nihil, re: RE: Margins
RE: Profitability
Although I was trying point out that Intel's pricing decisions are very complex, your excellent note adds the wild cards of competition and customer profitability (loyalty) to my simple unit sales v. margin dollars discussion. I wouldn't want to be the Intel marketing guy that had to explain, in detail, why I was recommending a specific price model.
For some reason, your note made me think back to the good old days when Intel had just released the Pentium, and had a much stronger control over their pricing model. At that time, and as Pentium prices *slowly* came down, everybody wanted a Pentium PC. Competition wasn't a large factor, & Intel probably had more power to dictate terms to the the PC manufacturers. The obvious question is could those days return with a quantum leap in technology (Merced?)? Of course many would make the (valid?) argument that increased speed no longer has the same dollar value, when PC's run just fine on current processors.
From your note: "Maximizing the present discounted value of long-term net margin dollars works because nothing is done in the short-run to sacrifice future market share, yet market share is not "bought" by pricing under full cost." I can't get my feeble mind around this sentence (especially "discounted value of long-term net margin dollars"), if you have the time could you simplify?
Thanks,
John |
