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

To: fastpathguru who wrote (247866)	2/15/2008 5:37:05 PM
From: wbmw	Read Replies (1) \| Respond to of 275872

Re: It's nice of you to admit that short term, Intel could easily jack prices up. It's nice of you to admit that if Intel were to jack up prices, it would only be for the short term. Re: Stubbornly clinging to the term "price elasticity" is improper here, since in this context it only refers to the response in demand to changes in price after a new demand curve has emerged once AMD has exited. Now you are putting words in my mouth. My premise had nothing to do with short term supply forces - which would realistically depend on Intel's fab capabilities in the first place. If Intel had their 45nm plants online, it's very likely that they could provide 100% of the market, right from the onset. The more important issue is where prices would go after the initial thrash. Many people think that any company in a 100% monopoly position would price gouge. But I have been arguing that the microprocessor market is elastic, and Intel is limited in their pricing headroom. It would take them years, plus substantially better products, before they could attempt to establish more premium parts at higher ASPs. Re: I believe even chipguy has admitted that longer-term, an Intel-without-competition would be free to slowly increase margins by controlling supply. Maybe someone has a link. Bull. Over their entire existence, Intel has always attempted to GROW their business by GROWING the market. Controlling supply only limits the existing market, and completely alienates new users. Intel's best bet is to grow the market, and if they were in a monopoly position, they would control the segmentation, and have more of an ability to price according to the capabilities of their product line. Instead of Extreme Edition parts being 10% or 20% faster than a $200 part, Intel could make them 2x faster (using future launches like Nehalem), and make it more attractive for consumers to spend more money on them. They can do that without raising the prices of their existing chips, thereby satisfying the pricing elasticity of the market, while still driving up ASPs by establishing a more premium mix. I think that's a far more likely scenario than anything you have hypothesized so far.