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To: fastpathguru who wrote (241888)	10/5/2007 12:32:38 PM
From: Tenchusatsu	Read Replies (3) \| Respond to of 275872

FPG, I stopped reading your post after the "gun to the head" nonsense. Seems like when AMD was able to compete, companies such as HP and Dell were able to dump the Intel rebates because they figured having AMD in their lineup was worth it. It was as easy as hitting the red Easy button from Staples. Tenchusatsu

To: fastpathguru who wrote (241888)	10/5/2007 12:48:26 PM
From: Petz	Respond to of 275872

Excellent post. Did you look at the much milder first dollar rebates to travel agents contested in Virgin Atlantic vs. British Air? The US court allowed them while the EU did not. I think the reasoning behind the US court decision was that 75% of airline tickets are purchased without travel agents, but I haven't found any description or analysis of the US decision, only the EU one. Petz

To: fastpathguru who wrote (241888)	10/5/2007 1:17:42 PM
From: Rink	Respond to of 275872

Excellent reply to Tench (eom)

To: fastpathguru who wrote (241888)	10/5/2007 2:11:11 PM
From: wbmw	Read Replies (1) \| Respond to of 275872

FPG, honest question here: I like the way you summed that up, and I don't know if Intel is guilty of using that pricing method today, but if they are, then it certainly meets your conclusions at the bottom. That makes it a very self-serving pricing situation, but my question is whether it's illegal under the law today. If it's illegal, and Intel does it, and Intel knows about it (presumably), then they would have to be fined for willfully violating the law. If it's not illegal, and it should be, then perhaps the result of the anti-trust investigation is to make it illegal, thereby forcing Intel to stop. If they don't, then you can certainly conclude that Intel's pricing is not beneficial to the vendor or the consumer, but there's nothing to stop them from finding a pricing structure that maximizes their profits. Lastly, if Intel is not participating in this kind of pricing scheme, then this whole debate is moot. I'd like to understand a few more specifics, then, about this theory of yours (again, nice post).

To: fastpathguru who wrote (241888)	10/5/2007 4:34:10 PM
From: fastpathguru	Respond to of 275872

Reposted without offending comment, just for Tenchu... T: Eco, that was a very long-winded self-contradicting argument you just posted. Rebates represent volume discounts, a practice that is common in any business or industry. They effectively LOWER ASPs. You are trying to have it both ways, by arguing that Intel enjoyed the market power of lower ASPs while earning the benefits of higher ASPs. You are demonstrating your lack of comprehension. You CAN have it both ways; By guaranteeing a certain volume by offering a rebate on the last few percent of processors, you can increase your ASP. For the truly thick-headed who still can't figure this out: (Each number represents a single widget's price) Option A) 9.0 + 9.0 + 9.0 + 9.0 + 9.0 + 9.0 + 9.0 + 9.0 + 9.0 + 0 Option B) 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 In each case, the OEM pays for 9 units, but in Option A, actually receives 10 units; That's good for the OEM[edited], but has no effect on the end consumer because the ASP is the same. Now, let's say Company X knows that the OWM needs 10 units, and Company Y can't supply more than a few units to this OEM because of their lower capacity. By offering parts at $9/unit and a 100% rebate on the last unit (or it could be structured as a per-unit "first dollar" rebate with the exact same effect), i.e. option A, Company X creates a very strong incentive (i.e. a [CENSORED]) to the OEM to purchase all 10 units from them. Otherwise, they're looking at this scenario: (Let's say Company Y sells units at $7/per, underlined) A) 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 7 = 10 units, $8.8/unit B) 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 7 + 7 = 10 units, $8.6/unit Or even if customer y sells at $1/unit: C) 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 1 = 10 units, $8.2/unit vs., with first-dollar rebate, D) 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 9 + 0 = 10 units, $8.1/unit Notice, the 10th unit for Company X is literally (or effectively if structured as a first-dollar rebate) sold below cost... For free, in fact. By not achieving the rebate trigger, the OEM would have to take widgets at $0/unit from Customer Y if they don't want to increase their costs. Now if Company X were to just accept $8.1/unit across the board but without the rebate trigger: E) 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 7 = 10 units, $7.99/unit HEY! That looks good for OEM AND the consumer, better than all the other cases listed above, in fact! And even better for the OEM and consumer: F) 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 7 + 7 = 10 units, $7.88/unit And so on: G) 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 8.1 + 7 + 7 + 7 = 10 units, $7.77/unit Hell, without that rebate trigger, the OEM has an incentive to buy all the Company Y widgets it can, to better compete with other OEMs through lower costs! So, with a 90% trigger on the a "rebate," Company X leverages its position as dominant supplier to A) increase, not decrease, its bottom line, while B) extorting OEMS even while lowering their margins, while C) excluding competition, and while D) harming the consumer[edited]! I.e. your argument is HOSED. QED. fpg