>re:"Look what AMD has already done to the price of PC's and Intel chips!"
Yes, and look at what AMD has done to AMD ! Their sales, in dollars per quarter are declining, their losses are increasing, their long term debt was downgraded yesterday to BBB- (I think that meets Mike M's criteria for a junk bond), and their own CFO has said that they face the possibility of running out of cash in the second quarter. That is some record of accomplishment for Jerry !
AMD is guilty of what I consider to be one of the most stupid strategies in the history of business. Look, an inefficient, cash starved company with less than a 10% market share cannot afford to compete with the undisputed low-cost producer with an 80% market share based on price. Oh, Jerry has been successful beyond his wildest dreams; the processors that he can't make enough of are selling for one-half to one-third of what they were going for a year ago, while his costs are higher than he ever anticipated. Now that is some way to make money and REALLY damage Intel.
As for my opinion that an IBM acquisition is a possibility (for which, I might add and am amazed, I now have the dubious honor of having been regarded as an AMD booster !):
I do believe that it is very possible, as are many other scenarios, including an IBM investment in AMD, or AMD just plain going belly up (and, presumably if this were to happen, SOMEONE would buy the rights to the K-6 family designs). As far as IBM is concerned, however, while an acquisition is a POSSIBILITY (and only that), of this I am certain: There is no way that IBM can lose. If AMD merely survives as an Intel competitor and lowers CPU prices, IBM wins. If AMD uses IBM to FAB K-6's, IBM wins. If IBM buys AMD, then IBM would feel that they had won (they wouldn't make the acquisition otherwise, although the ACTUAL wisdom of such a move would not be apparent for a year or more); similarly, if AMD goes belly up and IBM buys the design, again (and following the same logic), IBM wins.
So, as I see it, while the outcome is uncertain for almost everyone else (AMD and Intel included), this appears to be a "can't lose" situation for IBM (although they could make a purchase that might turn out to clearly have been a mistake with the benefit of a couple of years worth of hindsight).
As for socket 7 and K-6, personally, regardless of how things look right now, I think it's doomed within less than a year. At 233 MHz, the technical reasons for slot 1 over a 100 MHz socket 7 are unclear and marginal, but we are going to 400 MHz plus real soon now. As processor speeds increase, the technical benefits of slot 1 in terms of cache efficiency will become more evident. Also, architecture aside, I simply don't feel that AMD is going to be able to keep up with either Intel's processor speeds or Intel's Pentium processor roadmap, much less Merced. So, in the end, I think that the K-6 line is doomed unless more resources can be put into it than AMD has left. IBM, however, has no shortage of resources, if IBM makes a strategic decision and a financial committment to acquire AMD and to go after Intel and the reclaimation of the processor business with everything that they have got. To succeed, however, this would have to be a true strategic decision with a ton of committment behind it. If they do this halfheartedly or with a tactical perspective, it will be a disaster.
Barry Watzman |
