Paarl,
Obviously those price cuts will take a huge bite out of margins for both AMD and INTC.
My guess is that INTC gets dinged far more than AMD in a relative sense, owing to increasing server revenues in AMD's mix.
The key in this desperate price cutting move by INTC is whether or not INTC succeeds in its objective of recapturing AMD market share.
Negative earnings impact would seem to be almost factored in already with the large recent price declines in both AMD and INTC.
Too difficult to measure unit share but Revshare is readily available from the financial statements. I'm guessing that AMD sees Revshare increase from Q2's 17.2%, perhaps significantly, thus explaining INTC's PR scramble to divert attention from their existing "financial crisis" evidenced by accelerating deterioration in almost every financial ratio by hyping a currently unavailable product.
In this regard, it's difficult not to be intrigued by Hans' comment posted by ixse this AM:
"In my opinion the performance is largely determined by how
low you can get the memory access. That means: 1) advanced
prefetching. 2) Integrated Memory interface is a big plus
but clearly not enough (which may have surprised AMD)
3) Large Cache is not really needed but continues to provide
and easy advantage for fraudulent benchmarking."
Again: "Note 3: Any Conroe advantages may be attributed to the larger caches which "provide an easy advantage for fraudulent benchmarking"
It is this comment that suggests to me that INTC had better make the most of any Conroe "cache fraudulent" benchmark advantages because it is a matter of a very short time, perhaps, before not only does AMD supercede all Conroe benchmarks with its 65nm offerings but at 50% of the die space required for Conroe because of the huge Conroe caches.
Summarizing, from my vantage point, INTC's financials are deteriorating far more rapidly than at any time in their history. Accordingly, INTC has chosen the only remaining avenue to it, price war, in hopes that their deep pockets can outlast AMD's, because if AMD gets to 25% marketshare, the INTC status quo will have to be turned upside down.
Will INTC succeed in beating back AMD? I doubt it because AMD has the vision, something sorely lacking at INTC over the past 5 years. I suspect that AMD ecosystem players will provide AMD with a decently long leash in order for AMD to show its wares at 65nm, especially the innovative co-processor initiative and the new mobile core.
INTC had to come up with a plan to slow AMD's accelerating momentum. hence the combination of humongous price cuts and the "fraudulently benchmarked" large cache Conroe.
I suspect that when AMD counters Conroe, INTC will need to quadruple their current 2MB, 4MB and 8MB caches to 64MB ;-) and consequently build several more fabs and get to 45nm real fast in effort to get more than half a dozen output candidates per wafer.
If I'm anywhere close in my perspective outlined above, INTC's existing price cuts and "fraudulently benchmarked" large cache Conroe vapour launch, will at best, only forestall the inevitable duopoly that will surface by 2008 at the latest.
What a wonderful world a duopoly will entail with "real" and "legal" competition and with customer needs in the forefront...and the memory of the era of INTC monopoly and illegal tactics just a bad dream. |
