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To: saukriver who wrote (36359)	12/10/2000 9:38:44 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 54805

>> Automobiles have a high selling price, but they are nevertheless a commodity. My impression is that commodity offerings are not feature differentiated, like sugar or paper bags, and while that might apply to low end autos, it wouldn't include Ferraris Lexus's, or Lincoln Navigators. Using similar logic, or lack of same, I wouldn't judge upper end microprocessors to be commodities. uf

To: saukriver who wrote (36359)	12/10/2000 10:13:37 PM
From: EnricoPalazzo	Respond to of 54805

To tell whether or not an item is a commodity, don't look at its price, but rather its price relative to its cost. In other words, look at the margins a firm gets on the item. If microprocessors were mostly commodities, we'd expect fierce competition amongst producers, causing margins to fall near zero. I don't know Intel's margins, but they're pretty high. I believe that AMD's margins are pretty low, because they produce commodity knock-offs of Intel's differentiated product (think generic Sodas vs. Coke). Plus, their costs are high since Intel always keeps them off balance (imagine if Coca Cola could instantly cause Grape Soda to be the industry standard, causing the generic producers to revamp their factories). Tinkershaw's recent much-lauded post is an excellent example of this. I believe TFM has some others. ardethan@recentconverttoINTCisGorillacrowd.NET