Noticed a lot of AMD in this morning's flyers, including some great deals on Turion notebooks at $599 and $799. Think they have finally started to take lots of notebook share. That should be really good for earnings this quarter and next. I think the market is completely missing how AMD is transitioning into the high margin part of the processor market. Its funny, they seemed perfectly willing to (correctly) dismiss AMD dominance of gaming machines as more about bragging rights than revenues, but now focus on that market like its the whole ballgame. It has long been true that while the FX chips are expensive and get a lot of attention, the volume is ridiculously low (10s of thousands), and the margins on most desktop chips are terrible. That is one reason why AMD which is really dominating the consumer desktop still has ASPs about 70% of Intel.
The big money is in mainstream notebooks where essentially the same chips get a 50% premium on pretty serious volume. I think this will be the surprise from AMD for the next few quarters, the impact on margins of growing notebook share. It makes a huge difference if they trade a Sempron sale at $45 for a Turion sale at $85-100. I think it also accounts for the trouble at Intel. They have had a cash cow with Centrino selling at $200-500 in huge volume, which more than makes up for any share loss in the much lower volume but even higher margin performance and server sectors.
I think Core Duo is actually a problem for Intel because it is such a small volume high dollar product, but it instantly relegates single core Centrino to second class, and as such makes it at best a direct competitor for Turion, and since Turion is 64bit and Vista ready (and cheaper), maybe not even that. If Intel could move 60% of the notebook market to dual core, that would be OK, but it looks to be a pretty niche product for now, so they seem to be positioning AMD to take the sweet center of the notebook revenue stream until Merom ships. Thank you very much.
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