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Technology Stocks : Advanced Micro Devices - Moderated (AMD) -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (46436)	7/6/2001 4:49:39 PM
From: Win Smith	Read Replies (1) \| Respond to of 275872

Charge the price for an equivalent cpu as Intel? I recall Cyrix trying to do that. You think AMD would be selling as many as 50% of the processors it's selling now if it tried to charge Intel prices? I don't think AMD is losing money selling processors at current prices. By all indications, Intel would lose money if it sold processors at AMD's current prices, or at an equivalent price-performance level.

To: Road Walker who wrote (46436)	7/6/2001 4:56:51 PM
From: Charles R	Respond to of 275872

John, <Gaining market share and losing money is not a sustainable business plan. It's pretty simple, you eventually go broke.> I guess we both share that view. <It's dead end. Why not charge the same price for an equivalent cpu as Intel does? Would AMD then lose all their business, I don't think so, if you do, you don't have much faith in AMD products. Would they lose a few points of share in the short term, probably. In the longer term, would people buy AMD products because they were cheaper, or because they felt they were better? Would Intel have more of a tendency to raise their prices, improving GM's for both companies?> If you are questioning if AMD processors should be priced a discount to Intel, that is a very good question and we can debate it for a long time. The discussion can go two ways: an underdog can either grow market share by marketing better products or by lower prices. AMD, by slipping on new products and having insipid marketing, is choosing the latter. <Going up against a company with 75% +/- market share, and the economies of scale, and marketing dollars that implies, by selling at a significant discount, it just won't work.> Not that "it won't work" but is is extremely difficult to make it work. Large market share makes things very tough for competitors that is precisely the reason why AMD has to win more market share. People here would have been singing a different song at this time had AMD stuck to its roadmap. Unfortunately for AMD longs that didn't happen. <Charge the same as Intel, make a few bucks on each processor, invest the bucks in building brand preference. It takes longer, but it sustainable. > It is not sustainable. Once again, I ask you, think of semiconductor companies that has long term success with a relatively small market share in the segment it competes. The problem is that semiconductor business in general and x86 business in specific is a very high fixed cost business and that dynamic will always favors going for market share (instead of slowly dying in a niche). <Consumers like to buy products from companies that say "buy from me 'cause I'm better", not from companies that say "buy from me 'cause I'm cheaper".> While there is certain merit to that argument the problem for AMD is not consumers. Consumers seem to be having no problem buying AMD based products if you notice. The problem is convincing OEMs to carry AMD bases systems for businesses. AMD's marketing seems to be having a problem changing that mindset. <It's an idea, anyway. Not very original, it's how almost all great companies were built.> IMO, all great companies were built by going for market share. I can't think of too many companies that became big by thinking that they will go after a niche. Can you name some in the technology business? IMO, what you are suggesting is a guaranteed path to nichedom or mediocrity. Chuck