If AMD is forced out of the CPU business, it will be terrible for the semi industry, actually. No one will push Intel to make faster chips, and prices for CPUs will firm, ending the sub-$500 computer. This would dramatically decrease sales for all sorts of semiconductors, and especially for DRAM.
I would prefer to see AMD and Cyrix continue to offer great alternatives to Intel and IBM. But to be able to do so they need to be able to get a profitable price for their product. My point is that prices are too low, and the fact that manufacturers are feeling the squeeze proves it. With Cyrix gone, that makes one less source of CPUs that are being sold below cost, which may allow the remaining players to keep their prices above cost while they split the pie three ways.
Competition is great, as long as each competitor covers its costs. The sale of any part below actual fully-loaded cost is a destructive and ruinous tactic. The whole industry ultimately suffers. Competition is strangled, not enhanced, by prices that are too low; exactly what we have just seen with Cyrix.
Margins can be squeezed to gain market share, but any company that allows them to go negative should be severely reprimanded in the markets (both the capital markets and the actual marketplace) to limit this temptation. There are many ways to gain market share other than price. Look at Apple: they are one example of how market share can be cultivated without always low-balling the price; I'm not saying they did/do everything right, only that their prices have always been higher yet they figure a way to get market share.
Two things truly amaze me at the close of the twentieth century: our amazing tolerance for buggy software, and our amazing tolerance for money-losing stocks.
Land_Lubber |
