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Technology Stocks : Advanced Micro Devices - Moderated (AMD)
AMD 215.32-0.2%Dec 30 3:59 PM EST
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To: gvatty who wrote (247756)2/13/2008 6:22:36 PM
From: chipguyRead Replies (3) of 275872
 
Wbmw, the theory exists, but it doesn't work with a monopoly. What you don't understand is that elasticity doesn't matter to a pure monopoly. The monopoly can dictate the demand. The monopoly can make 10,000 units of an item and charge $1 per unit to gross $10,000, or it can make 1,000 units and charge $10 per unit to make the $10,000.

What a load of horse excrement!

Of every 100 processors Intel will sell this quarter perhaps
1 will be from unconditional demand - replace a broken
down PC in the first world. Most of the demand, maybe 70
to 80 processors, are for entirely *discretionary* upgrades
of existing systems in the computer saturated first world
nations. If Intel doesn't offer ever more compelling and cost
effective products the upgrade market sits on its hands and
Intel doesn't sell processors, AMD or no AMD, monopoly
or no monopoly. It is a computer upgrade, not oil or food.
The remaining 20 to 30 are for new PC users mainly in the
developing nations. However these markets are extremely
cost sensitive and again Intel has little pricing power. Folks
in third world countries lived and worked without computers
for a very long time and will easily continue to do so if Intel
could and did choose to price entry level processors out of
their reach.

The idea that without AMD as competition that Intel could
exert monopoly pricing power over the x86 market given
its inherent composition and nature today is delusional
raving. If AMD disappeared tomorrow and Intel doubled its
prices it would sell perhaps 80% less processors and take
a huge hit in revenues and profits (fixed costs, ever heard
of them?)
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