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

To: pgerassi who wrote (247835)	2/15/2008 12:31:32 AM
From: wbmw	Read Replies (1) \| Respond to of 275872

Re: Try telling that to a user who needs access to the DB to do his/her job! The user already has a computer, Pete. Weren't you listening to my premise, or were you too busy pontificating? That's why the market is elastic - because there is a healthy installed base of PCs in the developed world. If Intel were to raise their prices, not everyone would pay more. Many would just keep the PCs they already have. Moving the upgrade cycle from 3-4 years to the time they break down would have a tremendous impact to Intel's revenues. Re: Lets look at the past history. Intel cuts their price by 50% on their desktop CPUs on July 22, 2007 (early Q3/07). Do they sell twice as many CPUs? Lets look at how many they sold in Q3 versus Q2 using Mercury. Intel desktop market share gained 1% from 72% to 73% on flat desktop shipments. Thus cutting prices 50% didn't add much to demand, just 1.4%. 0.50/0.014 = 36. Thus to double demand prices would have to shrink to 1/36 of current prices. That is quite inelastic. Boy, let's dissect this one, shall we? First, Intel didn't drop prices by 50%. They dropped prices on selected products, waterfalled others, and replaced the top end skus with new ones. The net affect on ASPs was minimal, and revenues were UP by over 15% in Q3 YoY. Second, this example includes the effects of competition (you even prove it by comparing market share), but we were hypothesizing about a situation WITHOUT competition. If Intel lowers prices, and AMD lowers prices by the same amount, demand for Intel's processors aren't going to exhibit elastic demand. That's just common sense. In the absence of AMD, if Intel wanted a serious net positive effect on their ASPs, they would only accomplish this by raising prices across their product line, which would diminish demand due to pricing elasticity. Re: So I see that you are ticked off that your arguments just haven't worked. LOL, who's the one who feels the need to insert trite little remarks like these, hmm? Pot... kettle... black.