Charles Smulders Strong Quotations

Strong market growth continued to be driven by lower prices and mobility in the third quarter. These factors sped up new PC adoption and replacement activities. Overall market growth exceeded expectations, with home demand for mobile being particularly strong.

Around mid-2005 we started to see the growth in the replacements that had increased, begin to slow and it'll continue to lessen as we move further into 2006. We expect the average system price to continue to fall and though Q4 unit numbers aren't strong, there remains strong pricing pressure.

Mobile demand remains strong worldwide, but in the U.S. desktop consumer market demand increased in response to renewed price competition.

In the first quarter of 2006, emerging markets and consumer demand in the mature regions were the major growth engines on a worldwide basis. Mobile demand remains strong worldwide, but in the U.S. desktop consumer market demand increased in response to renewed price competition.