Seeking Alpha

H-P (HPQ -2.1%), Seagate (STX -2.6%), and Western Digital (WDC -2.8%) underperform after UBS'...

H-P (HPQ -2.1%), Seagate (STX -2.6%), and Western Digital (WDC -2.8%) underperform after UBS' Maynard Um argues Intel's (INTC -1.3%) Q1 report backs up his thesis that "PC pricing needs to come down ... to entice upgrades." Um thinks this will lead to margin pressure for OEMs, and an unfavorable mix shift for hard drive vendors. He also notes H-P/Dell might not benefit from Intel's server CPU strength, since it's fueled by cloud buyers who often rely on white-label gear. Also: Paul Otellini stated on Intel's Q1 call he expects Window 8 (MSFT) touch devices (7" tablets?) using Intel's upcoming Bay Trail Atom CPU to eventually sport ~$200 price points.
Comments (3)
  • I feel like this analysis is not correct. It's true that PC users need a compelling reason to upgrade, but the reality is that there wasn't a material improvement in the available technology in the last year. For PC enthusiasts, an upgrade from a 2500k to a 3770k just doesn't make any sense given the cost. The GTX680 and 7970 still both reign as video card champs, windows 8 isn't driving new hardware adoption... SSDs have gotten incrementally better/faster, but not enough to replace an existing one.

     

    Maynard Um seems to be saying "since it isn't better it needs to be cheaper," which is one dimension (and perhaps accurate for the folks who haven't yet upgraded from 2-3 years ago), but once the next get chips come out, perhaps it will be better and there won't be as much price erosion as predicted.

     

    Wall street is missing the point that technology cycles don't nicely align with quarterly/annual earnings cycles, and there WILL be a wave of PC upgrades once there is something to upgrade to!

     

    When Intel gets Atom down to single digit watts, I think that will be a game changer.
    17 Apr 2013, 02:49 PM Reply Like
  • An additional challenge has been magnetic disk drive performance and capacity. Until a few years ago, the capicity per disk was rapidly increasing. Now, it seems that actual technology delays are causing vendors to try and cram more disks into an "average" drive.
    This bodes well for the future of solid state drive makers, but presently FLASH is more than an order of magnitude more expensive for the same amount of storage. However, not too long ago, FLASH was more than 2 orders of magnitude more costly, and it outperforms magnetic products, particularly during the reading of data, and power consumption when standing by.
    17 Apr 2013, 04:32 PM Reply Like
  • "PC pricing needs to come down ... " ???

     

    PCs are already cheap. You can buy one for $500.
    17 Apr 2013, 10:50 PM Reply Like
DJIA (DIA) S&P 500 (SPY)