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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Charles Gryba who wrote (160008)	2/24/2002 7:31:48 PM
From: Monica Detwiler	Respond to of 186894

Charles - You asked The question remains. Why sell high-margin Nwoods at 1.6 to 1.9Ghz instead of 2-2.2 Ghz? This is a very basic tenet of business marketing - and I'm surprised the answer isn't obvious to you. The underlying reason is that the market demand for a given product type is greatly skewed to the lower cost products in a given market. Simply, there are more customers for a $120 - $150 CPU than there are for a $450 CPU. To offer only $450 CPUs, Intel would only attract the small number of customers in the price and/or performance bracket willing to pay this price - for a CPU or a PC from an OEM with a $450 CPU inside that PC. For the vast majority of buyers, they don't want to - or can't - pay that much - but they are willing to pay a smaller price and accept a lower performing part. Hence, Intel offers Northwoods with a wide spectrum of price points, in an attempt to maximize their revenue - which would be the sum (sigma) over i of NiPi, where Ni is the number of Processors sold at a price Pi. If all Intel offered were low price processors, they would give up the lucrative high margin, smaller volume end of the market. If all Intel offered were high price processors, they would sell a few but lose all the business at the low price points. And as for Northwood, again, the die size makes the margins greater no matter what the sales price - compared to the larger Willamette die size. Elementary marketing, Charles. Elementary. Monica

To: Charles Gryba who wrote (160008)	2/24/2002 8:28:13 PM
From: wanna_bmw	Respond to of 186894

Constantine, Re: "The question remains. Why sell high-margin Nwoods at 1.6 to 1.9Ghz instead of 2-2.2 Ghz?" I don't pretend I know the answer, but it's clear from multiple people in-the-know here, as well as tests on Northwood headroom from multiple hardware review sites, that Northwood is binning excellently. Therefore, if I were to guess, Intel is probably launching lower frequency Northwood parts in order to satisfy orders from certain customers, primarily those in the channel, where costs are more sensitive. In other words, these customers are asking for low cost chips, so Intel could either lower the cost of their entire CPU line, and give these customers low cost 2.2+GHz chips, or they could downbin those chips to 1.6GHz and 1.8GHz, and sell them at a lower price, while maintaining the premium on the higher speed chips. If I were Intel, I would also do the latter choice. But this is only my theory. wbmw