>Now I ask, who can argue with this logic?<
It is not logic, it is a fact. Jack Tremiel made it quite clear that Commodore was in a price war with TI even as the Commodore 64 was priced higher than the TI 99/4A.
This price war was triggered by TI's actions years ago. Back in the early 70's, the demand for processors to go in calculators outstripped supply, resulting in backorders of several months. Calculator manufacturers, including Commodore, responded by increasing their orders to insure more timely supplies as shortages continued. Eventually, TI shipped the backordered processors at the original order price, just as they entered the market with their own line of calculators priced less than they charged for the processors in Commodore's calculators.
Jack Tramiel made it quite clear that the Commodore 64 was payback time for TI. Eventually, he was forced to resign as CEO because of the perception that he was more interested in crushing TI than optimizing profits from the Commodore 64.
In the case of the Commodore 64 price war, what defined it as a price war was not that Jack was sacrificing profits for market share. Commodore actually had record profits during this period. It was that he was willing to sacrifice potential profits to inflict losses on a competitor.
If AMD slashes their ASP by 10% to realize a 20% increase in unit sales, this is not a price war action, because AMD is increasing revenues. If Intel slashes their ASP by 10% in order to avoid a 5% loss in unit sales, this is a price war action, because Intel is sacrificing profits to retain market share. |
