What is going on in the US computer market? The Wall Street Journal’s quarterly pulse-taking, drawn from the figures for the March-to-June quarter reported by the major players show that profits for computer manufacturers – 15 companies, including IBM, Amdahl, DEC, Unisys, Apple, Tandem and Control Data – shows a 39% decline in profits compared with the second quarter of 1988. Five companies posted increases, five posted declines, and five posted losses, three of which reported profits a year ago. In the semiconductor sector, in a sample of five companies, there was a surprising 8% increase, but the total was slewed by a 244% improvement at National Semiconductor: three companies showed improved profits, two reported declines. The software sector looked thoroughly healthy, but the Journal’s list of seven companies includes most of the ones that are doing particularly well, with only Lotus Development Corp recording a decline from a year ago. In telecommunications, a mixed bag of four companies AT&T Co, Communications Satellite Corp, General Instrument Corp and Motorola Inc, all four recorded gains that averaged out at 20%. Of the lists of companies chosen, the one of computer manufacturers is the most comprehensive and the most representative – and because it is much the biggest, it has a dominent influence on the picture for the technology sector as a whole, so that despite the modest increase in chips and the strength of the software companies, weighting of the manufacturers means that the whole sector saw a decline of 11%. And the overall picture pretty much tells us what we knew already, that the industry is in the midst of several revolutions, and that customers are increasingly relying on the suppliers they trust, the big names and the ones with a reputation for quality, a trend that is making life extremely hard for second-line firms.
