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Technology Stocks : Intel Corporation (INTC)
INTC 34.73+1.2%12:59 PM EST
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To: Bill Jackson who wrote (63133)8/23/1998 6:53:00 AM
From: Fred Fahmy  Read Replies (2) of 186894
 
Bill,

<If Intel had kept prices higher AMD and Cyrix would be making profits and the market share would have been the same.>

I guess this is the old chicken and the egg scenario. It could easily be argued that it has been AMD's steadfast and suicidal strategy of staying 25% cheaper than Intel (at any cost) that has nearly destroyed AMD. I know from experience that you don't take an industry giant head-on. This is a sure recipe for failure.

The company I work for is in the exact same position as AMD going up against a market giant/leader which has huge (not unlike Intel) market share, tremendous resources, and strong brand recognition in our industry. Had we pursued a policy of remaining 25% cheaper than them, we would have been destroyed. Instead we marketed value and focused on specific segments (vertical markets) to gain a few percentage points here an there. We nibbled on the edges. Our pricing only needed to be slightly below the leader to capture attention. Our technical strength together with our strong management leadership has allowed us to flourish financially and gain acceptance in the market place. We now command prices very near if not on top of the leader and we continue to nibble away at market share. In the process our stock has gone up 4x over the past 3 years. AMD's task was not impossible, it was just impossible with Jerry at the helm.

There are ways to deal with an industry titan which has more resources than you. AMD's approach is not one of those ways. Jerry's leadership has been a disaster for all AMD investors and I see no signs that this is going to change soon.

FF
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