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

To: pgerassi who wrote (247699)	2/13/2008 2:47:11 PM
From: wbmw	Read Replies (2) \| Respond to of 275872

Re: Intel used to get $230 ASP in 1997. Heck Intel CPU ASP didn't drop below $200 until 2001. What is it now? $130 or so? What would a CPU ASP rise to $230 do? Add $100 for each CPU Intel sells. They would sell over 60 million of them, if AMD wasn't around. Add $6 billion to both revenue and gross profit for Q4/2007 and you get GMs of 70.2%. That's a 20% GM rise on ASP alone. Sounds great, Pete, but I don't see it happening. Price elasticity means that Intel has limited means of raising ASPs, and they can only do it with breakthrough products. Perhaps if AMD is still standing still when they launch Nehalem, they can demand higher ASPs. Penryn is doing its job as a more cost effective die with slightly better performance and lower power dissipation, at the same price points. Since AMD has been kind enough to stand still in terms of competitiveness over the past year, Intel's product line looks like a screaming hot deal. And indeed, the rest of the enthusiast community outside of a few AMD fanboy forums seems to be praising Intel for the value of their products. That counts for something, primarily mindshare and perceived leadership. When AMD finally gets around to ramping K10 products across the product segments at competitive frequencies, I would expect Penryn pricing to be regarded as simply reasonable. That doesn't leave much room for making major inroads with pricing. But with Nehalem coming and AMD already uncompetitive with K10, there are opportunities to add more high end segments. You can't take away segments, because theoretically, AMD could continue to sell Athlon X2 and Phenom, which would compete against the mid-section of Intel's product line. But as long as Intel outperforms AMD's high end by a certain amount, consumers may be willing to spend more to get more. I think 70% GMs may be possible over a few years of work, Pete, but Intel would need to add significant value to get there. AMD can help by continuing on their current path of execution. Intel wouldn't have gotten this far without AMD's implicit assistance.