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Technology Stocks : IDTI - an IC Play on Growth Markets -- Ignore unavailable to you. Want to Upgrade?

To: Mason Barge who wrote (4596)	11/4/1997 10:24:00 AM
From: flickerful	Read Replies (1) \| Respond to of 11555

mason... that makes two of us, at least. IDT, CYRIX, and AMD have nothing to gain, and everything to lose by ignoring the effect of the intel advertising machine. they must address it, and they must address it soon.

To: Mason Barge who wrote (4596)	11/4/1997 3:55:00 PM
From: Rob S.	Respond to of 11555

No one can directly match Intel's marketing budget - around $1 billion per year for the Pentium. That includes advertising and promotion. Intel's higher pricing structure for their Pentiums is partialy off-set by the pay-out of promo dollars to their OEMs, distributors and major retailers. So the reason their is a lot of the "Intel Inside & Intel Pentium" slogans pasted on product adds all over the place is because about $75 average of every Pentium sold gets paid back to the marketer or OEM for doing advertising. Cyrix/NSM, AMD and IDT must sell on the proposition that they let the dealer/OEM/disty keep the dollars to spend more as they will. That's not to say that a promo program and advertising aren't part of the success equation, it just means that it is not reasonable to think that copmpanies that sell in the several hundred millions of total Pentium product sales can pay out what would amount to as more than their total sales figure in marketing budget. I think that there will be errosion of the effectiveness of Intel's branding strategy. Many, many examples of branding have been dilluted over the past several years because of increased competition and a rasing of universal quality standards. This phenomena has caused a proliferation of brands on store shelves, in car dealer showrooms, and in services, such as telephone service. I think that telephone service is a useful and, IMO, similar example of branding strategy despite the differences in markets. AT&T has spent billions on making telephone service mean "friends and family" - warm fuzzy experiiences rather than just some technological thing that transmits voice signals. Intel wants the public to equate Pentium processors with Multimedia and other performance in a way that says "you're not cool or with it if you don't have a Pentium inside". Human psychology says that people like to phantasize about things that they pay a lot for - they like the idea of a pretty and sexy girl/handsome guy being baited by their expensive car or multi-purpose vehicle. The telephone service, car or other commodity is made to represent all the good feelings and lonings we strive for. In summary, Intel doesn't want the public to focus on what should realy matter - compatibility to standards, reliability, and cost/performance. If the public looks at things for what it actualy does for them and the benefits that can be gotten from it, the decision will more often be swayed to the most competitive offering rahter than the one most able to fullfill our phantasies. I think that advertising that both slaps Intel's ads in the face in a farcicle way, such as AMD's play on the clean room suits, and ones that say boldly "Don't be scammed people, buy the performance and features you need, not the hype" will be successful in making a lot of buyers ask the serious question, "Just what am I getting for my money". The success of Compaq's Presarrio 2000 line that uses the Cyrix MediaGX would not have been posible if not for the high level of recognition and regard that consumers have for Compaq. With that assurance, buyers have been willing to ignore that Intel is Outside on the sub $1,000 market thrust (except for cheap, stripped-down & under-engineered clones). The Intel jugernaut will take a lot of effort and time to eat away at. Some people will buy the C6 becuase it works well in many applications, better than Intel solutions in laptops and for upgrades, despite the market pull that Intel generates. IDT must start their advertising as they are doing - in the trade journals and industry magazines. I don't think they can consider a campign to create mass market familiarity and pull as a counter to Intel's efforts for at least a couple of years. AMD is of the size that they can afford and need an advertising campaign.