Formerly About Advanced Micro Devices Message Board

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Politics : Formerly About Advanced Micro Devices

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To: Paul Engel who wrote (2525)	10/27/1996 11:14:00 PM
From: AK2004	of 1583422

Paul interesting thoughts. I do not agree with anything but I have to admit it is somewhat interesting. 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. they do not need large profit margins all they need is to establish themselfs in the market. Amd shareholders do not expect dividends. On another hand all of the intel shareholder do expect dividends. Intel's profit margin is of the monopoly that is 50%+ and we are not talking of just good profit margins here. 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. I sure hope so that they will aim at low end. Not only low end computers are in larger demand that will also free the manufacturers from intels control and once that would happen you will see compaq inside instead of intel inside again. 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. it is true but do not forget that k6 is the next generation chip. And you are talking about it as if it is still 586. 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. same as before it is a p-pro genration chip 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. the only thing that amd needs to do is to provide an alternative solution. Remember that amd will have a logo that it is compatable to MS and Intel may not. And for most the advantage of intel(x86) vs others is that there is a lot of software out there. But software is associated with MS more than intel. Let us not forget all the manufacturers who are fed up with intel. Regards

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