jbass@polyslo.UUCP (John L Bass) (01/29/88)
The following are my opinions and best crystal ball readings ... I welcome any sound arguments which make the following predictions without merit. For the last 6 months I have been talking to people in the industry tring to find an area to develop a new product. To my surprise it seems that another 1982/1983 style PC market adjustment is about to happen. I.E. the rapid market growth can not be supported by the total market size. I use PC to mean Personal Computers of all types -- Apple, IBM, and clones. How soon? Maybe by this summer. Maybe as late as fall 1989. How massive? Maybe as little as 15% of the computer industry labor force. Maybe as much as 75%. In many areas -- manufacuring, retail sales, and supporting industries -- chips, drives, printers, etc. Only the service industries will continue strong -- repair, training, support. It is unclear how the software markets will fair. Who will be affected? Nearly everyone in the industry. Why and how? The short answer is that the personal computer market will dry up quickly, since the market place is nearly saturated. This follows the 1986 & 1987 frenzy to replace typewriters with PC's of all types. Surprized by this? 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. Estimates of current PC shipments range between 0.7 million PC's/month to 1.7 million PC's/month. Many of these are PC/XT/AT clones targeted for word processing and little else. IBM is shipping about 0.25 million PC's a month alone! Apple, Atari, and the other M680X0 systems are included as PC's. None of this includes the numbers and impact of the multiuser and mainframe markets. Thus, the market is either already saturated or will saturate in the next 24 months ... my best quess is within 3-9 months. This posting may cause it to happen now. What can be expected during after the market crash? Many things both good and bad -- mostly very bad. Consider the following: 1) The US computer retail industry will suffer significantly. A number of shops closed before/after christmas because the volumes were slowing with margins sharply down. This trend will continue for the next year with perhaps as many as 75% of the current computer stores closing by mid 1989. 2) A significant shakeout will occur between US manufacturers and importers resulting in a fatal round of price cutting and bankruptcy filings. As in the 1982/1983 crash, discontinued goods will be found on the market and in auctions for between 10% and 35% of cost. Plenty of opportunities for small buyers to make a quick dollar on surplus inventories. 3) A significant shakeout will occur in the support markets for the same reasons. Expect tough times in chips, drives, and printers. It is going to be doubly hard on the Japanese, Tiwan, and Korean economies as well ... the rapid dollar shift was only the begining. 4) Unlike the 1982/1983 crash, the market will not recover into a strong growth period ... the crash will mark the end of the PC boom years. A small first time buyer and replacement market will remain. The result will be a large labor force out of work and requiring significant retraining since no other large domestic industry exists today which requires the same talents. 5) It takes about 5 years for a new market to mature. There is no promising computer product on the horizon to force early retirement of the current installed base of systems. An upgrade market will exist ... but with small volumes and margins. 6) The mid range multiuser systems and workstations will be significantly affected by the price wars in the 386 product lines. Many of the current workstation players will go down as well with UNIX is becoming more common on 386 desktops with high res graphics. 7) As with the 1982/1983 crash I expect buyers will start buying and paying more for products from stable companies ... it is difficult to trust your business to a computer that will be orphaned when the maker/retailer/VAR goes out of business. 8) There will be a strong service and support market for orphaned computers and software. 9) There will be a sharply lower demand for computer engineers, computer sales and support staff. New college grads are going to face tough employment prospects. Particularly if the next congress and president continue to provide minimum $$$ support for research and development in technical areas like SDI, NASA, and other military and civilian aerospace. 10) Without the revenues from computer product sales, little domestic funds will be available to develop next generation technology. It takes PROFITS to invest in the future. The US electronics and computer industry faces some grave problems. 11) It is doubtful that 1Mbit and 4Mbit memory chips will reach expected volumes and price levels. Other advanced silicon will likely suffer the same fate given a sharply contracted market. 12) The price of housing will drop sharply in Silicon Valley again. A few other places will see the same. 13) In this election year it would be wise to vote for canidates that are more conservative financially and support US technical industries. Congress will have to carefully examine our technical industry and make sure that supports are in place via research funds and contracts for products to keep our options open for the future. 14) Domestic exports of computer equipment will meet price cutting and expanded competition from frustrated asian manufacturers. Bounce the above senerio off your management, then start looking ahead for how YOU and YOUR company will survive the next few years. Ask your management what their SHORT and LONG TERM business plan looks like. Have they thought this far ahead? If not, better find a new LONG-TERM job before the layoffs start. So you still think that this will not happen? ... consider that the VCR market just saturated this last fall following record volumes and is headed down rapidly ... just as the cassette player and walkman markets did a few years ago. Mean while, we continue to look for consulting/contract work ... Have any? We specialize in design/product reviews, cost sensitive product development, SCSI products, and UNIX systems, hardware, systems software, and applications. Have Fun ... John L. Bass DMS Design (805)541-1575 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.
aburt@isis.UUCP (Andrew Burt) (01/30/88)
In article <1105@polyslo.UUCP> jbass@polyslo.UUCP (John L Bass) writes: > >How massive? Maybe as little as 15% of the computer industry labor force. > Maybe as much as 75%. If you make statements such as this, particularly with numbers involved, please supply the data and algorithms you used to arrive at them. Are 15-75% just guesses, or...? >Surprized by this? 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 240 million is a more reasonable number; of this an average of 120 million are employed during the year (according the 1987 world almanac). How do you derive the 60 million figure (given that the 200 million is 20% too low, in particular)? > Maybe 1 in 3 (about 20 million) > actually has or needs access to a PC (on their desk or shared use). And how about the home market? Is it insignificant or significant? What about the demand to upgrade (XT->AT, AT->386, etc.)? Do you consider that for cheap clones it is often cheaper to replace a part or whole machine than to have it repaired? > Estimates of current PC shipments range between 0.7 million PC's/month > to 1.7 million PC's/month. Again, where are these figures from? > Thus, the market is either already saturated or will saturate in > the next 24 months... How do you arrive at these numbers? 24*.7million = 16.8 million, what relevance to your other points above does this have? I'm not disputing your claims (not yet at least) but before I consider your arguments I need to evaluate your methods. Please make a second posting on this matter. -- Andrew Burt isis!aburt Fight Denver's pollution: Don't Breathe and Drive.
brad@looking.UUCP (Brad Templeton) (01/30/88)
In article <1105@polyslo.UUCP> jbass@polyslo.UUCP (John L Bass) writes: >For the last 6 months I have been talking to people in the industry tring >to find an area to develop a new product. To my surprise it seems that >another 1982/1983 style PC market adjustment is about to happen. I.E. the >rapid market growth can not be supported by the total market size. >I use PC to mean Personal Computers of all types -- Apple, IBM, and clones. >... A long summary, based on the idea that everybody has a computer now who >... needs one, so they'll stop buying >So you still think that this will not happen? ... consider that the VCR market >just saturated this last fall following record volumes and is headed down >rapidly ... just as the cassette player and walkman markets did a few years >ago. Yes, just as everybody has a car, and Ford, Toyota and Mercedes are all dying. Yes, just as everybody has a TV, and Sony and Toshiba are failing. Yes, just as everybody has a stereo, and the nobody opens up new stereo stores anymore. Fact is, computers go out of date far faster than cars, TVs, or stereos. The 386 machines today outpower the first PCs 15 to 1 for the same money. The software sector will continue to grow and thrive. For these and many other reasons, the bottom is not about to fall out. The market for PC clones may saturate soon, but this will only cause a change in direction, I suspect. -- Brad Templeton, Looking Glass Software Ltd. - Waterloo, Ontario 519/884-7473
ewhac@well.UUCP (Leo 'Bols Ewhac' Schwab) (01/30/88)
[ Wouldn't you like to be a line eater too? ] John L. Bass forecasts a gloomy horizon for the microcomputer industry, based on the argument that the market is saturated. The *business* market may be saturated, but I feel that there are many other markets which have yet to be addressed, and which are potentially lucrative. Also, I believe his gloomy forecasts are based on the fact that the whole economy, not just the computer industry, will start a major decline by the end of the year. In article <1105@polyslo.UUCP> jbass@polyslo.UUCP (John L Bass) writes: >To my surprise it seems that >another 1982/1983 style PC market adjustment is about to happen. I.E. the >rapid market growth can not be supported by the total market size. >I use PC to mean Personal Computers of all types -- Apple, IBM, and clones. > I think this is your basic error. PC should refer to just PC's (IBM clones, et al). Whether or not Apple has problems will be for entirely different reasons. >Why and how? The short answer is that the personal computer market will dry > up quickly, since the market place is nearly saturated. This follows > the 1986 & 1987 frenzy to replace typewriters with PC's of all types. > The frenzy was for IBM Clones. Your argument that that market is saturated may be valid, but it would be valid only for this market. > Maybe 1 in 3 (about 20 million) > actually has or needs access to a PC (on their desk or shared use). > No one "needs" a PC. God knows we just finished a bloody war over in comp.sys.amiga on whether or not anyone "needs" multitasking. People curious about computers will continue to buy the things, as well as technofreaks. > 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. > Probably very few. So create a market for them. Lord knows American business is masterful at foisting useless stuff on us. > Apple, Atari, and the other M680X0 systems are > included as PC's. [ ... ] They shouldn't be; they're completely different animals. >What can be expected during after the market crash? Many things both good and > bad -- mostly very bad. Consider the following: > 1) The US computer retail industry will suffer significantly. A number > of shops closed before/after christmas because the volumes were slowing > with margins sharply down. This trend will continue for the next year > with perhaps as many as 75% of the current computer stores closing by > mid 1989. > Those dealing *only* in PC's will be the heaviest hit, I agree. Those with a wider perspective on life will probably survive, as well as stores that cater primarily to individuals. > 3) A significant shakeout will occur in the support markets for the > same reasons. Expect tough times in chips, drives, and printers. > It is going to be doubly hard on the Japanese, Tiwan, and Korean > economies as well ... the rapid dollar shift was only the begining. > Somehow, I get the feeling that the Japanese are going to come out of this smelling like a rose... > 4) Unlike the 1982/1983 crash, the market will not recover into a > strong growth period ... the crash will mark the end of the PC boom > years. [ ... ] I disagree. The 1982/1983 crash was largely a shakeout of the entertainment-oriented computer market. That market has now reorganized and is doing very well, thank you, and with the economic recession just around the corner, is expected to do even better. The entertainment industry has done well historically during economic downturns. Don't believe me? Go to your local video arcade. Atari is still making very good coin-ops, as is Sega, Williams, and Taito. And around here, they get a lot of play. > 5) It takes about 5 years for a new market to mature. There is no > promising computer product on the horizon to force early retirement > of the current installed base of systems. An upgrade market will > exist ... but with small volumes and margins. > Obviously you haven't looked at the Amiga :-). Desktop video is only beginning to get off the ground (we've had two years head start), and so far it looks good. Also, I don't see desktop publishing (Apple's baby) heading for a downturn. > 6) The mid range multiuser systems and workstations will be > significantly affected by the price wars in the 386 product lines. > Many of the current workstation players will go down as well with > UNIX is becoming more common on 386 desktops with high res graphics. > Maybe not on 386 machines, but I suspect UNIX will become more popular, too, given that OS/2 is largely predicted to be a complete and utter loss. However, don't count Apollo or Sun out yet; they've got lots of good ideas... > 7) As with the 1982/1983 crash I expect buyers will start buying and > paying more for products from stable companies ... it is difficult > to trust your business to a computer that will be orphaned when the > maker/retailer/VAR goes out of business. > I know of very few businesses that trusted their office automation program to the Coleco Adam :-). The only stable PC manufacturer is IBM. Compaq's only product is PClones. Once that market dries up, I think Compaq is going to have trouble. IBM always has the mainframe market to fall back on. > 8) There will be a strong service and support market for orphaned > computers and software. > Absolutely, though I don't think you'll ever be able to call PC's "orphans"; there are just too many of the blasted things. > 9) There will be a sharply lower demand for computer engineers, > computer sales and support staff. [ ... ] Dunno about sales and support, but engineering looks like a strong job market to me. There's still a hell of a lot of stuff yet to be designed out there... > 10) Without the revenues from computer product sales, little domestic > funds will be available to develop next generation technology. [ ... ] Maybe, maybe not. In the midst of the 82/83 crash, Commodore developed and brought to market the Commodore-64. It did very well. Before that, all they had were calculators and the Commodore PET, so I don't think they had much capital. > 11) It is doubtful that 1Mbit and 4Mbit memory chips will reach > expected volumes and price levels. [ ... ] Unfortunate, but probably true. I expect 1Mbit chips to fall in price a bit more, but the 4Mbitters will remain way up there until the next generation of systems comes out (along with the inefficient compilers and bloated applications that will require all that memory). > 12) The price of housing will drop sharply in Silicon Valley again. Let's hope so. Properly values down there are almost as crazy as in Marin. >Ask your management what their SHORT and LONG TERM business plan looks like. >Have they thought this far ahead? If not, better find a new LONG-TERM job >before the layoffs start. > Better start looking NOW; American business is notorious for having no concept of a long-range business plan. >So you still think that this will not happen? ... consider that the VCR market >just saturated this last fall following record volumes and is headed down >rapidly ... just as the cassette player and walkman markets did a few years >ago. > Again, this is because everyone and his mother is making VCR's, with 37 heads, octophonic sound, 2.564E+34 cable channel capability, remote control, event timers that let you schedule program recording 32 years in advance, AI commercial killers, and the newly developed S-EG-XMP-ST-XT-AT- CRC-3000000 recording process which can record 24 hours of the entire electromagnetic spectrum on one tape. There'll be a shakeout, and the market will re-organize, and things will be fine again. DISCLAIMER: I'm not an economist, just an Amiga hacker, so I probably have absolutely no idea what I'm talking about. I agree there will be a downturn in the industry, but I don't think it will be as bad as Mr. Bass suggests. I hope.... _-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_ Leo L. Schwab -- The Guy in The Cape ihnp4!ptsfa -\ \_ -_ Recumbent Bikes: dual ---> !{well,unicom}!ewhac O----^o The Only Way To Fly. hplabs / (pronounced "AE-wack") "Work FOR? I don't work FOR anybody! I'm just having fun." -- The Doctor
zrm@eddie.MIT.EDU (Zigurd R. Mednieks) (01/31/88)
In article <1105@polyslo.UUCP> jbass@polyslo.UUCP (John L Bass) writes: >... To my surprise it seems that >another 1982/1983 style PC market adjustment is about to happen. I.E. the >rapid market growth can not be supported by the total market size. >I use PC to mean Personal Computers of all types -- Apple, IBM, and clones. > Market saturation? It happened long ago. The number of PCs out there is still dwarfed by the number of 6502 machines out there, even if most of those are mouldering in closets. The number of Macintoshes is dwarfed by the PC market it is taking market share from. And, in turn, the Macintoshes dwarf the number of Sun 4-class RISC-based machines. Beyond that, we have the prospect of parallel machines coming to desktop computing. All this will take quite a bit longer that five years to arrive, mature, and decline. I'll leave the prognostications for what comes after to the professional futurists. Several new waves of computing power are coming in. Which means the industry as a whole is not going to go into a depression. It also means that there will be massive displacement. Luckily for us, most of the protectionist dipsticks in Congress would be too embarassed to call for the protection of the business of making 8088-based computers, unlike, for instance, their bailout of the business of making claptrap Dodge Omnis. But are people going to see the need for more powerful machines? You bet. In one case I can think of, poeple may not like to have to buy more powerful machines but when they see how badly OS/2 + Presentation Manager + some hairy graphics application runs on an 80286-based machine they will either give up on computers or write a check for an 80386-based machine. And if the folks at Apple can get their cost-of-goods-sold under control, they will take advantage of that situation as well. So buck up. The end is not near. Not even in sight. But if you try to stay in one place, you are guaranteed to get run over by the people hurrying into the future. -Zigurd -- ------------------------------------------------------------------------ Zigurd Mednieks MURSU Corporation (617)424-0146 25 Exeter Street Boston, MA 02116
kent@xanth.cs.odu.edu (Kent Paul Dolan) (01/31/88)
Second the motion on the market remaining strong. I've got two perfectly good computers gathering dust in the apartment, because my Amiga makes the older machines look sick. Folks who learn to use and love the C64's, Timex Sinclairs, and so on have only had their appetites whetted for newer and better toys. Business that can't live without word processing, spreadsheet, and slide creation software now will find hypertext, interactive visually modelled resource flow simulation, and animation presentation graphics equally vital a step down the road. If the economy undergoes a general recession, then people will tighten belts and make do; this may hurt the home market, but the business market will be looking for new efficiencies, and there will be all these promising new programs, and the techie new machines on which they run, looking like a worried comptrollers dream. Kent, the man from xanth.
jr@bbn.com (John Robinson) (02/02/88)
In article <1105@polyslo.UUCP>, jbass@polyslo (John L Bass) writes: >The following are my opinions and best crystal ball readings ... I welcome >any sound arguments which make the following predictions without merit. > 13) In this election year it would be wise to vote for canidates that > are more conservative financially and support US technical industries. > Congress will have to carefully examine our technical industry and > make sure that supports are in place via research funds and contracts > for products to keep our options open for the future. I won't comment on the obvious lack of support for all the economic arguments; others have been doing fine on that score. I do find the above pair of sentences a bit contradictory. The conservatives are the ones that don't want to spend money on worker-support programs or protectionist tariffs. The only "supports" these types will put in are likely to have little impact on the PC industry (however defined) that is discussed in the article. SDI and ARPA have little to do with clone makers. The retraining implied above will not make it in the face of budget-slashing. --