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

To: Charles R who wrote (113751)	6/1/2000 7:16:00 PM
From: Joe NYC	Read Replies (2) \| Respond to of 1573433

Chuck, Whether you like it or not AMD is routineely downbinning products by 2 to 4 speed grades because consumer market is not willing to pay high ASPs. Let's face it, no amount of MHz lead will help AMD in this space. Need to win the corporate space before the ASP equation can be improved. I don't know how the distribution of people's willingness to spend on a CPU matches the distribution of the binsplits. Most likely, there is not a perfect fit. So some amount of downbinning may be necessary. But I have to question the routine downbinning of products 2 to 4 speed grades. Let's say the center of bin-split distribution (normal distribution) is 900 MHz, and AMD's ASP is $240. Than, I think AMD should sell the 900 MHz for $240. If the downbinning theory is right, we have 900 MHz parts sold as 700 MHz and 800 MHz at say $50 and $100 discounts. But to make up the money lost, 900 MHz part has to be priced at a premium. This premium causes fewer of these chips to be sold at this speed, so the premium has to be high, let's say $150 to $200. The end result is value is destroyed, the chips are crippled, everybody is screwed. AMD's advantage of the ability to deliver higher speed chips is lost, potential to increase market share is lost, the chips that AMD can make in highest quantity are the hardest to sell. This is a good strategy of a monopolist to extract the maximum amount of revenue from the given market, not of an upstart trying to topple the monopolist. What AMD should do is tell Gateway: "You want a 100,000 chips? Ok, here is a 100,000 Athlons, with this speed distribution and our asking price is $250 per CPU. You mark them however you want to mark them (up to the spec) and sell them however you want to sell them." Joe