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

To: Gopher Broke who wrote (122751)	8/22/2000 7:58:46 AM
From: Road Walker	Read Replies (2) \| Respond to of 1577906

GB, re: "What percentage of the system price is a $1000 CPU?" I didn't think AMD had $1000 cpu's? But the retail on on a PC with a $1000 cpu would probably be about $3500, so the percent of retail would probably be about 28%. Remember, they don't put Porsche engines in Yugo's, the other components will be more expensive as well, more RAM, bigger hard drive, better graphics card, etc. Plus a manufacturer and then the retailer will take a higher gross margin on a high end product. And each and every cpu that goes out the door has to support a lot of fixed cost that don't appear in gross margins. Salaries, buildings, insurance, paper clips, tons of fixed costs that go up as a percentage of sales, as the selling price declines. AMD is in the enviable position of a product transition that is raising their overall asp's, by eliminating the low end. Once the low end is gone, so are the increasing asp's, and going forward prices become a more delicate issue. John