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Politics : Formerly About Advanced Micro Devices
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To: Elmer who wrote (49052)2/9/1999 6:09:00 PM
From: RDM   of 1581816
 
Elmer,

I believe that Intel actions have clearly stated by Intel to be use the Celeron to gain market share against AMD. THey are simply floating a product at a higher price than AMD but undercutting AMD pricing at large OEMS.

This is what a price war is.

Intel can make large profits at the same time as doing this price war/reduction. They have other products to cover the overhead. Celerons are 10% of their revenue. Even if they gave them away free it would only reduce their profit by a small amount (perhaps 25%). The real threat to Intel is if the Celeron suddenly becomes a much large percentage of their business. Then the low margin of the Celeron would be more material.

It is very difficult to ensure that Intel Pentium customers will stay
with Pentium as opposed to switched to the Celeron. Intels Celerons actions are making value a central buying propositon on a bigger scale than AMD ever did because they are bigger and greater reach.

I hope you are right that the $15 hit in Intel is just temporary and due "normal trading factors". However, I am concerned that the market may been better than anyone in sensing the pending consequences of Intel's managed plan to "retake the low end" and is in the process of repricing appropriately downward.
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