Albert, your analysis is seriously flawed. You assume that
there is no "switching" costs between Intel products and AMD
products, while in reality, there are huge risks and costs for an OEM
to switch from Intel to AMD (e.g. will consumers or businesses
want an AMD chip inside instead of an Intel inside, poor track
record for AMD, etc.). The answer to these question could be 'yes',
but the risks that a major OEM takes to find out are enormous.
Also, you totally ignore the "stranglehold" that Intel has over
OEMs because of the strong demand for "high-end" chips, and the
resulting priority which Intel gives to the major OEMs for certain
chips. Also, Intel has many "partnerships" with the major OEMs,
which will not be jeopardized because of switch to a another vendor.
Your arguement is based on the assumption that since AMD
can produce 30M chips a year by 1998, then this is the demise
of Intel's monopoly. Well, I totally disagree because of the
switching costs as described above. I also don't buy the
performance arguement of K6/M2. If they do outperform Pentium II,
it has to be very significant 25-30% in order to make a difference.
Also, any perf. advantages will be temporary.
You also say that Intel cannot maintain margins by losing
market share. Well, that's not true either. You totally
ignore economies of scale, product shifts to higher chips/margins,
market increasing so much that demand outstrips supply, etc.
It will be interesting to see if AMD has any major OEMs lined
up for K6 in April. If they don't, I think the stock will go
down.
regards,
joey |
