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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Kashish King who wrote (27021)	12/20/1997 2:56:00 PM
From: Bill Jackson	Respond to of 1579897

Rod, In effect Intel may fall by the wayside as long as others make gatescode processors?. true enough, and the ranks are getting crowded, and it is far from a sure thing as long as the latecomers can make enough money to fund development costs. Intel is not selling below cost, and I have never intimated that. They have cut prices faster than they need to for pre-emptive reasons. They did not want AMD making fat profits this year. They could easily have left the price $200 higher. AMD cannot produce more than 1M processors per quarter(yet). However that would have given AMD a gift of $200 million. So Intel cut the price by the $200. Since it make 20 million CPUs per quatrer it gave away $4 billion per quarter for 1997, or $16 billion to stop AMD from making the $800 million in 1997.(these figures are approx, as the price cuts varied across the CPU/speed mix. I just picked $200, as a reasoable in between figure, and based AMD at 5% of Intels production) That $200M is more important to AMD than the $16 billion is to Intel. It kept AMD in the red, and after a while AMD will run out of money. No-one forced Intel to do this. It was a strategic move. It did impact the share price as this became known, as those profits are gone forever. I think the Intel plan for a microchannel kind of slot 1 thingy will also be less successful than Intel hopes. When IBM did it, IBM was already way down in share. Intel is implementing it from a far higher share position and will have more success, but not guaranteed success. Bill