Fyo,
re: Wouldn't you agree that if Intel promised to give Dell $5 worth of advertising, they could get $14 dollars for their $10 dollar CPU?
Your example assumes co-op funds are 33% of purchases, I assure you they are not. Generally, you are looking at anything from 2% up to 10%. My WAG is that Intel has a 5% "co-op" program.
On paper, you would assume that all of the advertising $'s are justified in the OEM pricing. In practice, almost every vendor has an ad allowance. My bet would be that AMD pays co-op funds, probably the same percent of purchases as Intel. On occasion, a vendor will give a "net net" price, usually very low, that doesn't include all the "extras" like advertising. AMD may be doing that. But suggesting that co-op advertising funds are an Intel plot to exclude competition is ludicrous. If you sell a consumer branded product, you have advertising funds, it's just the way it works.
What it's worth, I don't know. What if you didn't see the Intel logo on all those PC's, the Intel notes and logo on TV ads, the Intel logo in all those newspaper ads? In sum, what's all that worth in brand recognition? Is it worth 5% (deductable) of revenues?
John |
