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

To: kapkan4u who wrote (59326)	5/23/1999 11:52:00 AM
From: Charles R	Read Replies (1) \| Respond to of 1573223

Kap, "What do you think is ASP threshold for Intel bellow which they are starting operating at a loss? My guess would be around $150." That is a tough question to take a stab at. It is a multi variable equation that involves: 1) ASPs - Intel by the virtue of production capacity (or alternately lack of AMDs production capacity) can, more or less, set the pricing for their parts even if AMD is wildly successful with K7 2) Cost structure - Intel can do a lot about this too. I know miracles can be done here both at chip and company level. 3) Market share - Intel has very little control over this, especially if K7 is on time (in volume). Barring any screwups, AMD will get to its 30%+ unit share within a year. I will be looking for Intel's signals on slowing down fab updates and new fab constructions. 4) Market growth - This one is truly a challenge - lower ASPs mean higher growth and price elasticity is tough nut to measure. I am sure Intel is spending phenomenal amount of time on this topic. As you can see the only thing that is totally out of Intel's control is, potentially, market share. So, profitability is strictly a function of time and what Intel does with it. Even if the low-end and midrange pricing collapses to the $100 range, given their solid position on the server side, Intel would have to screw up big time even to entertain that thought. Unfortunately, from an Intel shareholder point even the relatively rosy scenarios mean a low-growth stock. Intel stock holders, today, need AMD's failure to be successful. And, unforunately, HOPE is NEVER a good strategy. Chuck

To: kapkan4u who wrote (59326)	5/23/1999 4:44:00 PM
From: grok	Respond to of 1573223

Re: <Some people on this thread were arguing that an all out ASP war would hurt AMD more than Intel. I think that just the opposite is true.> The thing is that an "all out ASP war" is not imminent. It looks like a retail price war is underway but Intel makes most of its profit in corporate desktops and servers. Maybe someday AMD will compete there but there are no signs of that yet. So Intel competing in retail with low ASP may hurt the stock price but the existance of Intel is not an issue. AMD has no other "priviledged sanctuary" so must make its money in retail. Of course, given time AMD may enter corporate and servers and this would hurt intc even more. Maybe Intel will decide to not give AMD time ...