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

To: A. A. LaFountain III who wrote (58611)	5/18/1999 11:07:00 AM
From: Scumbria	Read Replies (3) \| Respond to of 1580692

Tad, I find your remarks rather condescending. Do you have any new information about K7, to distract us from the fact that the K6 family is not making a profit for AMD? Scumbria

To: A. A. LaFountain III who wrote (58611)	5/18/1999 12:00:00 PM
From: Process Boy	Respond to of 1580692

A.A. - Thank you. EOM.

To: A. A. LaFountain III who wrote (58611)	5/18/1999 12:55:00 PM
From: grok	Read Replies (2) \| Respond to of 1580692

Re: <... couldn't the Celeron line have gross margins of about 55-60%, PII/III about 65-70% and Xeon about 75-80%?> Thanks for your informative post. However, shouldn't there be a bigger range between gross margins from lowend to highend? After all, costs are rather close to being the same and ASAP is hugely different.

To: A. A. LaFountain III who wrote (58611)	5/18/1999 2:22:00 PM
From: Kevin K. Spurway	Read Replies (1) \| Respond to of 1580692

Let's say a 500 MHz Xeon with 1024k L2 goes for $2000. Using your highend estimate of 80% margins that is $1600 in profit/unit. It's also $400 in cost/unit. You're saying that the margins on the Celeron could be as high as 55% (so for a $95 Celeron 400, that means about $50 in costs). Let's try to verify this $50 number. We know: 1) Mendocino Celeron has a larger die size than the Xeon core, making it more expensive to manufacture. 2) Celeron has (in some cases) no SECC cartridge/no slot making it cheaper to manufacture. Let's say these materials cost $10/chip. 3) Celeron has no large off-chip L2 cache. Anyone know the current spot market price of 1024k of full speed SRAM? Deduct 40% margin and you get Intel's cost on the Xeon SRAM. Let's use $200 as a cost here ($280 spot market)--this is a WAG but I expect it's way on the high side. Someone give me a good number here? 4) According to Ten, Celeron has no desperate need to climb the speed curve (less validation necessary), no need to validate on the 100 MHz bus. I'm not sure how good an argument this is because Celeron overclocks at least as high as Xeon does, if not higher (because of the lack of L2). In other words, Intel could sell a 550 MHz Celeron today if it wanted to. Since it is the same process that Intel is using on all of these chips, process development costs should be spread evently. That being said, Xeons should be tested to higher reliability standards than Celerons, have to go through multiprocessor validation, 100 MHz bus testing (more sophisticated electricals), etc. so I'll throw in a few bucks of extra cost here--say $20. So to put together a "virtual Menocino" using the Xeon: $400 Xeon cost -$10 slot 2 cartridge -$200 cache -$20 testing, etc. =$170 total cost. Add another 10% for the 128k of L2 on die, and you get $177 of cost for a 400 Mhz Celeron (downbinned). Are Intel's margins for the Xeon higher than 80%? Maybe. Are the expenses I'm stripping out of the Xeon cost reasonably accurate? Maybe not. Is Intel selling below marginal cost? Unlikely. Is Intel selling below average unit cost? Possible. Kevin

To: A. A. LaFountain III who wrote (58611)	7/27/1999 5:45:00 PM
From: RDM	Read Replies (2) \| Respond to of 1580692

<couldn't the Celeron line have gross margins of about 55-60%, PII/III about 65-70% and Xeon about 75-80%? Even if these numbers are not exact, the concept shouldn't be too far off> I think is interest to put pencil to the paper and check your hypothesis with some numbers. Applying your margins to my estimated ASPs yields the following costs: Xeon: 25% of $1500 is $375 PIII: 35% of $250 is $80 Celeron: 45% of $75 is $35 To many on this thread, the estimated cost of the Xeon looks high even considering the special cache and the cost of the PIII looks high while the Celeron cost may look reasonable and possibly low so as to create an honest difference of opinion regarding your statement that "But the notion of the high-end making all the money and the low end losing it seems unlikely". I am of the belief that the central issue is one of allocation of overhead and research expenses which is ultimately as much political as it is legal and therefore difficult to ascertain ahead of time.