Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Mary Cluney who wrote (44323)	1/7/1998 5:17:00 PM
From: Kirk ©	Respond to of 186894

Too bad you don't consider HP.....Shows HP needs to spend more on advertising it seems. Supposidly it is reliable and gives good performance. I must admit that I helped two friends buy/set-up new PCs this xmas break and I was impressed with Dell's customer service, once we got through while the cheapo P2 house label is in the shop.... Kirk out suite101.com suite101.com (More Intel discussion)

To: Mary Cluney who wrote (44323)	1/7/1998 5:56:00 PM
From: gnuman	Read Replies (1) \| Respond to of 186894

Mary, re:"I would have thought Compaq needs Intel a little bit more than Intel needs Compaq". I'm sure Eckhard knows this. But he also knows he is the largest supplier of PC's in the world, and Intel needs that. From what I know of the history of Intel and their customers, Intel has always been a very demanding supplier. I think friction between Compaq and Intel goes back at least ten years. I think even Rod Canion had problems with the relationship. It's interesting that Intel was charging as much as $1000+ for X87 products back in the late eighties. When IIT and Cyrix introduced competitive products, I believe Compaq jumped on this as an opportunity to get better prices from Intel. I believe that as soon as they had an alternate source they used it to their advantage, much as Intel uses a proprietary product advantage. Between 1987 and 1990 FPU prices dropped to the $75 range. I'm sure Compaq believes that in order to expand and grow their business they must penetrate markets with price. The CPU being the largest single contributor to cost, this becomes the major target. This is a dicey game, but I see Compaq and the consumer as the big winner. AMD will never be the source or resource of an Intel, but I think they provide new bargaining power. Intel must be concerned that AMD will develop enhanced brand recognition through suppliers like Compaq and IBM. (I see that 5 of the top 10 makers have now committed some product to AMD). So I think they will address Compaq's initiatives in a businesslike manner, unlike some posters that think Intel will retaliate. They need each other, and I think this love/hate relationship is neverending.

To: Mary Cluney who wrote (44323)	1/7/1998 6:31:00 PM
From: Road Walker	Respond to of 186894

Mary, re: Compaq/AMD I didn't think I made myself clear <g>. re: "Do you really think this was a decision on a product managers level or even a Division level?" No, I said I was thinking from a product managers point of view. I am sure this decision went to the Compaq executive committee, with a carefull analysis of the all the implications. re: "What kind of impact could it possibly have on sales and profits (maximum $ - given AMD production capabilities)?" If they really believe that a Pentium processor will motivate, say 40% of consumers to step up to a $1200. from a $799 or $999 computer, it can have a very substantial effect on profit dollars. Lets say 30% of their units are in the low end, if 40% move up to the Pentium, that is 12% of total sales. My assumption is that the profit dollars (not GM) on the $1200. PC are double the $799. PC. For any company looking at the bottom line, this is very substantial. As for AMD's production capability, I've got to assume that Compaq has a clearer picture of this than we do. re: "For myself, 5 years ago, I would have been willing to pay more for the Compaq brand name, but more recently I have been buying Dell" I didn't say that they were right that people go for PC brand rather than CPU, I said the "assumption might have been". It would fit with Compaqs culture to believe that they have superior brand preference to Intel. This may be their error. re: "I would have thought that Compaq needed Intel a little more than Intel needed Compaq." They both need each other, it doesn't matter who needs who more. Intel can no more afford to abandon their largest customer and the worlds largest PC maker than Compaq can afford to abandon their largest supplier and the technology and production leader. Bottom line, the golden rule, "he who has the gold makes the rules", and Compaq is the customer that pays Intel (and ultimatly shareholders). I beleive that Compaqs brand ego got in the way of making a good marketing decision, and they will probably lose sales to HP and other competitors in the sub 1K segment. But I don't believe this is a strategy to somehow weaken Intel, if they didn't think it made business sense I don't believe they would have made the decision. John