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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Kevin K. Spurway who wrote (64827)	7/12/1999 1:01:00 AM
From: Process Boy	Respond to of 1579983

Kevin - <It may or may not come back to bite them in the *ss. The next twelve months will tell.> I don't believe it will, because I disagree with the following statement: <It's quite possible that Intel is even selling chips below the total (not average or marginal) cost of production.> I don't think so. That's all I can say. Maybe Andy Bryant will have more to say on Intel's continuing efforts in the cost cutting arena on Tuesday. Anyway, one of your better posts dude, IMHO, even though I disagree with the premise. PB

To: Kevin K. Spurway who wrote (64827)	7/12/1999 6:50:00 AM
From: Fred Fahmy	Read Replies (3) \| Respond to of 1579983

<Intel sets the prices in this market. Practically speaking, it's pretty simple. AMD can ONLY sell K6 chips at some discount to Intl> What discount is the key. It was AMD who chose to set this gap at a ridiculous 25% and accelerate their losses. AMD's approach in tackling a market leader was simply a poor strategy, not the only strategy. I work for a tech company that is in the same relative position as AMD vs. INTC. The leader in our industry has about 90% market share and we are a fraction of the size of our competitor. Just like AMD we had no brand awareness whatsoever and just like AMD we had no resources to advertise on TV. If we had tried to gain acceptance by pricing 25% below them, we would have been crushed by red ink just like AMD. Instead we priced much more competitively, offering only a small discount and good value. We focused on certain vertical markets and became very successful with those customers by having innovative products. As our acceptance grew we expanded into more vertical markets and we grew with the industry. We are now taking market share away from the leader (in small steps) with equivalent pricing (albeit better value since we offer excellent innovative features) and we have gained much wider acceptance. We still don't advertise on TV. The bottom line of our strategy (in contrast to AMD) is that we have been very successful from both a financial and stock perspective. Our EPS has gone up steadily (1994=-.23, 1995=.32, 1996=.84, 1997=1.08, 1998=1.70, 1999est=2.58). Our revenue has nearly doubled. Our stock has gone up 6.5x in less than 6 years . So you see, strategy can make all the difference in world. Unfortunately, for the three years I have followed these threads, I have noticed that most (not all) AMD fans only want to talk about benchmarks and ignore the reality of Jerry's misguided approach to marketing and sales. They assume that this was the only approach and that everything bad that happened was/is Intel's fault. AMD products are not what held back AMD. They have always had decent competitive products in certain segments (not all segments). Instead of taking a more reasonable low key approach, which starts by growing with the industry (afterall Intel has been growing nicely without increasing market share for years), they went up to an 800lb gorilla and said "want to fight, we're going to kick your butt". Not a very good strategy and the results speak for themselves. FF