tejek:
"Please tell me how AMD will grow market share when Intel slashes prices every time AMD turns around?"
The formula is: offer products with superior price/performance, a formula that has worked exceedingly well to date. As market share improves, I'd guess that the current discount offered by AMD for its products will eventually close and perhaps at some point even demand a premium as AMD makes inroads into the corporate space.
Intel is sitting on $9 billion and has lines of credit up the wazoo...they can play this game for ever.
INTC, according to Mr. Sanders, has a higher cost structure and consequently this tactic erodes INTC's financials more than AMD's...INTC no longer has the advantage of product continuity in its new products which it has enjoyed over the lifespan of its P3...P4 is a "high risk" new product without infrastructure at the moment and it remains to be seen just how great the market share slippage is for INTC as they attempt to force feed the market with the "unproven" P4...Interestingly, AMD's Athy, after 2 years of proven performance, now owns a much more solid infrastructure than does the "unproven" P4...Gonna be interesting to see how well INTC, who've seem to have put it all on No. 7 with its P4, can compete over the next 2 years...I'm just not as optimistic about P4's future prospects as most, I guess. Now is an opportune time for AMD to gain market share with its "proven" Athy while INTC sputters and stumbles in trying to get its P4 off the ground! Additionally, AMD faces the very real prospect of offsetting "price war" costs with incremental revenues derived from the new spaces recently entered: mobiles and servers...Successful entry into these new spaces improves AMD ASP's while at the same time places additional pressure on INTC margins...INTC faces declining margins owing to price war and new competition in the mobile and server spaces...AMD faces declining margins owing to the price war, but happily for AMD, these declining margins are partially offset by incremental margins in the mobile and server spaces...All in all, INTC is far more at risk financially than is AMD in the current environment, imo! |
