Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Process Boy who wrote (71048)	9/4/1999 8:02:00 PM
From: Charles R	Read Replies (2) \| Respond to of 1575173

Ten, PB, <<"It's the volumes, stupid!" There's no way AMD can afford to sandbag the numbers when their volumes are so low and demand is so high. Given that they can't produce more than 200K or 300K Athlons this quarter, I'm sure that AMD will find more than that many people who are willing to buy the fastest speed possible, even if it costs hundreds of dollars more.> Exactly. AMD has to generate cash to stay afloat. The notion that AMD is playing some game with clock speeds is ludicrous. They're shipping every thing they make at the highest speed grade they can generate.> What benefit would AMD get by being too far ahead of Intel on speed grades? Whether they are sandbagging or not is a good debate but, assuming they can sandbag, the benefit is in sandbagging. Just think about it - If AMD has K7-700 today, would it price it higher than $800+ tag that they currently have on K7-650? There will come a point in time the answer would be different. For now, if they can, why would AMD not sandbag? I would likt to hear your thoughts. Chuck

To: Process Boy who wrote (71048)	9/4/1999 8:28:00 PM
From: Dan3	Read Replies (2) \| Respond to of 1575173

Re: They're shipping every thing they make at the highest speed grade they can generate... No, it may be counter intuitive, but it is absolutely not the case that they would necessarily maximize income by shipping all processors at the highest speed. Maximizing profitability through market segmentation is a fine and complex art. The slope of the demand curve for CPUs is quite steep. If AMD marketed only 600 and 650 Athlons and were producing equal quantities of each, then in order to get sell through at the highest speed grade they would have to reduce that price to whatever the 50th percentile customer was willing to pay. This is why Intel has long shipped downrated chips. If all of your product is at one speed grade, you must price it low enough to capture the buyer who is willing to pay only a low price. If you were to do that, you would forego the profits that could have come from buyers who are willing to pay more for better performance. This is why you only want a small percentage of chips at the highest speed and many speed grades. Then you capture most of what buyers are willing to pay and don't forego profits. Dan