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Politics : Formerly About Advanced Micro Devices
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To: kash johal who wrote (63144)6/24/1999 1:23:00 PM
From: Charles R  Read Replies (4) of 1572638
 
Kash,

<I suspect that days of $500-600 desktop chips will be over soon frankly once K7 volumes exceed 1M/Qtr.>

IMHO, a more accurate way to phrase it might be "the sales volume of $500-600 ASP desktop chips will decrease significantly over time".

About K7 volumes exceeding 1M/qtr - I say the odds are pretty good that that benchmark will be reached in Q3. Let's look at the following:
- AMD produced 6Mu K6s and 10s of Ku of K7s in Q2.
- AMD has over 2Mu K6s for Q3 needs.
- Assume AMD produces 2-3Mu more K6s in Q3. Now, what do you think about how many K7s AMD can produce in Q3?

As of Q3, it appears that the risk has now moved from production to sales. I think the strategy of using low K7 prices (lower than PIII, I mean) was an excellent strategy for the short-term. Systems guys can use part of the cost savings to increase ad spending, "spiff" and other marketing expenses.

IMHO, the answer lies not in the consumer channel but the business side. Will Compaq, Gateway, IBM and HP create enough business SKUs to take advantage of Dell's absence in the high-performance systems range? Dell's systems with PIII-550 and PIII-600, some of them with the super-expensive DRDRAM, will be severely handicapped. This may be a good chance for Dell's competitors to reduce Dell's momentum but it is to be seen if they have the marketing savvy to pull-through.

For the time being, my current #1 concerns is: Can AMD push through 1Mu high-end products in Q3?

Chuck
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