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Politics : Formerly About Advanced Micro Devices
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To: AK2004 who wrote (2506)10/27/1996 7:32:00 PM
From: Paul Engel   of 1583469
 
Albert - Re:"Spread you wisdom and don't be shy."

AMD needs to sell lots of these K6 devices at good profit margins to re-coup their investment and prestige as a major player in the x86 arena.

If the K6 is not as powerful as Intel's Klamath or next generation processor, AMD will have to sell the K6 as a low cost Pentium upgrade (since it will fit into a Pentium socket). Their typical customer will be low end, second tier manufacturers. This will reduce volumes and the accompanying economies of scale.

Intel typically will drive down the price of the CPU they want to obsolete, and where competition exists. They will make it very unprofitable (or marginally profitable, at best) for their competitors, while they (Intel) charge a premium for their newest CPU which (as is the assumption of this argument) has no serious technological challenge from their competition.

I am ignoring the argument that a low cost chip from a competitor will prevent Intel from converting the market to their new, higher priced, higher performance CPU. This has never happened in the past - in the 286 to 386 conversion, 386 to 486 conversion, nor the 486 to Pentium conversion.

AMD will have to provide a more powerful solution at a cheaper (than Intel) price. And more powerful will mean more powerful than the Pentium Pro/Klamath chip. This will give tier 1 accounts a good incentive to provide more powerful, cheaper systems (with AMD K6) to their customers.

Otherwise, AMD will be playing Intel's game. And Intel gets to make up - and change - the rules.

Paul
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