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

To: graphicsguru who wrote (241451)	9/29/2007 4:45:02 AM
From: aleph0	Read Replies (1) \| Respond to of 275872

Which is why I'm invested long in Intel. Because Intel is now driving AMD out of business the legal way -- with superior products. And if AMD ceases to be an important force in the CPU business, Intel will be worth several times its current valuation. .. and we can be pretty sure that the US FTC & Justice Dept. will still insist it is not a monopoly ! LOL !

To: graphicsguru who wrote (241451)	9/29/2007 1:09:30 PM
From: wbmw	Read Replies (3) \| Respond to of 275872

Re: Hogwash! Why is the OS a larger portion of the price of a PC than its CPU? Very simple: Intel has significant competition from AMD, but MSFT is a monopoly. graphicsguru, I respect many of your posts in areas of graphics and others where you have a lot of experience, but in this case, you simply don't know what you're talking about. Pricing elasticity is about creating demand around products at a specific price point. When you raise those price points, you drastically change the dynamics of the market, and you very quickly lose volumes. To put it in another way, Microsoft is able to continue pricing their OS high, because they have never been forced to LOWER their prices. But you can certainly expect that if Microsoft offered their operating system for $50 long enough to create a market at that price point, and then raised their prices back to $100, they would once again lose a lot of this market. Now, you'll be quick to remind me that people don't have a choice of standard PC operating systems, and that foregoing Windows means to forego a vital piece of the PC. Fair enough for mature markets, but you forget that many of Microsoft's sales come from markets where a $50 increase in PC prices would make the machine unaffordable. Microsoft is also in a unique position, because in the case of Intel, their mature sales are driven by future increases in performance. Without more performance, people don't have a reason to upgrade, and hence sales go down. The same goes for the GPU industry. But if you are in Microsoft's position, you might as well be a monopoly on power supplies. Without them, the PC simply won't function, even if other aspects of the PC (like the performance of the CPU or GPU) are driving the sale. I would therefore say that operating system sales are less elastic than CPU sales, simply because they are a necessity to a PC purchase, rather than a driver for a PC purchase. You can read more on price elasticity on Wikipedia. en.wikipedia.org Re: Why have Intel profits failed to rise in tandem with the overall rise in CPU units? Simple: competition from AMD. Yes, AMD is responsible for some of it, but also expanding into emerging markets requires a larger volumes of low ASP parts, which drives a larger mix towards lower prices. If many of those increased volumes you mention come from low margin pricing that is necessary to penetrate an emerging market, then it's clear why you are seeing limited profit growth. If Intel were to cast aside all their low priced offerings, they'd probably show much higher margins on the remaining parts, which would bump up the average. But at the same time, their volumes would plummet, and the cost per wafer would go up dramatically, thereby decreasing profits. Finding a means to raise ASPs without losing volumes is a very complex art. Without AMD, Intel could probably introduce a new line of high end products at higher price points, but they would have to keep their existing lines growing, too. This might raise the mix of products to these higher price points, but the effect would be slow and take many quarters to accomplish. All the while, Intel would have to continue developing new micro-architectures to give their customers a reason to upgrade. They would not be able to halt or slow their development cycle, as many here have predicted. If they did, the upgrade cycles of mature markets would grow much longer, and Intel's sales would drop. Again, competitor or no competitor, Intel has to move forward. Intel can certainly turn into a harmful monopoly in the absence of AMD, but the law shouldn't preempt this possibility. The law should be designed to stop Intel when they become a harmful monopoly, not if they stand a chance of becoming a harmful monopoly.

To: graphicsguru who wrote (241451)	9/29/2007 10:20:17 PM
From: JoeyBoston	Read Replies (2) \| Respond to of 275872

graphicsguru re:Which is why I'm invested long in Intel. Because Intel is now driving AMD out of business the legal way -- with superior products. And if AMD ceases to be an important force in the CPU business, Intel will be worth several times its current valuation. I'm with you. With Intel executing so well with its "tick-tock" strategy, they have essentially created a "barrier to compete", let alone just a "barrier to entry". I'm surprised analysts and the market have not seen this yet. BTW, how high do you see Intel's stock going? J