<< The issue is relative. Intel screwed up, by any measure, in 1999. They opened the door, and AMD had the good fortune to have the right product at the right time. Those set of circumstances might not repeat. >>
What did Intel screw up? The capacity issue is a phantom. They had just moved to .18 when they hit this supply crunch. On the .18 move they should have nearly doubled capacity alone, and yet they could make only the same number of parts as they did before.
It's quite obvious that they didn't have capacity issues but had bin split problems, and the only reason they had bin split problems is because AMD raised the bar from 500 mhz to 1 ghz in 8 months instead of 18 months.
What you call Intel's screw up, I call AMD's success, they forced Intel to try to double the speed of their new mhz introduction, and Intel couldn't keep up, now we can get into symantic debate about whether AMD did a good job or Intel did a bad job, but the fact is Intel would have executed their original roadmap just fine if it weren't for AMD.
Either way, if AMD has a superior product and a superior price like they did with the Athlon, then they can easily force the same set of circumstances on Intel again. It's not a given that they will ever have a superior product though, especially with the newest schedule slips with the hammer.
<< If the market recovers, certainly AMD will do better. But to always play the game of the discount microprocessor, to have that as a long range plan, I don't believe it's a company I would want to have in my long term portfolio. >>
For the most part, ASP's were growing, and market share was expanding until AMD started to lose it's technological lead. If we look at their success pre-p4 though, they were doing outstanding in pretty much all aspects. Then the p4 hit, and they lost the mhz advantage, the price wars started, and the industry went into the toliet at the same time. When they have a clearer technological advantage though, I think they can raise ASP's and market share at the same time.
To me, it's simply a technology question, if AMD has better technology then Intel I'd continue to invest. I pulled out because I'm not convinced they will have better technology over the next year since they dont' seem to be sticking to their roadmap, and Intel is starting to pull way ahead in mhz just like AMD did a year ago.
There is the question of the willingness for people to pay a premium for better technology. It might not be there in the future if software never catches up, but I'd probably guess the company with the best cpu tech will win, since it seems like it's generally worked out that way over the period of time I've watched.
<< The companies that are respected, and earn good PE ratios, are those that can get a premium for their brand equity. I was doing a mental exercise, trying to figure a way that AMD could start to move towards pricing parity with Intel. >>
Great idea, AMD does need to figure out a way to get pricing parity with Intel, and I think for AMD to do this, they need market share. To get market share, they either need a substantially better product, or a substantially better price. If they want to raise prices later, they better hope they gain their share the first way and not the second. When Athlon first came out it was clear they were gaining share with the first method (mostly revenue share and not unit share), now it's clear they're trying the second method, and they're gaining unit share not revenue share. We can see which method was more beneficial to the stock. |
