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Technology Stocks : Intel Corporation (INTC)
INTC 39.50-3.1%3:59 PM EST
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To: Gary Ng who wrote (44282)1/7/1998 12:02:00 PM
From: Road Walker  Read Replies (2) of 186894
 
All, re: Compaq/AMD

The more I think about the fact that in the new Compaq line, the consumer won't be able to get a Pentium PC below $1200., the more I believe it could be a strategic mistake for Compaq. Part of designing a product mix is to create sales, part is to not LOSE sales. It seems to me that there are customers that are looking for a sub-$1200. PC that also want a Pentium, and the Compaq AMD units will be on the shelf next to PC's at the same price point that have Pentiums. Some of those consumers that are familiar with Intel and Pentiums will undoubtedly buy the AMD units, but certainly some will switch to another brand to buy a Pentium.

Another good question is will the consumer that wants a Compaq and a Pentium step up to a higher priced Compaq computer? I'm sure this is Compaqs thinking, is their brand and Intels brand strong enough to make this happen? If so, then it is a good strategic move as the lost sales to competitors would be offset by the sales of higher margin computers.

As far as the effect on Intel, this decision should lower their potential 1998 revenues and gross profit dollars growth, should raise their overall GM percentage.

Comments welcome,

John
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