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

To: combjelly who wrote (260222)	5/15/2009 11:49:09 AM
From: Windsock	Read Replies (2) \| Respond to of 275872

Here is a home work assignment for you. AMD offers 1 million free processors to HP if they will invest the time, money and engineering resources to build systems and offer them to market. The processors are the new Opteron design that have very little infrastructure in place and have not been thoroughly validated for server use. Your job is to calculate the cost of developing Opteron systems answering these questions. Also specify the amount of time in months and the number of engineers that it will take to design and validate the Opteron systems. Opteron systems are new to the market and AMD has not spent the money or resources to ramp the market for Opteron server systems with system purchasers. How many systems will HP be able to sell if it invests tens of millions of $$ in order to ramp the market for AMD? Calculate the profit on the Opteron systems that HP will sell and determine the return on the HP investment to ramp the market for AMD? Discuss whether HP should ask AMD to invest its money and resources to ramp the Opteron market and return when the Opteron market will better support an HP investment.

To: combjelly who wrote (260222)	5/15/2009 12:08:21 PM
From: Tenchusatsu	Read Replies (1) \| Respond to of 275872

CJ, > AMD is arguing that despite a very low price, and free is about as low as you can get, they still couldn't entice the OEM to go with a much superior processor. That's AMD's fault. It's up to AMD to demonstrate to the OEM that building systems around said product would actually give them an advantage. Price isn't the only competitive factor, and "superiority" had yet to be demonstrated by AMD. > Which is supicious to say the least. Suspicion is nowhere near proof of abusive monopoly. It would have been the exact same thing had the OEM had its needs met by two suppliers, and AMD was the third supplier trying to break into the market. Basic barriers to entry. Business 101. Tenchusatsu