Yousef, i agree, and it is the biggest problem I have with AMD. There is simply a mismatch between strategy and capability. AMD's strategy is to "provide high quality, cheap CPUs for the masses". They want to be the alternative CPU supplier to Intel. In other words, there strategy, using Porter, is to become high-volume, low-cost, which is basically intel's strategy. I'm not saying that their can't be more than 1 successful high-volume, low-cost leader in an industry (e.g. car industry), but the problem is that the chip-making industry is extremely capital intensive, especially if you want to be volume leader. Another reason why its capital intensive is because the technology is changing very fast (e.g. .35m to .25m to .18, etc.). Bottom line is that in order to pursue AMD's strategy, AMD needs the capital investment needed to possess the capability to produce for the masses, and the BIG PROBLEM for them is that Intel simply wont let them do it (by introducing faster parts and cutting prices). AMD simply does not have the profits to invest in capital, and its going to turn into a downward spiral very soon. AMD has to change their strategy, imo, but it might be to late since they already agreed to buy a new fab. It will be a money-losing proposition. AMD profits and revenues will be limited and it wont matter what metric you use <ggg>. I much prefer Cyrx's startegy of low-cost (e.g. outsource) niche player (sub $500) but that strategy has flaws as well.
Another metric I think is important is the how productive are your 'knowledge resources'. You used labor, which you caould argue is a knowledge resource. Other metrics might be Return on R&D or the number of innovative products/R&D.
joey |
