Re: are you saying that intel started the price war?
No, AMD.
I don't mean to be quite so aggressive about all this, but I don't expect the glory days of a significant portion of buyers routinely paying $250 to $500 for a CPU to return - ever. And I think that AMD is better positioned for such an environment than Intel is. Intel has been spending more than 10 times what AMD has been spending in order to supply 3 times the market. I don't think they're ever going to get back what they're spending now.
I thought Rambus was a horrible mistake on Intel's part, and I think their current spending binge is using up the cash cushion it took them decades to build.
As far as the server market being a huge new source of revenues - the reason Data General and DEC and Unisys and now Compaq have all thrown in the towel after losing billions is that commodity servers, heretofor Intel's part of the server market, become the preferred solution for more and more server applications as time goes by.
Now Intel wants the glory of making big iron, but they'll probably also get the losses that have almost always gone together with making those products. Here's how SUN, IBM, and Compaq make money:
store.sun.com
They list an 18 gig SUN drive for $1,200 and a 36 gig SUN drive for $1,700. They buy them from seagate for $200 and $350 and add a $75 case. Then they offer them at the fabulous discount of 40% off, including 1 year's maintenence FREE! Maintenance is usually (about) 12% of the cost of the drive. So first they sell the drive for either $720 or $1,020 for netting themselves $345 or $595, then, after the first year, they get you to pony up another $144 or $204 each year for maintenance. SUN makes lots of money this way, even during a quarter when sales of new machines are down.
But seagate doesn't make much.
If Intel can get everybody to buy lots of $4,000 Itaniums, they'll do fine. But it's much, much more likely (IMHO) that Compaq etc, will buy far more P4 Xeons at $500 (or AthlonMPs at $300, if Intel tries to do a Rambus style force move on the market) and Intel will have enormous development costs for a relatively few Itanium units - and end up losing money like everyone else has in that business for the last 20 years.
IBM and SUN make money on these systems, but on the peripherals, support contracts, etc. - the chips are loss leaders.
Dan |
