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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 236.05-7.8%11:23 AM EST
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To: economaniack who wrote (219840)12/10/2006 4:11:03 AM
From: TenchusatsuRead Replies (1) of 275872
 
Economaniack, > Tench, a natural monopoly is characterized by decreasing average cost across the range of economically significant sales. There may also be significant barriers to entry. The result is that the lowest cost solution is for one producer to serve the market hence "natural monopoly".

Sorry, but economies of scale do not lend themselves to "natural monopolies." That's hogwash.

Significant barriers to entry do, but then that would suggest that hardware lends itself more to a natural monopoly than software. After all, you don't need to invest in a multi-billion-dollar fab (or make a contract with a multi-billion-dollar foundry) in order to write software.

Hardware certainly has high barriers to entry, fabs, processing expertise, design expertise and patents among them, but the efficient scale is closer to AMDs size than Intel's. At 30% or so of the market most of the cost of an AMD die is production cost, which is scaling more or less linearly.

More hogwash. AMD doesn't have 30% of the market yet. Intel still has greater than 70% of the market. According to your logic, that would suggest that Intel has the greater efficiencies of scale.

> "What's the hardware analog to Linux and Firefox?" AMD of course.

You mean I can get AMD processors for free? And all I have to do is download them over the Internet?

Tenchusatsu
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