Re: how can a 20% player dictate ASPs to an 80% player
It can't. But Intel, on its own, can decide to lower prices below what it would otherwise do in order to try to deprive AMD of revenue. Trouble is, as the volume leader, every $1 dollar revenue decrease at AMD is gained at the cost of $4 dollars at Intel. But Intel can afford it. They could just leave their plans as they were prior to the advent of the Athlon, and allow AMD to have ASPs equal to Intel's, but they've chosen to deny AMD market share - and with overall markets not doing well, it may be their best move.
To a degree, both companies have "osborned" themselves. Intel's customers are waiting for SDRAM or DDR P4s, and AMD customers are waiting for 266DDR Athlons. AMD should be out of that hole early next quarter while Intel will take quite a bit longer.
The other reason AMD affects Intel is that the rate at which the actual value of Intel plant is depreciated is increased. When AMD opened Dresden, the value of 4 of Intel's .25 FABs was cut drastically. If not for Dresden, those FABs would have remained state of the art revenue generators for several more years. Instead, Intel has been forced to invest an extra $6 Billion in its FABs to accelerate the openings of planned FABs.
I'm not sure that I'm stating this very well, but IMHO what AMD did was to jump the competitive environment faced by Intel forward by at least a year, with the result that the trailing year's worth of capacity suddenly became worthless (for CPUs).
If IDC is right, and PC growth will be back to near 20% next year, both companies should do well. But in that case, Intel ASPs would fall less quickly, while AMD ASPs would rise substantially.
Just one view, and through AMD colored glasses.
Dan |
