Steve Porter, re: "They (AMD) cut the snot out of pricing."
Well, that's one scenario. When I said I didn't think Intel was playing the makers game here's what I meant.
Imagine that 18 months ago Compaq, etc. went to Intel and said "There is a huge untapped W/W market for PC's selling in the $1K range. If you can provide chips for this market we can sell a ton". Imagine that Intel say's "That doesn't fit our business model, it will have too much impact on earnings and margins. And besides, we own the market and people will buy what we build! Historically the competition has always been behind our curve, and we don't see them participating any better than they have in the past".
Could this have been a strategic marketing error?
Suppose instead that Intel had said, (and this is all supposition), "OK, we'll introduce a family of chips targeted for this segment, or reprice chips for that market." Don't you think the makers would have preferred to go with that? After all, "Intel Inside" is a powerful marketing tool. (Building product with Cyrix/AMD was probably a risky decision). But I think they didn't say that, and Cyrix/AMD found platforms that provided the recognition their brand alone couldn't.
Once it was obvious that this was a very large market, I think Intel responded with Covington in what I consider a "knee jerk" reaction. The two flavors of Mendocino will be better solutions, but I think the damage is done. AMD got the support and exposure they needed from top tier vendors, and they're now a well known supplier to the consumer PC market.
The result of all this appears to be that Intel must bring all products down a much steeper learning curve at more frequent intervals. And I think earnings and margins are probably worse than if they had (hypothetically) responded with lower prices back then.
Just my opinions. |
