John,
That's the type of stuff they need to do. Very good, better than my idea.
But to do it, they probably need to get more for the products.
It's a hard transition, when you walk into a OEM and can't give them the price they want. The OEM is used to selling AMD products for a discount, that's the differentiation. Now the AMD salesguy walks in and says "We are doing a bunch of advertising, so we are raising our relative prices, and you can raise your prices". The OEM has two words, and they start with B and S. "Give me my price break or I use the competition. Price is why people buy AMD".
My guess is the only way AMD can get out of the discount merchandise cycle is to bite the bullet and fund the advertising, without the supporting gross margins. It's a gamble, if sales pick up, if the consumer buy's it and shows a preference for AMD, they can go back to the OEM's from a more powerful position, and probably get a better relative price.
I still believe that AMD needs to give up some share in order to get some pricing power. It's really hard. I remember, years ago as a sales manager for a small company, sitting in meetings when the economy got rough. The President of the company would say "if we don't get some sales NOW, we are going to have to lay off Joe and Harry and Mary and Pete...". These were all folks I knew, people that worked hard in the factory. It was a different sense of urgency. What I'm saying is that it's hard to give up sales, even if it's in the long term best interest of the company.
Rambling,
John |
