|To: Elmer Phud who wrote (2540)||1/10/2008 9:50:46 AM|
|From: inex||Read Replies (2) | Respond to of 2581|
|They can't make money with an underperforming higher cost product in the lowend.|
This touches upon one of the points that I made earlier... Prior to buying ATI, AMD was a CPU and Flash company. When entering a price war with Intel, AMD thought that the Flash was going to insulate them a little bit and help them break even (knowing that the CPU division would lose money...) Intel subsequently brought the pricing war to the Flash market and created a double whammy for AMD... Now, with products which don't compete directly with Intel, AMD can in fact wage a price war in the CPU market and hope to at least break even.
Here's a hypothetical situation... Let's estimate that the low and middle ends of the market account for roughly 8o% of unit sales. If AMD can capture 50% of this market, then, that would equate to 40% of total unit sales. Right now, AMD only holds ~20% unit sales. Not only would this double their unit sales, but, it would also double their market for chipsets and graphics cards. Doubling a market in which Intel doesn't compete is very lucrative for AMD and could potentially finance a price war which could have very humbling effects on Intel.
Just because AMD is not in a position to compete in the high end has no bearing on whether or not they should strive to capture marketshare. You perceive the lack of competitive product as the reason that AMD will fail. I perceive the lack of marketshare to be the reason that AMD is failing. The difference between the two of us is that, under your scenario, AMD must produce a competitive product to turn things around, but, under my scenario, they need to pump out MORE product. This added product will improve profit centers outside of Intel's influence.
This is much the same tact that Intel has historically used to counter previous price wars with AMD. I applaud AMD for finally "getting it"...