, quickly
> and relatively cheaply.
See the part of the article you missed for one point of view on the number
of upgrades a company might purchase.
> 2) Software marches on, and the old hardware is too small and slow to
> run the new software. Try running OS/2, or Windows, or Microport
> System V with DOS Merge, on an 8088-based machine.
This is a kinda gray area. Does a secretary really need to multi-task and
search for all occurences of the word 'the' in 58uSec? If I was paying out
of my budget I'd probably say no. The attitude a manager has on this question
may largely determine the number of upgrades that are purchased.
>Now, it's true that we probably have seen the end of the boom years of the PC
>industry, and it's a good thing, too. The dizzying growth and pell-mell
>embracing of PC technology has permitted far too many shabby products and
Wasn't this what he was trying to say all along? That the PC industry
is headed for bad times?
----------------------------------------------------------------------
Rick_...@cup.portal.com I don't have a cute saying down here.
...ihnp4!ptsfa!well!rkitts
David Vangerov
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 |
| fia...@ucscc.BITNET || fia...@ucscc.ucsc.EDU || ...!ucbvax!ucscc!fiatlux |
+----------------------------------------------------------------------------+
David Vangerov
>In article <21...@isis.UUCP> ab...@isis.UUCP (Andrew Burt) writes:
>>In article <11...@polyslo.UUCP> jb...@polyslo.UUCP (John L Bass) writes:
>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.
I meant to say that I agree with Andrew who is saying that the
market for PC's (Mac's, IBM's, whatnots...) is a lot more 20
million or so units.
I might point out that a lot of bussinesses are realizing that
you can turn a 286 or 386 box into a very nice mini system with
little cost in relation to what a mini system from DEC or Sun
might cost. Just slap in some more memory, add a large disk, get
a few ports for terminal lines and get Xenix for it and you're
off and running for a lot less than what DEC or Sun charges.
Ji...@cup.portal.com
Since you are so confident on your computer industry crash, why
don't you do the same with say, TV set, dishwasher, refrigerator,
and other home appliances?
Jinfu Chen
ji...@cup.portal.com
John L Bass
>I watched the previous round of drivel on this topic silently. This time,
>I can't stand it. There are two MAJOR misconceptions here:
>
> 1) "The PC industry" is *NOT* synonymous with "the computer industry".
I did not equate them, although I believe they are much more closely
linked than you seem believe. My first posting talked mainly about
the direct effect on JOBS and PROFITS in the PC industry and how
that will effect many readers on this network. Because the PC market
is very high volume, a market crash will have a major effect on
Jobs in the retail sector (computer stores), PC computer manufacturers,
and suppliers for PC manufacturers of ALL types -- IE chips, drives,
software, power supplies, monitors, keyboards, diskettes, etc.
> 2) You completely ignore upgrades. Example: every company big enough
> to need a mainframe probably had one by 1965. Did the mainframe
> business die in 1965? Hardly. It's still probably, what, a
> $50 billion a year industry, and going strong (despite all the
> smug predictions of extinction by the PC geeks five or six
> years ago).
The upgrade market is a completely different case. I made no references
to it ... this is your private soap box. The "upgrade" market for
motherboards, drives, memory, add-in boards is mainly third party
after market stuff ... a relatively small, but significant market.
If per chance you equate "upgrades" with "replacement purchases"
my second posting specificly addresses that issue.
>
>People will continue to buy PCs because the old ones get obsolete. This
>continues to be forced by two functions:
>
> 1) The manufacturers will cease to support them. No sane businessperson
> will build their business on hardware that can't be repaired, quickly
> and relatively cheaply.
>
> 2) Software marches on, and the old hardware is too small and slow to
> run the new software. Try running OS/2, or Windows, or Microport
> System V with DOS Merge, on an 8088-based machine.
NO ONE disagrees with your point ... this is your private soap box.
MORE IMPORTANTLY, In my second posting I attempted to quantify the
effect the replacement market has on the industry in terms of
anticipated volumes and timing. In the long term the replacement
market will become the entire market for PC manufacturers.
>Now, it's true that we probably have seen the end of the boom years of the PC
>industry, and it's a good thing, too. The dizzying growth and pell-mell
>embracing of PC technology has permitted far too many shabby products and
>shady companies to succeed in the short term. When the market slows down,
>the marginal players should, and will, fail, leaving only the quality outfits.
Bravo, Bravo .... THAT IS EXACTLY MY POINT!!!!!!!
Both of my postings are simply an attempt to educate people BEFORE
hand that this is likely to occur SOON ... and let them know WHY .... so they
can choose their next job more carefully.
Had you made that statement several weeks ago BOTH of my postings
would have simply been defending your above point.
Where are your projections of the market sizes and volumes?????
So ... what are the misconceptions and drivel???? What WAS the purpose
of your posting????
John Bass
DMS Design
John L Bass
> 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*.
IF there were black & white market size numbers it would be easy to
give you the PROOF you think you need. Unfortunately I haven't seen any
numbers which are specficly labeled "the offical PC 1988 market size". Lacking
such I BOLDLY used the following estimate DETAILED in my first posting:
"Consider the US has a total population of about 200 million
people, of which, less than 60 million are working adults who may have
some exposure to using a computer in the work place ... many of those
access a mainframe with a terminal. Maybe 1 in 3 (about 20 million)
actually has or needs access to a PC (on their desk or shared use).
"The real number is probably much smaller -- look around you for the
next week and take your own sample of how many people in the general
population have/need access to a PC for any reason."
The art of estimating is a skill that used to be taught to all using a
slide rule. THINK about what the above MEANS --- DO A LITTLE CRITICAL thinking.
The above estimate of one PC for 10 people (20 million PC's for 200 million
people) is not outragously large (or small) ... to claim the number is either
as little as 1 in 5 or as large as 1 in 20 WOULD take some justification!
The 20% error in US population size estimate is in the noise given the other
error probabilities!
In sampling my aquaintances I get a number of something larger than
1 in 15 ... that may be an quirk of this local. I can not in my wildest dreams
believe a number in 1988/89 of 1 in 5 or roughly 40 million units (or 48 million
units by the revised estimate of population size). After subtracting out
youth under 15, unemployed, housewives, and retired folks that would make
the ratio in the working class about 1 in 3 ... totally absurd!
Try the following: pick numbers, at RANDOM in the phone book until
20 people answer the following survey -- Ask them "do you CURRENTLY use
a personal computer or have need to use a personal computer on a DAILY basis?".
Factor the result to market size .... post your finding to the net.
> 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%.
Great ... lets look at the numbers .... a 3 year useful life
means the product is discarded as scrap at the end of 3 years. THIS IS
not happening like it did with the first generation Z80 systems!!! Most
of the early (1981/82/83) IBM PC's and early clones are still in use with
minor upgrades like add-on memory and a hard card. The cost of repair or
replacement for motherboards and drives is a minor operating cost at the
current time. The life of the electronics is 10 years plus.
The current PC boom is largely driven (80% or more systems) as
typewriter replacements. In any case the current MS/PC DOS 8088 systems will
run Word Perfect keeping a typist happy for atleast another 4 years. This
will make the average life atleast 5 years even if the machine is scrapped.
The used PC market is becoming a significant factor in attracting new
users/owners as the original owners move up to 286/386 machines and
applications. I expect the real useful life number to be between 5 and 10 yrs.
depending on where the industry goes in the next 5 years.
This is VERY LIKE the automotive industry where current stats
show the median life of a car at about 10 years. A new car is obsolete
for the jet set in a year (new model comes out), first-owners keep a
new car an average of about 3 years, a typical car has 3 or 4 owners in
it's lifetime. A typical person buys ONE new car in their lifetime. A typical
new drivers first car is a USED car.
So assume a 25 million unit market, 5 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/5) 5.0 million, a decline of about 50%.
The .8 M/mon number is too low in reality since IBM is shipping about
0.25 M/mon and Apple/Atari/Comadore about 0.25 M/mon combined. There seem
to be ATLEAST 3 clones (AT&T, Compaq, Tandy, SONY, and imports) for every real
IBM box. This makes the number about .25 + .25 + .75 = 1.25 M/mon or 15 M/yr.
This would make the decline about 67%.
> 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?
Sure some will ... that is where I expect cheap used systems to go.
Consider that VCR's staturated in the market at 37% of US households last
Oct/Nov after 5 years of strong sales (made possible by the video rentals).
This is a $225 item that has strong appeal to middle/lower class households
with children where the cost of going out to the movies is $30 for the nite.
A good return on the investment, even as an alternative to cable.
As of 1988 a PC hasn't a fraction of the utility of a VCR for
most households ... maybe some compelling application/software will be
developed in the next few years which will drive a stronger home market.
A PC with printer and hard drive (usable configuration) is also about
four times the cost of a VCR. I don't expect 1 in 3 households to have
a PC anytime in the next few years.
> 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.
Sure things will continue to get better -- but how fast and how
compelling will the upgrade/replacement cost be for the installed base of
PC's? We are finally at a point where computers will start getting more
expensive (after the initial market crash shock) since volumes will get lower
and technology cost improvements are slowing down.
(graph in posting # 2)
> 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???
The graph was an off-the-cuff guesstimate specifically labeled
"not to scale" to help people put the "dizzying growth and pell-mell embracing
of PC technology"(from Larry Cambell's posting) in perspective with the
effect of an adjustment to market equilibrium and a brief resurgence in
the market as the first replacement wave hits. If you read the labels you
would note that "#" IS NOT "(number new sales)" BUT RATHER "first time buyer
sales" of new systems which I expect to go very close to zero. Most of the
"new sales" will be replacement systems for previous owners/users of a PC.
>
> > 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???
I didn't have any the first time - nobody I am aware of did!!
Of course, some of us learn from our mistakes .... the rest of you
shouldn't have to repeat them ....
>
> > 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.
Pretty strong statement ... but I guess mine was too ...
the world is not perfect ... sometimes people only buy what they THINK
they want to hear ... or are only given what someone else THINKS they
should/want to hear ....
>
> 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.
I did not lack sufficient data to make the claim IT IS CLEAR
to the experienced eye!
You should study demand curves for the introduction of
mass market products more carefully ... and see the errors in your
analysis. PC's are not a fad ... just the right product, at the right cost,
at the right time ... Just as VCR's and other trendy/fad high tech
product introductions.
> 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.
If transit busses were dropped to $500 ea I doubt they would
replace cars ... they are too expensive to maintain and cost to much in
fuel to operate. Cats are virtually free, not every household has one. Old
newspapers could be worth money ... yet people dump them in the trash
every day. Schools turn down donations of IBM 360/50's because they are
to expensive to operate and maintain.
Even PC's require a need to aquire, otherwise they become just
so much clutter among one's personal effects. The day that a personal
computer was a valuable property is past, or very nearly so.
In 1968 I would have given anything for an electronic calculator
with a single "memory". Today I have a box of them that haven't been used
in 5 years -- for good reason. In 1972 I would have given anything for
a computer that would run basic ... today you can get a sinclar for free
(or less than $5) at a garage sale -- who cares any more for a basic
computer???.
The production costs of computers are starting to reach bottom.
The false econmomy of falling prices in this industry may revert to
normal ... IE everything goes up by inflation each year ... certainly
TV's, radios, and other electronics have started to. A sharp reduction
in volume will affect this some. The Yen probably more ...
I look at the market size in terms of need/want .... not cost ...
If computers were free few people would have ten.
> 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 did the first time ... you were just too busy cutting at what
you didn't want to hear to think critically about the statements made ...
> I suspect you're ignoring many factors, but I won't even listen to your
> claims until you give me some reason to.
There are hundreds of factors I CHOOSE TO IGNORE ... they don't
significantly affect the outcome, but do significantly affect the error
probablility of the results --- and the ability to grasp the basics
of the problem .... heck you couldn't even see the obvious in the
population/market size estimates ..... why should I clutter up the problem
even more????
Have fun ...
John Bass
DMS Design
John L Bass
> Since you did not hear the counterarguments, I shall repeat them, slowly...
>
> 1. Your argument rests on a number of unjustifiable assumptions.
>
> 1. The useful life of a PC is 4 years.
> 2. The total number of PCs needed is 20 million.
> 3. Each user needs at most 1 PC.
> 4. The market is limited to domestic users.
> 5. Demand for PCs is based totally on the existing uses of PCs.
> 6. Domestic manufacturers are most vulnerable to a decline in the
> market size.
> 7. Computer makers only make IBM PC compatible computers for home and
> office use.
For the case I presented, sharp reduction in Jobs and Revenues for
production and sales of PC's in the US market, ONLY 1 and 2 were necessary
to arrive at the basic answer.
I did not make a case for 3, but rather stated that many users
need only shared access to a PC or NO ACCESS AT ALL. This is several times more
significant than the number of users who have/need multiple PC's.
I made no claims as to your items 4, 5, 6. and 7 ... go find your
own soap box if you wish to make an issue of these points.
>
> I could write ten thousand words on each of these cases. I will restrain
> myself. Nevertheless...
>
> In my experience, both at work and at home, the useful life of a
> computer has been less than three years. Computers die of old age or use in
> 5-10 years. They become obsolete much faster and replacing them is more
> economical than expanding them. As the basic technology improves, the rate
> of o0bsolescence will stretch out, but I don't think this issue is being
> addressed.
At face value I would have believed that too ... but I had to
really look at what the current state of affairs and the future brings
(atleast in the next few years).
First, yes the Z80, 6502, and 6809 systems died a quick death.
On the other hand IBM has brought it's normal long-lived product line
strategy into the PC market place. IBM PC/XT systems and clones sold
during 1981 to 1983 are largely still in use after minor upgrades for
memory and disk space. I expect many of these system will still be running
in another 4 years. I expect the rest of the PC/MS DOS systems built
in the last 5 years will be running another 4 years too. From this
It appears the useful life of a PC in this decade is between 5 and 10 years.
Who knows what products will be like in 1995.
The reason for this is largely simple ... most of the 8088
PC/MS DOS systems are simply low cost word processors .... typewriter
replacements. Word Perfect runs as fast as the operator can type.
Nearly all the functionality is in the software, little reason to
upgrade the hardware ... it is plenty fast enough.
Sure some users will upgrade to a faster/bigger system to do
low end desk top publishing and graphics ... and some other happy
user will take the old machine and keep on typing ...
> As to total numbers, I have a PC at home, and one at work. At work, video
> terminals are being replaced by workstations. At home, my wife and I
> have begun to compete for computer time. I think demand has not levelled
> off yet. This is just my opinion, but I am not making a public prediction of
> gloom and doom. I think the claim that 20 million is the total size of the
> market forever amen needs more than a back-of-the-napkin justification.
See my reply to Andrew Burt .... but in a nut shell ... sure
some of us have lots of computers .... BIG DEAL who are you tring to
impress .... the average US household doesn't need one ... most people
don't even use a typewriter .... much less need/use a computer as a typewriter.
Nor did I say the market size of 20 million was forever ... just
my best guess of the 1988 market size. I fully expect the market size to
grow over the next 5 years to absorb the used machines from the next
replacement wave in 1990 to 1994.
>
> I also think that measuring the market base based solely on today's uses of
> computers is a serious mistake. If we'd done that five years ago, would we
> have gotten a market size of 20 million units? Seems unlikely. New
> technology enables new uses. We don't know the impact of such emerging
>technologies as very high capacity disk storage, smart data cards, and parallel
> processing on computer use.
It certainly would be a mistake to measure today's market size based
on 1995 possible uses. The fact of the matter is that 5 years ago when the
market crashed ... the total market size was only a few million units ....
that is why it crashed in the face of heavy production.
Yes new technolgy enables new uses, but it takes 3 to 5 years to
integrate that technology into society. If it isn't on the market today,
it isn't going to greatly affect the industry economy in 1988/89. So ...
in a nut shell .... yes things are going to move forward, just not as
fast as the last 5 years.
>
> The analysis seems reasonable, but only if the assumptions are correct. I
> think this is the point where you part company with everybody else.
So far we have only heard from a few hot heads which were to
quick to post a rebuttal -- they didn't even spend any time researching
the problem ... just gave a seat of the pants reply... one hell of a way
to make major decisions about peoples futures ...
Have Fun,
John Bass
DMS Design
John L Bass
>
> 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.
For some folks this may be true ... it certainly is for me...
but looking around me I KNOW I am an exception in 1988/89. There is
no compelling reason for very many people to have a home computer
system today or in the near future .... that is the basic period of
interest in my postings. What happens in 1990 and beyond will not
affect the 1988 market much.
Since it takes 3 to 5 years for a mass market to develop,
and there is no existing need or product today that would compell
the market place, it is clear that this senerio will have little
effect on the 1988/89 market place.
> 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.
A technical product doesn't create it's own market need.
People need a use for the product. Consider that VCR's saturated
this fall at 37% of households (about 30 million homes). Sure they
will continue to sell ... just much more slowly. Maybe the total
market size in 10 years will grow to 60% or more .... maybe VCR's
will become obsolete like reel-to-reel tapes before then?
What is so compelling about a PC at $1,000 that would make it more
attractive to most US households than a VCR at $225.
John L Bass
> From: Ji...@cup.portal.com
> Since you are so confident on your computer industry crash, why
> don't you do the same with say, TV set, dishwasher, refrigerator,
> and other home appliances?
I did for VCR's ... it's just that most of these products were
introduced before you were born ... you probably don't have the foggest idea
what their market segements looked like during the first 10 years.
I'm not that old either for dishwashers, refrigerators, and
many other home appliances. I was however working in a TV/Appliance
store and repair shop as a TV tech during the late sixtys and saw the
end of the boom period for Color TV's ... a lot of parallels to the
last 10 years of PC's .... the VCR market too ...
Have fun,
John Bass
DMS Design
John L Bass
>In article <11...@polyslo.UUCP> jb...@polyslo.UUCP (John L Bass) writes:
>>
>>It seems that some people could not follow the train of thought
>>in my first posting ... here it is a little slower ...
>
>Most of the reply postings I saw seemed to follow your train of thought
>perfectly well - they just didn't agree with you. You now seem to be
>on your own dead-end line :-)
I see you too are incapable of some critical thinking ... just
smart replies ....
>
>> We have sold in the US something between 15 and 20 million PC's
>> in the last few years.
>
>True.
Bravo. Bravo .... How did you reach that conclusion ...
accept my word for it????
>
>> Based on some off-the-cuff population estimates I guess the
>> US PC market installed base will stop about 20 million units.
>
>Untrue. I have worked in offices where the PC to personnel ratio was
>greater than one. I have worked in offices where everyone had their
>own PCs in the office, and most had them at home. I know many people
>who own several PCs. Your estimate is NOT based on fact, but on
>suppositions, which I believe to be wrong.
See my replies to the other disbelievers ... I make my case
clearly ... What DO YOU accept as a 1988/1989 market size????
How do you justify it in terms of ratios to the general population
and to the working population????
As for computers in one place .... I have about a dozen here
for myself ... all but three haven't been turned on in months. My MAC,
Fortune UNIX box, and a cleints Compaq 386/20 are used daily. But after
all I/we work in this industry creating the beasts ....
I can also find without trouble several places where more than
50 people are employeed, that have a single computer in the accounting
department.
The exceptions don't prove anything ... you make a case that
more than 1 in 10 americans will require a PC in the next year!
>
>> If we accept this market size of 20 million units
>
>But I do not, in any way, accept your market size offhand. You don't
>provide any data on how you arrived at this figure, and without that
>I can't comment on its accuracy. My feeling is that it is demonstrably
>low - if we are approaching saturation, why is it that so many people
>who don't have PCs are buying them now (I have at least 10 friends in
>the PC market as I write this), and why is it that so many small businesses
>are just now beginning to use them (due to plummeting prices), along
>with other groups who, up until very recently, could not afford them?
>Until you offer some rational reason why this should be so, and still
>support your theory that the market is approaching saturation, I
>reserve the right to believe that your theory holds little water.
I presented how I got the numbers in the first posting -- I doubt they
are more than 30% off either way. Your "feelings" don't cut it ...
look around you ... go out on the streets and look at the average
people waking by and figure out how many of them NEED a PC!!!
Why are so many people buying them right now??? I think we
are at the peak of "the dizzying growth and pell-mell embraching of PC
technology" to quote Larry Campbell. And what a crash is to follow ...
Rest assured ... both you and I have the right to believe each
others theorys hold little water. I have offered the rational
explanation for my postings in the various replies tonite ....
you have not made any at all .... just an emotional appeal .... just try make
a case for a strong market ... I don't think anybody can ...
your signature line says it all .....
>Michael J. Farren | "INVESTIGATE your point of view, don't just
>{ucbvax, uunet, hoptoad}! | dogmatize it! Reflect on it and re-evaluate
> unisoft!gethen!farren | it. You may want to change your mind someday."
>gethen!far...@lll-winken.llnl.gov ----- Tom Reingold, from alt.flame
Have Fun,
John Bass
DMS Design
PS. to all ... this has been a long nite ... pls forgive my typing and
train of thought lapses in some of the replies ....
Dave Caswell
=don't you do the same with say, TV set, dishwasher, refrigerator,
=and other home appliances?
You're right. List your five favorite American companies making TV's,
and making dishwashers continues to push Maytag to record profits.
Just because making TV sets dishwashers and refrigerators aren't huge growth
industries doesn't mean computers won't be.
Huge numbers of people buy their PC's for one reason to run 1-2-3.
Lots of peoples computers are used less than thirty minutes a day and are
on some executives desk.
These people are not going to by a more expensive machine simply to
upgrade to new operating systems or faster chips.
Greg Lee
+ ...
+ I might point out that a lot of bussinesses are realizing that
+ you can turn a 286 or 386 box into a very nice mini system with
+ little cost in relation to what a mini system from DEC or Sun
+ might cost. Just slap in some more memory, add a large disk, get
+ a few ports for terminal lines and get Xenix for it and you're
+ off and running for a lot less than what DEC or Sun charges.
A "lot less"? It would be interesting if you would post the details
of the cost comparison you made.
Greg, l...@uhccux.uhcc.hawaii.edu
Chris R. Lewis
>In <10...@maynard.BSW.COM> camp...@maynard.BSW.COM (Larry Campbell) says:
>> 2) Software marches on, and the old hardware is too small and slow to
>> run the new software. Try running OS/2, or Windows, or Microport
>> System V with DOS Merge, on an 8088-based machine.
>
> This is a kinda gray area. Does a secretary really need to multi-task and
> search for all occurences of the word 'the' in 58uSec? If I was paying out
> of my budget I'd probably say no. The attitude a manager has on this question
> may largely determine the number of upgrades that are purchased.
There's an incredible amount of *customer* excitement being focused on
being able to do DOS multitasking (Microport w/DOSmerge or 386/IX w/VPIX).
Most offices started out small where sharing data wasn't particularly
important, so they "grew into" a couple of disconnected PC's. Networked
by floppy disk if at all.
These applications are becoming BIG. And the offices are often stuck with
a particular set of programs. And, they want to add a few more secretaries,
data entry, and the manager is starting to want integrated statistics ....
So, all of these sites are realizing that not only do they have to expand
their total computing power, but they have to get their current systems
to talk to each other and add more "users" to the whole shebang.
Well, you could add PC's, AT's etc. at 3-5K per user with difficult
to administer and occasionally flakey LANS, or expand by UNIX + DOS
emulation multi-user systems at $500 to $1000 per "seat".
Performance and functionality expectations continue to grow. No matter
what. So, there will continue to be new generations of software and
hardware.
It wasn't so long ago that "universal wisdom" suggested that only one
computer (with roughly 386 or 68020 performance if I recall) would be
needed to provide all of the compute requirements of North America.
We all know how wrong that prediction was... (sorry, no reference)
My grandfather used to contract CPU time off a machine in New York
at $100-$200 per CPU minute, (around 20 minutes of CPU per year)
and the performance of that machine was roughly one one-hundredth of
a IBM PC.... Thing was made out of vacuum tubes and had a machine cycle
of around 300-500 microseconds (2-3 KIPS!).
--
Chris Lewis, Spectrix Microsystems Inc,
UUCP: {uunet!mnetor, utcsri!utzoo, lsuc, yunexus}!spectrix!clewis
Phone: (416)-474-1955
roger_wa...@cup.portal.com
No flames, but where are you getting your figures? Specifically, the figur
of 60 million in the work force with access to computers? The civilian work
force is, I believe, well over 100 million and inching toward 110 million.
This does not include military or younger students; both of these groups
may relrfect substantial need for computers, both at home and at school/militat
With these figures in mind, I'm curious as to why you feel only 55% or so
of the work force would have access to a computer. Do you have any hard data
on what occupations definitely do not have access to computers of any type?
This is a separate issue from your assumed ratio of 1:3 to obtain 20 million
units. As best as I can figure, your ratio of NEEDED PCs is still guesswork.
The evidence you give seems more related to the ratio of computer contact.
Can you give a source?
All I can give you is anecdotal evidence for your ration of NEEDED PCs;
the rations I've come across are 1:3 at the worst (this was in a state
government office who was in the process of ordering more PCs); most other
offices I've been in, the ration was 1:2 or 1:1. This evidence doesn't mean a
whole lot, of course; anything here on the net is biased toward PC-using biz.
Still, there is a lot of slop in your figures that I reallwhere it's cominum
Jim Frost
>From article <19...@saturn.ucsc.edu>, by fia...@ucscc.UCSC.EDU (David Vangerov):
>+ ...
>+ I might point out that a lot of bussinesses are realizing that
>+ you can turn a 286 or 386 box into a very nice mini system with
>+ little cost in relation to what a mini system from DEC or Sun
>+ might cost.
>of the cost comparison you made.
This brings up an interesting point that most people miss. The cost
of an 80386 machine is very comparable to the cost of a similarly
configured Sun 3/50. Performance wise they're pretty close, too, but
in terms of software reliability the Sun UNIX is somewhat better than
Xenix or Microport.
jim frost
ma...@bu-it.bu.edu
Eric Green
> From article <19...@saturn.ucsc.edu>, by fia...@ucscc.UCSC.EDU (David Vangerov):
> + you can turn a 286 or 386 box into a very nice mini system with
> + little cost in relation to what a mini system from DEC or Sun
> + might cost. Just slap in some more memory, add a large disk, get
> + a few ports for terminal lines and get Xenix for it and you're
> + off and running for a lot less than what DEC or Sun charges.
> A "lot less"? It would be interesting if you would post the details
> of the cost comparison you made.
Well, I did a similiar cost comparison some time ago. A decent Sun or DEC
system, with Unix, came out at about $12,000 for a usable system. A 286 clone
with 4 serial ports & Microport Sys V would have come out at about $3500 at
the same time. Current 386 prices are running about $1500 more than 286
prices, so add it up... around $5,000 for a quite reasonable Unix system. Of
course it doesn't have the graphics of a Sun, or the support of a MicroVAX.
But for CPU-oriented stuff, it's about the same speed (i/o suffers because of
the slow IBM i/o bus). Handles about the same number of users, too. Quite
reasonable, for, say, a small business that needs 3 or 4 terminals right now
but someday hopes to become a BIG business (in which case their software and
databases can be moved to larger machines that run Unix).
--
Eric Lee Green e...@usl.CSNET Asimov Cocktail,n., A verbal bomb
{cbosgd,ihnp4}!killer!elg detonated by the mention of any
Snail Mail P.O. Box 92191 subject, resulting in an explosion
Lafayette, LA 70509 of at least 5,000 words.
Steve Ardron
> Xref: crcmar comp.misc:1249 misc.headlines:1571 misc.jobs.misc:682 talk.rumors:189
> Posted: Thu Feb 11 07:26:46 1988
>
> IF there were black & white market size numbers it would be easy to
> give you the PROOF you think you need. Unfortunately I haven't seen any
> numbers which are specficly labeled "the offical PC 1988 market size". Lacking
> such I BOLDLY used the following estimate DETAILED in my first posting:
>
> next week and take your own sample of how many people in the general
> population have/need access to a PC for any reason."
>
> people) is not outragously large (or small) ... to claim the number is either
> as little as 1 in 5 or as large as 1 in 20 WOULD take some justification!
> The 20% error in US population size estimate is in the noise given the other
> error probabilities!
>
> In sampling my aquaintances I get a number of something larger than
> 1 in 15 ... that may be an quirk of this local. I can not in my wildest dreams
> believe a number in 1988/89 of 1 in 5 or roughly 40 million units (or 48 million
> units by the revised estimate of population size). After subtracting out
> youth under 15, unemployed, housewives, and retired folks that would make
> the ratio in the working class about 1 in 3 ... totally absurd!
>
> most households ... maybe some compelling application/software will be
> developed in the next few years which will drive a stronger home market.
> A PC with printer and hard drive (usable configuration) is also about
> four times the cost of a VCR. I don't expect 1 in 3 households to have
> a PC anytime in the next few years.
>
I also have a few problems with your projections. When I lived in the States,
almost 100% of households that I knew had Home computers! Many, almost half,
had more than one! As computers become more prominent, most middle class
families buy >one computer for their children at school, many universities
require students to buy their own computers, and many households don't
resell their computers, they just get stuffed in a closet.
You were also argueing against yourself later in your article, as you said
that a change in price wouldn't affect the total demand, yet later you said
that more people would buy a VCR than a PC because a PC system was 4X the
cost.
You also based almost all your arguements on using PCs as typewriters, an
invalid assumption if I ever heard one. Many people use their machines for
games at home, and many small businesses and not a few households use them
(or will use them) for database applications, an application that is very
dependant on the machine for how well it will run. With these applications
in mind, a printer isn't needed, and not even a hard drive is required,
bringing the price of the PC down to the level of a VCR. This is still
rapidly falling with no sign of letting up.
As was said by others, and I don't feel adequetly rebutted by you, there
are still many other uses for PCs showing up. Many of these aren't brand
new, and have allready completed much of their integration. Such things
as computer shopping and banking have great potential for expanding the
PC market when a PC and modem costs only a few hundred, along with
the previously mentioned heating and light control, aswell as games,
typing and databases that are allready there. I'd say these things
made a PC a hell of alot more useful than a VCR that is only for
entertainment.
Stevie.
P.S. please excuse the many typos and bad grammer, since I was in a hurry.
eric townsend
>
> In sampling my aquaintances I get a number of something larger than
> 1 in 15 ... that may be an quirk of this local. I can not in my wildest dreams
I would imagine this is a quirk. The only even semi-valid use or your
sample would be in making statements about the sample itself. There
is really no predictive value in your sample. It sounds nit-picky,
but it's rather important not to make hasty assumptions...
> Try the following: pick numbers, at RANDOM in the phone book until
> 20 people answer the following survey -- Ask them "do you CURRENTLY use
> a personal computer or have need to use a personal computer on a DAILY basis?"
This is better, but still not really valid each person in America does not
have an equal chance of being chosen for the sample. A test of this
sort using a list of names from the Census would be a little better...
A phone book is better than "asking the guys at work", but still not perfect.
> This is VERY LIKE the automotive industry where current stats
> show the median life of a car at about 10 years. A new car is obsolete
> for the jet set in a year (new model comes out), first-owners keep a
> new car an average of about 3 years, a typical car has 3 or 4 owners in
> it's lifetime. A typical person buys ONE new car in their lifetime. A typical
> new drivers first car is a USED car.
I think this is very valid with computers... I owned a C= 64, one of the
first few thousand sold in America (how many of us payed $600+ for a C64?).
Now I use a rather used 3b1. The C64 lasted me at least 7 or 8 years, I
expect I'll use the 3b1 for 10 or 15.. If I don't sell it to someone else.
As for how many households have computers, I would suggest to you the
_Statistical_Abstract_of_the_United_States_ for the most recent year
that they surveyed for computer ownership.
--
Just say NO to skate harassment. | Just another journalist with too much
If I wish really hard, will IBM go away forever? | computing power..
Girls play with toys. Real women skate. -- Powell Peralta ad
J. Eric Townsend ->uunet!nuchat!flatline!erict smail:511Parker#2,Hstn,Tx,77007
Jim Boritz
>
> A technical product doesn't create it's own market need.
>People need a use for the product. Consider that VCR's saturated
>this fall at 37% of households (about 30 million homes). Sure they
>will continue to sell ... just much more slowly. Maybe the total
>market size in 10 years will grow to 60% or more .... maybe VCR's
>will become obsolete like reel-to-reel tapes before then?
>
> What is so compelling about a PC at $1,000 that would make it more
>attractive to most US households than a VCR at $225.
>
>Have Fun,
>John Bass
>DMS Design
I have read most of the postings on this topic although I have missed a
couple. Most of the questions I have seen have been a result of not reading
past the line you disagree with. I hope my questions are new.
There is a great deal of talk about the estimated market size. Especially
in comparisson to VCR's. Unfortunately most companies do not provide each
of their employees with a VCR. In addition, I am not likely to see someone
with a VCR at home, being given one at work (i.e. A bad way of saying
that a person may have a machine at work and at home as well). I have the
impression that the number of companies that provide one computer for 50
employees is about the same as the number that provide a one to one ratio.
How about comparing the computer to the telephone? In some ways it is
similar to the computer market. Yes it is also different, but so is the
VCR. I may have a telephone at work and a telephone at home, and a phone
for the kids. It is highly unlikely that they will each be of the same
capability or expense.
Another issue is the number of small market segments. On its own, a
small market segment can be discounted, because its size is unimportant
in relation to other larger values. However, the existence of many
small markets adds up. Would these not make up a big enough population
segment to alter your figures?
I am of the belief that that the market has to slow down somewhere, it is not
infinite, and I hope most people agree with this. However, your predictions
of possilble 50-60 percent decreases seem much to severe. They paint the
picture in black and white. There seems to be an assumption that after 20
million PC's get sold (or any other figure you may choose) the market is
going to stop dead in its tracks and switch over from a first time market to
a replacement market overnight. I doubt that this is the case. Is there
any way to account for the transition period?
Just curious.
--
Jim Boritz jjbo...@watcgl.waterloo.edu
Computer Graphics Lab
University of Waterloo {allegra,utai,clyde}!watmath!watcgl!jjboritz
roger_wa...@cup.portal.com
"After subtracting out the under 15s, homemakers..etc"
Flare lit tip off that Mr. Bass doesn't klnow what he's talking about.
The civilian labor force ALREADY excludes these figures and is far above
the paltry figure he posits.
Gideon B. Sheps
>Another issue is the number of small market segments. On its own, a
>small market segment can be discounted, because its size is unimportant
>in relation to other larger values. However, the existence of many
>small markets adds up. Would these not make up a big enough population
>segment to alter your figures?
>
On the topic of small market segments adding up... An economist I heard
speak recently (I saw a few, so I don't recall exactly who held which
opinion - suffice it to say they were all different :-)
was of the opinion that the market for manufactured products (everthing
from toasters to PCs) is going to change from its current "mass market"
approach to a catering to all these special interest segments approach
in the near (10-20 years) future. Those companies that can't, will of
course die out.
His reasoning (simplified) is that there are so many of these special
needs, they are sufficiantly different, and people are more and more
begining to expect (or are willing to pay for) the adaptations for their
need; that the lowest common denominator approach simply won't sell
by the next century. Actually - the argument was more in terms of
North American vs Offshore production.. the mass market LCD approach will
still sell the most units, but North America will never be able to
produce them as cheaply as the "emerging nations" (who ever happens to
be emerging at the time), North American companies, in order to survive
will have to move towards servicing the special needs groups.
Was that relevant ? I hope so...
--
University of Toronto Career Centre Research Office
Koffler Student Services Centre Gideon Sheps
214 College st. W. 416/ 978-2081
Toronto, Ontario, Canada M5T 2Z9
car...@gpu.utcs.toronto.edu car...@utorgpu.bitnet
The University has a stake in any opinions I develop while using their
resources should they prove to be commercially viable.
Greg Franks
>Since you [Mr. Bass] are so confident on your computer industry crash, why
The market for TV's, dishwashers, etc is already saturated. A more
applicable comparison is to VCR's. Five years ago (whenever) there were
pratically no consumer VCR's. Today roughly 50% of all households have
them (ref: some consumer article in our local news rag a few months
ago). The market for VCR's is flattening out. Manufacturers have
adapted by cutting the price in hopes of stimulating demand (how much
has a VCR gone up in price in comparison to a Toyota?), or by giving up
completely (i.e. Sony dropping Beta as a consumer tape deck). Sound
familiar?
There will always be *some* demand in a static market. It is left as an
exercise for the marketing people to figure what that demand will be.
(The one with the crystal ball is the one who will make a fortune!)
--
Greg Franks XIOS Systems Corporation, 1600 Carling Avenue,
utzoo!dciem!nrcaer!xios!greg Ottawa, Ontario, Canada, K1Z 8R8. (613) 725-5411.
"Those who stand in the middle of the road get
hit by trucks coming from both directions." Evelyn C. Leeper.
Greg Franks
[and a host of others too...]
> No flames, but where are you getting your figures? Specifically, the
>figur of 60 million in the work force with access to computers? The
>civilian work force is, I believe, well over 100 million and inching
>toward 110 million. This does not include military or younger students;
>both of these groups may relrfect substantial need for computers, both
We can all argue ad-nausium about the figure 20 million. Of the 110
million people, how many actually need or use computers. I dare say the
guy/gal building automobiles, or pouring concrete or whatever isn't.
And so what if the number 20 million is wrong. If the market saturates
at 50 million, the crash comes later (and will likely be more
spectacular because there will be more players to get hurt!). And
perhaps the crash will turn out to be a bump. After all, who really
knows what innovations will occur which will (again) change demand.
Isn't market forecasting fun?
Ric Messier
You know, it's funny but I thought this topic was dead but wait a
minute, here we go again!! Strap yourselves in.
--
- Kilroy r...@lscvax.UUCP
'Just what cowpatch is Lyndonville, Vermont in anyway?'
*** Can't deal, &CRASH
John L Bass
>
> You know, it's funny but I thought this topic was dead but wait a
> minute, here we go again!! Strap yourselves in.
One gets tired of attempting to prove the obvious ... sales of personal
computers will make an abrupt down turn in the next 24 months, most likely
in the next 3 to 9 months. The sales of PC's will drop between 25% and
70% of the current 12-15 million units per year volume in the short term
and level out at between 4 and 7 million units per year with some growth
in the market spurred by occasional technology advances.
There is no current product which will force early obsolence of the
typical 640K 8088 PC running PFS Write or Word Perfect as a typewriter
replacement/augmentor. This typewriter replacement market accounts for
the vast majority of PC systems purchased in the last few years -- and is
the market that has saturated.
I have spent over 300 hours researching similar markets and the distribution
of jobs in the US in attempt to quantify the size of the US Market for
personal computers. Every new way I have examined still projects the market
size to be between 20 million and 30 million units for business users and
a much smaller number of home systems.
I have posted two conclusive deductive arguments for the market down turn,
neither of which have been more than lightly rebutted .... only emotional
replies of the nature "It can not happen". If this is the general level of
critical thinking for computer professionals and management in the US computer
industry, then I made a mistake in thinking these people would like to PLAN
AHEAD rather than crash and burn.
I posted the conclusion and arguments for free as a service to the
industry ... and it was discarded as worthless free advice. At the request
of a friend, the data and computer model are being compiled into a report
that should be available during late April -- price $3,000.00.
I stand by my prediction solidly .. the market place can not support the
current 12-15 million units per year volume. For those who are so out of
touch with the world, or find the critical thinking involved in data analysis
beyond your mental grasps, I present my final argument:
From USA TODAY, Wed March 16, 1988 page 1B read the box titled "Will
auto boom go bust?" and article titled "Auto sales rise 6.3% this month"
Note the annual sales volume of 14.7 million units per year for
cars and light trucks. Note the average sales of about 13.5 million
units over the last 5 years.
Justify why computer shipments should stay at the same level ....
nearly everyone needs a car ... few people need a computer ...
Again I ask you to present these arguments to your management and ask what this
means for your company's future and YOUR job should the market turn down
abrubtly in the next year. I believe in planning ahead ... your may do as you
wish ... but don't bother flaming at this article ... If you have some
critcal analysis feel free to share it.
Have Fun ..
John Bass
DMS Design (805) 541-1575
EMAIL: polyslo!dmsd!bass
SMAIL: PO Box 12508, San Luis Obispo, CA 93406
Kurt Guntheroth
even though he personally guarantees that he was hit in the head by a piece.
> There is no current product which will force early obsolence of the
> typical 640K 8088 PC running PFS Write or Word Perfect as a typewriter
> replacement/augmentor. This typewriter replacement market accounts for
> the vast majority of PC systems purchased in the last few years -- and is
> the market that has saturated.
This assertion is patently untrue. Anyone who has recently graduated from
Wordstar to Microsoft Word, Page Maker or any of the various other modern
document formatters and page layout systems can tell you that the 8088 poops
out on page layout problems. Modern document processors do graphics, multiple
columns, multiple fonts and point sizes. The graphics requirement alone will
obsolete a significant PCs. Perhaps Mr Bass makes due with a dumb terminal
connected to an aging mainframe, so the world looks more static to him.
> I stand by my prediction solidly .. the market place can not support the
> current 12-15 million units per year volume. For those who are so out of
> touch with the world, or find the critical thinking involved in data analysis
> beyond your mental grasps, I present my final argument:
As evidence of this, our scholar cites that forum of business acedemia:
> USA TODAY, Wed March 16, 1988 page 1B read the box titled "Will
> auto boom go bust?" and article titled "Auto sales rise 6.3% this month"
> Note the annual sales volume of 14.7 million units per year for
> cars and light trucks. Note the average sales of about 13.5 million
> units over the last 5 years.
So if computer unit sales only continue to be as good as auto sales (a mature
market with no quantum leaps in technology likely, and stable price/performance
ratios), there will be NO slowdown.
> Justify why computer shipments should stay at the same level ....
> nearly everyone needs a car ... few people need a computer ...
I bet most businesses own far more computers than cars or trucks, both in
number and in dollar value. I also suspect the rate of replacement of
computers will be higher. But that's where John and I part company.
I want to add that I personally expect a modest recession sometime next year.
This recession will likely cut into purchases of small computers, just as it
will affect sales of all sorts of capital equipment. I don't see that
computers will be singled out for an unreasonably large cut. Computers are
as much part of the fabric of production in this country as milling
machines, light trucks, and carbon paper. I also see the current production
levels as a little higher than reasonable, maybe 5-15% too high, and I see
the possibility of a temporary decline, concentrated in sales of older models.
Finally it makes me uncomfortable that my management occasionally buys
expensive reports on the business outlook, and therefore might waste $3K on
this report, which they could ignore for free. Does anyone else but Mr Bass
have any experience with Mr Bass's previous scholarly works or reputation as
a prognosticator? I would hate to waste my time trying to get management to
read a report I didn't believe in, from a person I had no knowledge in, and
then find out he was not highly regarded by his peers. His report would
certainly have more appeal if it appeared in the Harvard Business Review,
Wall Street Journal, or some other known source.
Put me down as one of those silly fools who never see the light.
Kurt Guntheroth
Senior Software Engineer
John Fluke Mfg. Co., Inc.
[These opinions are mine alone. In particular, Fluke management may]
[also have been hit by a piece of sky and not seen fit to tell me. ]
Ronald O. Christian
>The market for TV's, dishwashers, etc is already saturated. A more
>applicable comparison is to VCR's. Five years ago (whenever) there were
>pratically no consumer VCR's. Today roughly 50% of all households have
>them (ref: some consumer article in our local news rag a few months
>ago). The market for VCR's is flattening out. Manufacturers have
>adapted by cutting the price in hopes of stimulating demand (how much
>has a VCR gone up in price in comparison to a Toyota?), or by giving up
>completely (i.e. Sony dropping Beta as a consumer tape deck). Sound
>familiar?
Indeed it does, but one small correction: Sony has not dropped
Beta. See the latest issue of Video Review. Sony has just released
a new Beta deck that beats the pants off anything else in consumer
video. It appears that they are hedging their VCR bets by defining
a new marketplace -- pro-sumer, the consumer that wants professional
results. There's a new business opening up in video -- small shops
that do small scale video productions, from taped want-ads to rock
videos. These shops often can't afford the true professional equipment,
(MII, U-Matic, Betacam) but must nevertheless produce close-to-professional
quality. Hence the pro-sumer marketplace. Note that this marketplace
is not concerned about renting movies at 7-11. :-)
Perhaps the computer business could recover some sales by searching
for new marketplaces, like IBM using their PS/2 as an intellegent SNA
terminal. (With the proper adaptor board and software.) Putting a
computer on people's desk isn't enough anymore. After they've played
with the spreadsheet a few months, it becomes just another expensive
paperweight.
"What's it *for*?"
The Mac, Amiga, IBM PC and Atari have all been tied in to the MIDI music
interface. This is a good start. In my opinion, new things like the
X-Windows standard will put more PC's to work on people's desks. (Too
bad the graphics capability in most of them is so lousy.)
The PC market *could* collapse, but it doesn't *have* to.
Ron
--
Ronald O. Christian (Fujitsu America Inc., San Jose, Calif.)
amdahl!cerebus!ronc
"Down, boy"
"Woof"
roger_wa...@cup.portal.com
I'd put more stock into these predictions if I had some more solid
data to go with them. At best, we have "off the cuff back of the envelope"
calculations. At worst. we've had idiocies like a work force of 90 million
which doesn't include the under 15s, housewives, retirees we have to throw
out (the fact is that the labor force is over 110 million and automatically
excludes these).
Please, more facts on PC/user ratios; some surveys butressed by
solid methodology (the descriptions thrown out here make me wince in their
shoddiness); etc.
John Moore
#There is no current product which will force early obsolence of the
#typical 640K 8088 PC running PFS Write or Word Perfect as a typewriter
#replacement/augmentor. This typewriter replacement market accounts for
#the vast majority of PC systems purchased in the last few years -- and is
#the market that has saturated.
I missed the early postings - we were disconnected from the net for a
bit. However, I do have one area I wonder if you researched: PC's as
mini's. My company, and many others, are using PC's where previously
mini's or custom controllers would be used. For example, in store
Point of Sale systems, traditionally a dedicated controller is used
for each box. We are finding these being replaced by PC's. There seem
to be a lot of places where this sort of PC use is happening. Likewise,
we see PC's replacing minicomputers as servers and concentrators. Did
you include these numbers? I realize that they are likely much smaller
than the typewriter replacement number, and that this alone doesn't
come close to invalidating your thesis. I'm just curious about the numbers.
--
John Moore (NJ7E) hao!noao!mcdsun!nud!anasaz!john
(602) 870-3330 (day or evening)
The opinions expressed here are obviously not mine, so they must be
someone else's.