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Merrill: Intel's More Interested In Crushing AMD Than Imprv

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March 10, 2007 2:36:02 AM

http://biz.yahoo.com/seekingalpha/070309/29149_id.html?...

Merrill: Intel's More Interested In Crushing AMD Than Improving Margins

------------------

Speculations on Paul O.'s motives, anyone?

I'm especially interested in rational or sensible motives he might have, if someone can offer some.

First to address one side of it (sans innovation for a moment), just how important is 80% market share vs 75%?

To see why it's questionable, imagine you made bicycles and I did, and we competed, and I made mine for about $105, and you made yours for about $115. Suppose when we started I had 75% of the market, and you 25%, and the this type of bicycles sold for about $200 on average. Would it be a good business decision for me to cut my average price from $200 down to $140, since I can make them cheaper, and gain market share, and still make profits?

I'd be cutting my margins, hoping to increase my unit shipments.

Often by cutting prices a business can increase the volume of units, and thus end up with more net profits, but....most businesses don't own 70%+ market share to begin with. If you *start* with a very high market share at the beginning, you can't double your market share, for example.

Starting at a high 75%, I might only get to 83% in a few years, if many people like the other brand for other reasons, like it's logo, or it's dealers, or whatever. Even if my bikes are better at times, or cheaper at times.

In this example, it would cost me more lost profits than I gained from extra market share, and if you had determination to persist also, it could actually cost me a great deal of money over years of time. I'd give up a *lot* of profits.

This is what Intel is in the middle of doing.

Not really what most people would think of as the way they'd run a business. After all, you go into business to make money, right? You don't normally give up a big chunk of your profits to gain 1/15 more share, or even to increase your volume moderately.

But the other side of this is innovation.

http://www.crmbuyer.com/story/GB8EgKP33KYGSB/Intel-Prof...

Perhaps there is *another* reason 80%+ share is very important for Intel.....

Any ideas, anyone?

More about : merrill intel interested crushing amd imprv

March 10, 2007 2:47:57 AM

The 2nd link is worth reading, just for the overall picture it draws together succinctly. But what exactly is Paul O. after?
March 10, 2007 3:12:19 AM

It could make sense if Intel could maintain even the 50% margins, and the world growth in computers would make for good profits.

But....Intel seems to have another plan. The Catch is, Paul O. doesn't own Intel. Stockholders do. The great majority of the owners expect the corporation to be run like a business, with business objectives that are about good profits over time. They don't want margins to move down to 45% or lower, and then stay there down there for years, just for modest gain in share of total market. They are more interested in making more profits and having their stock appreciate.

Intel can make a lot more profits at 73% market share and 60% margins than it can at 80% market share and 43% margins.
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March 10, 2007 3:30:44 AM

consider their previous business model pre amd. if amd does not exist there is no real need to spend a fortune on r&d. they can simply refine their process and raise the clock speed of their cpus. intel knows that the avg consumer doesnt have a clue on what makes a cpu tick and will only look at the amount of gigahertz. i definitely hope barcelona and r600 is a smash hit like conroe cuz i would hate it to become a one horse race again.
March 10, 2007 4:55:01 AM

I think that sometimes some people lose sight of the fact that Intel is into various chipsets, that CPU's is just really a very small part of their overall product line.

They are rumoured to be entering the WiMax market in a big way, and are already making chipsets for various mobile products. Not to mention that they are the largest integrated GPU maker (which is not to say the best...). They are into the server market with the Itanium though they seem to have quit developement recently...

So think of Intel as an octopus, with a tentacle in every camp that they can get into. WiMax not profitable? Drop it. Itanium not moving? Shelve it. Controllers not moving? Think about buying AB. CPU's taking a loss? No problem, one of the other divisions will take up the slack.

Add to that their marketing acumen, their arm twisting deals... Immoral maybe, illegal in some areas, but BAU in others, and one gets the beginning of the true global power of a chipmaker like Intel. Frightening, eh?

Now take a look at IBM...
March 10, 2007 5:00:23 AM

I think that sometimes some people lose sight of the fact that Intel is into various chipsets, that CPU's is just really a very small part of their overall product line.

They are rumoured to be entering the WiMax market in a big way, and are already making chipsets for various mobile products. Not to mention that they are the largest integrated GPU maker (which is not to say the best...). They are into the server market with the Itanium though they seem to have quit developement recently...

So think of Intel as an octopus, with a tentacle in every camp that they can get into. WiMax not profitable? Drop it. Itanium not moving? Shelve it. Controllers not moving? Think about buying AB. CPU's taking a loss? No problem, one of the other divisions will take up the slack.

Add to that their marketing acumen, their arm twisting deals... Immoral maybe, illegal in some areas, but BAU in others, and one gets the beginning of the true global power of a chipmaker like Intel. Frightening, eh?

Now take a look at IBM...
March 10, 2007 12:42:35 PM

Quote:
There is reason to the pricing,but there is malice in it as well;Why continue to throw away good investor revenue?When ultimately it could end up bieng considered monopolistic behavior?

I would put a lock on Intels prices if i were a judge until I could make a full investigation.I would freeze all internal documents and raid every center for information. I would then warn amd about potential slander charges .

I hope it bites Intel in the azz.This cross obsession is sick thinking for both of them.At this point a new quad core doesnt mean much in the disgust for these antics they evoke from me.

They think that Intel is a lot more interested in reducing AMD to its former status than in showing much gross margin improvement this year.


This from Merrill lynch. At least the truth is out and the pricing is nearly confirmed on periferal evidence as quasi predatory.

Sacrificing GPM to put the competition out of the running,Is predatory;it requires facts to become a litigious matter; These are not facts but it adds to the pool of those who believe Intel will never stop this type of behavior.

They deserve it to bite them hard.

Wow, you would make a crappy judge. :roll: What should Intel be charging for their chips? They are still making Billions a quarter in profit. I don't think the pricing is a preditory so much as that AMD just is WAY WAY behind in Technology. What if Intel opened up the C2Ds to their full potential, did away with its single core processors and made the low end C2Ds the bottom of its line and stretched out it product line more. Would that make you happy?

If AMD launched K10 tomorrow and it was worth a shit, AMD would be fine. It is NOT Intels fault that AMD fell behind. :wink:
March 10, 2007 1:00:59 PM

Quote:
There is reason to the pricing,but there is malice in it as well;Why continue to throw away good investor revenue?When ultimately it could end up bieng considered monopolistic behavior?

I would put a lock on Intels prices if i were a judge until I could make a full investigation.I would freeze all internal documents and raid every center for information. I would then warn amd about potential slander charges .

I hope it bites Intel in the azz.This cross obsession is sick thinking for both of them.At this point a new quad core doesnt mean much in the disgust for these antics they evoke from me.

They think that Intel is a lot more interested in reducing AMD to its former status than in showing much gross margin improvement this year.


This from Merrill lynch. At least the truth is out and the pricing is nearly confirmed on periferal evidence as quasi predatory.

Sacrificing GPM to put the competition out of the running,Is predatory;it requires facts to become a litigious matter; These are not facts but it adds to the pool of those who believe Intel will never stop this type of behavior.

They deserve it to bite them hard.

Wow, you would make a crappy judge. :roll: What should Intel be charging for their chips? They are still making Billions a quarter in profit. I don't think the pricing is a preditory so much as that AMD just is WAY WAY behind in Technology. What if Intel opened up the C2Ds to their full potential, did away with its single core processors and made the low end C2Ds the bottom of its line and stretched out it product line more. Would that make you happy?

If AMD launched K10 tomorrow and it was worth a ****, AMD would be fine. It is NOT Intels fault that AMD fell behind. :wink:

It won't be INTEL's fault when AMD is closed next year...
March 10, 2007 1:02:55 PM

Quote:
There is reason to the pricing,but there is malice in it as well;Why continue to throw away good investor revenue?When ultimately it could end up bieng considered monopolistic behavior?

I would put a lock on Intels prices if i were a judge until I could make a full investigation.I would freeze all internal documents and raid every center for information. I would then warn amd about potential slander charges .

I hope it bites Intel in the azz.This cross obsession is sick thinking for both of them.At this point a new quad core doesnt mean much in the disgust for these antics they evoke from me.

They think that Intel is a lot more interested in reducing AMD to its former status than in showing much gross margin improvement this year.


This from Merrill lynch. At least the truth is out and the pricing is nearly confirmed on periferal evidence as quasi predatory.

Sacrificing GPM to put the competition out of the running,Is predatory;it requires facts to become a litigious matter; These are not facts but it adds to the pool of those who believe Intel will never stop this type of behavior.

They deserve it to bite them hard.




So I guess now I can say this without everyone attacking.


ALL HAIL THE BOTTOM FALLING OUT!!!
March 10, 2007 2:46:41 PM

The new memory technology deserves it's own thread, and I think it's appropriate for the cpu forum, since memory and cpus are becoming intertwined and memory is part of cpus.

I'm curious of your thoughts on these two (phase change and edram).

IBM has said, as you probably remember, that their eDram will double cpu performance.

Also, with so many new memory technologies coming, could one of them compete with DDR3 in the memory banks? I'd like to just be able to goto to 4GB in 2008 when I do for like $120 or less. That seems like a more reasonable price to me. Maybe $150 if it's higher performance. But really, I think it should be $110 for instance, to bring out more buyers.
March 10, 2007 2:49:16 PM

Another Point re the subject here:

although it's questionable to lower your *average selling price* (ASP), it isn't questionable at all to change your product mix.

So if the cpu makers move agressively to quad cores in the $200 neighborhood, but have a rich mix and decent ASPs, then the "cheap" quad core isn't really bad for business. It's the ASPs and the margins that matter, for profits.
March 10, 2007 2:51:42 PM

Quote:
Another Point re the subject here:

although it's questionable to lower your *average selling price* (ASP), it isn't questionable at all to change your product mix.

So if the cpu makers move agressively to quad cores in the $200 neighborhood, but have a rich mix and decent ASPs, then the "cheap" quad core isn't really bad for business. It's the ASPs and the margins that matter, for profits.



But a 49% margin for something at $400 is a lot more monetarily than a 49% margin at $200.

The bleeding continues.


ALL HAIL THE BOTTOM FALLING OUT!!!
March 10, 2007 3:09:28 PM

I realy didnt want a lesson in economics.
Why should we care?
will our opinions directly change anything?
March 10, 2007 3:58:45 PM

Hey, reading is voluntary, right? I have to be pretty selective in what I read, since I barely can read 20% of even publications I subscribe to. The easiest and perhaps best strategy is to read what interests you.
March 10, 2007 4:40:33 PM

Quote:
my first guess is this may not be a business decision type thing. maybe paul O took exception to the how to build a dual core proc for dummies book thing personal
but he doesnt say anything in words and decides to crush amd with their own book.
this doesnt help amd at all if its true (see link 50 W xeons coming)
http://www.theinquirer.net/default.aspx?article=38138
i think the dummies book was too much for this tiny amd company to try to pull


Could someone please give me some more information (history) on the "dummies book". Was that a comment AMD made in public or something ....
March 10, 2007 5:19:29 PM

Quote:
So I guess now I can say this without everyone attacking.


ALL HAIL THE BOTTOM FALLING OUT!!!


Because one analyst agrees with you? If there were real worries, they'd vote with their wallets (i.e. move INTC to 'sell').

The move works for Intel is the PED for their CPUs is >1. I have no data on the elasticity, but I would guess it could well be.
March 10, 2007 7:21:27 PM

Well, the stock market itself seems to be not enamored with Intel lately. People there are voting with their wallets, so to speak.

What's "PED"?
March 10, 2007 7:30:19 PM

Quote:
Ahh, found it ...



zomg plz link to where I can purchase!!!!!

I never heard of google so plzz linkage!
March 10, 2007 7:36:19 PM

Quote:
Well, the stock market itself seems to be not enamored with Intel lately. People there are voting with their wallets, so to speak.

What's "PED"?


Doing badly compared to AMD?

PED is Price Elasticity of Demand, a simple theory which, ceteris paribus, determines whether a price change will result in increased revenue.
March 10, 2007 9:41:44 PM

The 1-year graph is probably more relevant to this topic, which mostly concerns recent Intel strategy. And, looking at the graph, I'd say:

Quote:
Well, the stock market itself seems to be not enamored with Intel lately. People there are voting with their wallets, so to speak.

is referencing the wrong company.
March 10, 2007 10:45:20 PM

You can learn a lot more about stock charts if you like. Intel is well off it's own peak. Even if you ignore the 2000 peak and just use $34.

the 1 yr is no more or less relevant than the 1 month or the 5 year, etc., etc.
March 10, 2007 10:48:34 PM

Quote:
Well, the stock market itself seems to be not enamored with Intel lately. People there are voting with their wallets, so to speak.

What's "PED"?


Doing badly compared to AMD?

PED is Price Elasticity of Demand, a simple theory which, ceteris paribus, determines whether a price change will result in increased revenue.

Overall, Intel has been +/- 10% relative to the C2D release of initial benchmarks, it is pretty clear that WS is not happy with either but punishing AMD more:

selective really

1 month, 2 yr, 5 yr. diff
March 10, 2007 10:54:44 PM

Yeah, it would have been nice to pick up some Intel in the 1980s!!
March 10, 2007 11:09:50 PM

I was disappointed when the IBM PC dominated the more elegant Apple, although it was just business confidence in IBM. Perhaps knowing that computers would be important, and that Intel was the chip maker, really, was the info. If only I had the capital back then! :?
March 10, 2007 11:23:15 PM

Quote:
consider their previous business model pre amd. if amd does not exist there is no real need to spend a fortune on r&d. they can simply refine their process and raise the clock speed of their cpus. intel knows that the avg consumer doesnt have a clue on what makes a cpu tick and will only look at the amount of gigahertz. i definitely hope barcelona and r600 is a smash hit like conroe cuz i would hate it to become a one horse race again.


My thoughts to the letter. Intel just wants AMD out of the game or marginalized to the point where they more or less have a monopoly again. I don't think AMD will let that happen, though. But if they make one big misstep right now, it'll bode very poorly for all of us.
March 11, 2007 12:29:08 AM

Quote:
http://biz.yahoo.com/seekingalpha/070309/29149_id.html?...

Merrill: Intel's More Interested In Crushing AMD Than Improving Margins

------------------

Speculations on Paul O.'s motives, anyone?

I'm especially interested in rational or sensible motives he might have, if someone can offer some.

First to address one side of it (sans innovation for a moment), just how important is 80% market share vs 75%?

To see why it's questionable, imagine you made bicycles and I did, and we competed, and I made mine for about $105, and you made yours for about $115. Suppose when we started I had 75% of the market, and you 25%, and the this type of bicycles sold for about $200 on average. Would it be a good business decision for me to cut my average price from $200 down to $140, since I can make them cheaper, and gain market share, and still make profits?

I'd be cutting my margins, hoping to increase my unit shipments.

Often by cutting prices a business can increase the volume of units, and thus end up with more net profits, but....most businesses don't own 70%+ market share to begin with. If you *start* with a very high market share at the beginning, you can't double your market share, for example.

Starting at a high 75%, I might only get to 83% in a few years, if many people like the other brand for other reasons, like it's logo, or it's dealers, or whatever. Even if my bikes are better at times, or cheaper at times.

In this example, it would cost me more lost profits than I gained from extra market share, and if you had determination to persist also, it could actually cost me a great deal of money over years of time. I'd give up a *lot* of profits.

This is what Intel is in the middle of doing.

Not really what most people would think of as the way they'd run a business. After all, you go into business to make money, right? You don't normally give up a big chunk of your profits to gain 1/15 more share, or even to increase your volume moderately.

But the other side of this is innovation.

http://www.crmbuyer.com/story/GB8EgKP33KYGSB/Intel-Prof...

Perhaps there is *another* reason 80%+ share is very important for Intel.....

Any ideas, anyone?
:lol:  Intel should just put the boots to e,m and end it.
March 11, 2007 1:57:32 AM

I may be crazy here, but I actually think intel's strategy makes sense.

This is why.

When you go to a movie theatre, the little tiny soft drink is $3.00, and the huge giant vat'o'cola is $4.00

Why? - because the margin on pop is so large that the extra buck for the huge vat make sense. They give you 14 cents more pop (at their cost) for another buck in revenue ... HUGE margin on the upgrade.

It's the same with CPUs.

Firstly, an E6850 cost the same to make as an E6300. If they can get you to upgrade from a $163 E6650 to a $266 E6850, intel makes another $100.. $100 in essentially pure profit....

Granted, Intel sells a few $ E6800s at $999 but it's quite few.... I bet the extra E6850s at $266 will generate far more revenue than the few at $999.

Quad cores?

Two E6600 in one package to make a Q6600 does NOT cost twice as much to make - it costs maybe a few dollars extra

Intel has already paid for the fabs, the R & D, etc..

It's like Microsoft and Windows.. the FIRST copy cost $5 billion... the second copy cost 23 cents...

If Intel can get you to pay an extra $150 to go quad core, they are laughing all the way to the bank.. the second chip on the package costs waaaaaaaay less than $150.. Intel ALREADY has the masks, the litho tools, the R & D... Cranking off a few million extra E6600s so folks can "double up" to quad core cost Intel maybe a few bucks per chip...

It's exactly like the pop in the movie theatre.... did you want the tiny pop for $3.00 or the Vat'o'cola for $4.00 ?

Just my 2 cents worth...
March 11, 2007 3:07:55 AM

Yes, the idea of just lowering prices to induce those who would not buy anything otherwise is certainly a good strategy for high priced goods. See my post re the "cheap quads" further up the thread, for instance.
March 11, 2007 3:11:36 AM

Quote:
It's exactly like the pop in the movie theatre.... did you want the tiny pop for $3.00 or the Vat'o'cola for $4.00 ?

Just my 2 cents worth...


Ummm... Going to the movies and buying a pop there, you know your getting raped for the money you pay.

I don't think that would be a good analogy to what intel is doing to amd... well from a customers point of view. We just want great prices.

Edit:
To clarify:

2 companies going head to head in trying to make profits, while one gets more attention for its price and performance vs a bunch of people in line suffering from thirst, just doesn't paint the right picture.. :lol: 
March 11, 2007 10:35:44 AM

I’m not looking forward to all the marketing BS that is going to be needed if Intel are to sell low speed Quad cores into the mainstream market. The pricing shows this:

Q6600(2.4, 1066) = $266
E6550 (2.33, 1333) = $163
E6850 (3.0, 1333) = $266

For most mainstream users they are better off saving themselves $100 and getting the E6550 as they are very unlikely to be running software that can benefit from quad cores.
Or if they are power users but don’t do video editing/rendering type tasks that benefit from quad cores then go for the E6850 at 3GHz.

I don’t think the quad-core pricing is that significant though compared to the low price of the dual core CPUs. That’s the real killer for me and will also impact AMD more than the quad core pricing.
Gamers are going to be better off with an E6850 due to the higher clock speed, which is the same price as the Q6600; this ignores over-clocking.

Quote:
I may be crazy here, but I actually think intel's strategy makes sense.

[Lots of stuff removed]

Two E6600 in one package to make a Q6600 does NOT cost twice as much to make - it costs maybe a few dollars extra
Intel has already paid for the fabs, the R & D, etc..

If Intel can get you to pay an extra $150 to go quad core, they are laughing all the way to the bank.. the second chip on the package costs waaaaaaaay less than $150.. Intel ALREADY has the masks, the litho tools, the R & D... Cranking off a few million extra E6600s so folks can "double up" to quad core cost Intel maybe a few bucks per chip...

No doubt Intel has enough excess capacity to sell the Q6600 at these prices without cannibalising its dual-core sales. If they run out of capacity and start forfeiting the sale of two dual-core CPUs for every quad-core sold, they will reduce their profit at these prices:

1 x Q6600 = $266
2 x E6550 = $326
Loss to Intel = $60

1 x Q6600 = $266
2 x E6850 = $532
Loss to Intel = $266

The Q6600 is a bargain if you run quad-core optimised applications and will put downward price pressure on the AMD desktop quad parts. Although by the time their desktop quads are out Intel will be close to releasing/have released their 45nm quads and those will obviously be cheaper to manufacture.
So it seems as if AMD won’t be able to nearly compete with Intel in performance per manufacturing cost even if the new architecture kick serious ass. We can talk about IPC and performance per watt etc but the bottom line in many ways is IP$ (Instructions per manufacturing cost). I can’t see Intel losing the lead here and that allows Intel to be very aggressive with their pricing.

As CPUs become more and more a commodity item, the manufacturing cost becomes more of an issue and performance becomes less important. A quad-core 2.4GHz CPU at $266 with 8MB cache on a 65nm process shows which way the market is heading.
This is the environment that AMD and Intel have to compete in.
March 11, 2007 4:52:58 PM

Quote:
I’m not looking forward to all the marketing BS that is going to be needed if Intel are to sell low speed Quad cores into the mainstream market. The pricing shows this:

Q6600(2.4, 1066) = $266
E6550 (2.33, 1333) = $163
E6850 (3.0, 1333) = $266

For most mainstream users they are better off saving themselves $100 and getting the E6550 as they are very unlikely to be running software that can benefit from quad cores.
Or if they are power users but don’t do video editing/rendering type tasks that benefit from quad cores then go for the E6850 at 3GHz.

I don’t think the quad-core pricing is that significant though compared to the low price of the dual core CPUs. That’s the real killer for me and will also impact AMD more than the quad core pricing.
Gamers are going to be better off with an E6850 due to the higher clock speed, which is the same price as the Q6600; this ignores over-clocking.

I may be crazy here, but I actually think intel's strategy makes sense.

[Lots of stuff removed]

Two E6600 in one package to make a Q6600 does NOT cost twice as much to make - it costs maybe a few dollars extra
Intel has already paid for the fabs, the R & D, etc..

If Intel can get you to pay an extra $150 to go quad core, they are laughing all the way to the bank.. the second chip on the package costs waaaaaaaay less than $150.. Intel ALREADY has the masks, the litho tools, the R & D... Cranking off a few million extra E6600s so folks can "double up" to quad core cost Intel maybe a few bucks per chip...

No doubt Intel has enough excess capacity to sell the Q6600 at these prices without cannibalising its dual-core sales. If they run out of capacity and start forfeiting the sale of two dual-core CPUs for every quad-core sold, they will reduce their profit at these prices:

1 x Q6600 = $266
2 x E6550 = $326
Loss to Intel = $60

1 x Q6600 = $266
2 x E6850 = $532
Loss to Intel = $266

The Q6600 is a bargain if you run quad-core optimised applications and will put downward price pressure on the AMD desktop quad parts. Although by the time their desktop quads are out Intel will be close to releasing/have released their 45nm quads and those will obviously be cheaper to manufacture.
So it seems as if AMD won’t be able to nearly compete with Intel in performance per manufacturing cost even if the new architecture kick serious ass. We can talk about IPC and performance per watt etc but the bottom line in many ways is IP$ (Instructions per manufacturing cost). I can’t see Intel losing the lead here and that allows Intel to be very aggressive with their pricing.

As CPUs become more and more a commodity item, the manufacturing cost becomes more of an issue and performance becomes less important. A quad-core 2.4GHz CPU at $266 with 8MB cache on a 65nm process shows which way the market is heading.
This is the environment that AMD and Intel have to compete in.

Often I have the sense in posts like this the suggestion is that Intel will progress, and AMD's progression will ..... kinda not happen. Like fusion won't happen, AMD/IBM won't do 45, or whatever. etc.

If you could freeze AMD in time later this year, then sure....
March 11, 2007 5:55:00 PM

Quote:
Often I have the sense in posts like this the suggestion is that Intel will progress, and AMD's progression will ..... kinda not happen. Like fusion won't happen, AMD/IBM won't do 45, or whatever. etc.
If you could freeze AMD in time later this year, then sure....

That’s not what I’m thinking at all. I’m fairly confident and hopeful that AMD have good designs down the line, but they will struggle to compete on a level playing field with Intel whilst they continue to lag behind Intel at the fabrication level. Intel’s 45nm process sounds like a done deal whereas IBM’s is less certain and when AMD’s get access to it seems to be unsure. So it’s not that they won’t happen but whether they happen in a timely manner, which is a separate issue.
AMD’s recent acquisition, fabrication plans & broadening portfolio show that they are serious about stepping up to the next level and I think this is what worries Intel rather than how good Barcelona will be. That’s why I think Intel will apply pressure to AMD via aggressive pricing in the hope of stymieing AMD’s expansion plans as much as they can. AMD’s strategy will hopefully turn out to be sound although they do seem to have lacked foresight in not tapping the markets for extra funds via issuing new shares when the stock price was high and they were still on the front foot. It might be a bit of a scary ride for a bit until things settle down; if they ever will. :o 
March 11, 2007 6:21:58 PM

Quote:


No doubt Intel has enough excess capacity to sell the Q6600 at these prices without cannibalising its dual-core sales. If they run out of capacity and start forfeiting the sale of two dual-core CPUs for every quad-core sold, they will reduce their profit at these prices:



Intel has four (4) 45 nano 300 mm wafer fabs planned. They will have Sh*tloads of capacity.

Some of this will be taken up in 2008 when Intel enters the discrete graphics market (GPUs tend to be really big dies) but still the 45 nano node will crank out a lot of chips.

What is REALLY unusual about Penrym is that it seems to be just about a "prefect" shrink - In theory the shrink from 65 to 45 nanos saves you about 47% on the die size (all things being equal) and when you factor in the 6 megs of cache and the extra 23 milliion logic transistors in Penrym, it actually is very close to 47% feature size shrink.

Intel is using it's advantage (fab capacity) to the max.

AMD is using it's advantage (direct Connect Architecture) to the max.

As they say in retail, "you sell what ya got"

We'll see which one wins out. :) 
March 11, 2007 6:56:41 PM

Quoting JJ,
Quote:
Yes... and it will be interesting to so who wins, because it turns out that this all out war.
, just further reinforces the subject. War is about 'crushing' your opponents.
March 11, 2007 7:37:31 PM

Quote:
Quoting JJ, Yes... and it will be interesting to so who wins, because it turns out that this all out war.
, just further reinforces the subject. War is about 'crushing' your opponents.

If the rumoured 3Q pricing (3.0 ghz E6850s on 1333 FSB for $266, q6600s at the same price)) is correct, yes, this is outright economic warefare by Intel.


In the short term, you and I win - big time.

Seriously, $266 for an E6850? - that's just f$%king amazing.

If you don't think that's a deal worth buying, you are not smart enough to own a computer.

In the longer term, AMD adapts and lives, or they die.

If they die, another will take their place.
March 11, 2007 8:23:21 PM

it's very simple. intel wants the high end back permanently. not just until barcelona. they want the 1990s back. that's where the margin is. if they raise prices back up to "normal" levels this year, their margins will be higher only until AMD introduces their next chip. then they have to R&D like hell to get ahead again. by starting a price war, intel is thinking long term. they are willing to take a short term "hit" on earnings (meaning their profits just dip a little) in order to cripple AMD's ability to keep up. intel wants to go back to the situation where AMD can't afford to develop high-end chips. as usual the wall street whiners are upset because they won't make money off of AMD or INTEL until someone blinks.

AMD may whine that "it's not a level playing field" but a price war is far from illegal. intel isn't dumping chips. they still make money on them. is it "anti-competitive"? probably. but what are you going to do. punish intel for making better chips that cost less? the cost of entry into the CPU market is very high. even then, once you're in, the cost of entry into the high-end is even higher. this is just the nature of the business. this is nothing like the microsoft situation. AMD will not "die". intel does not want them to die. anyone who thinks they will die is crazy. they are just being kicked out of the high-end.
March 11, 2007 8:59:41 PM

listen when intel was 18 and nobody said a word in summer with C2D coming out the stock went to 21 - now that amd is at 14 from 35 they all say how bad it is!

do the opposite - when the cnbc guys all slam amd you should be buying calls 2-3 months out!


intel would have gone to 30-35 if they would not have buried amd for market share - intel is putting the hurt on dell for jumping to amd

expect higher prices if amd does not deliver on what they said for this fall



intel owns the high end = amd can't sell a fx-74 or fx-72 and they getting $300 for a fx-62 while intel owns the $900 chip market

intel will own the mid market with qx6600 at $600 when supply catches up


Quote:
Quote:
Quoting JJ,
Quote:

If the rumoured 3Q pricing (3.0 ghz E6850s on 1333 FSB for $266, q6600s at the same price)) is correct, yes, this is outright economic warefare by Intel.

In the short term, you and I win - big time.

Seriously, $266 for an E6850? - that's just f$%king amazing.

If they die, another will take their place.



i do not beleive the above rummor its totally against share holder value - why give the chips away, e6850 $400 i would guess - qx6400 $500 and qx6600 at $600

the x6800 will become the x6900 and the qx6700 stays as is for 1 yr
March 11, 2007 9:30:15 PM

Quote:
I realy didnt want a lesson in economics.
Why should we care?
will our opinions directly change anything?

this is where ppl can separate the knowledgeable ones from the others.

plus, it is actually an excellent educating ground for those who are willing to learn (i.e. me :lol:  )

ALL HAIL TO THE FREEDOM OF SPEECH
March 11, 2007 9:32:48 PM

Quote:
If the rumoured 3Q pricing (3.0 ghz E6850s on 1333 FSB for $266, q6600s at the same price)) is correct, yes, this is outright economic warefare by Intel.

This pricing might not be as radical as it first seems; it may simply be a case of Intel bringing forward the pricing of their 45nm chips and applying it to their 65nm parts for a quarter or so to put pressure on AMD.
$266 for a 45nm 3GHz 1333 FSB 4MB cache chip doesn’t seem so radical since these parts are likely to have a lot of headroom so 3GHz is a mid range bin. It still gives them space for higher priced parts. Possibly the only thing stopping them from releasing higher clocked C2Ds on 65nm is the TDP. But with the Quads breaking the C2D’s TDP anyway, this may well not be the issue. Is Intel going to go above 3GHz with C2D?

So the plan is to keep AMD’s ASP low whilst Intel transition from 65 to 45nm, by introducing the price cuts early! But if AMD’s new architecture arrives on the desktop later than Q3, why drop your prices so early? Hey, when the bell goes, there’s nothing stopping you from throwing some haymakers from the off. I remember Mike Tyson knocking out Michael Spinks in 91 seconds in round 1 back in the 80s. Spinks was well regarded, a former heavyweight champion and unbeaten. He never boxed again after that bout; no chapter 11 for him. Ding ding, seconds out.
PS. I hope AMD have a good cuts man.
March 11, 2007 10:14:29 PM

Quote:
it's very simple. intel wants the high end back permanently. not just until barcelona. they want the 1990s back. that's where the margin is. if they raise prices back up to "normal" levels this year, their margins will be higher only until AMD introduces their next chip. then they have to R&D like hell to get ahead again. by starting a price war, intel is thinking long term. they are willing to take a short term "hit" on earnings (meaning their profits just dip a little) in order to cripple AMD's ability to keep up. intel wants to go back to the situation where AMD can't afford to develop high-end chips. as usual the wall street whiners are upset because they won't make money off of AMD or INTEL until someone blinks.

AMD may whine that "it's not a level playing field" but a price war is far from illegal. intel isn't dumping chips. they still make money on them. is it "anti-competitive"? probably. but what are you going to do. punish intel for making better chips that cost less? the cost of entry into the CPU market is very high. even then, once you're in, the cost of entry into the high-end is even higher. this is just the nature of the business. this is nothing like the microsoft situation. AMD will not "die". intel does not want them to die. anyone who thinks they will die is crazy. they are just being kicked out of the high-end.


Yes, it's better Intel is using legal, transparent tactics now. Frankly I don't think it will work so well regarding R&D. AMD did great R&D without much money before, and now has IBM helping.

It *might* work some with fab-building. We'll see. I've no doubt Paul O. would like to be back above 80% market share, so he can justify his decisions (instead of getting fired eventually!).

Regarding the high cost, it's less than getting into the commercial airline business. If you like that the U.S. has the leading chip makers, you like things as they are now. If AMD didn't stay competitive with Intel then new competitors *would* emerge. For one thing, countries like China and S.Korea would think about getting into it, and they have pockets deep enough. Avenues might be to use an existing company, like Samsung, or create a new one with state financing. China could put $50B into a project very easily. Or $100B. Intel is better off competing with AMD.
March 11, 2007 10:19:42 PM

Quote:
If the rumoured 3Q pricing (3.0 ghz E6850s on 1333 FSB for $266, q6600s at the same price)) is correct, yes, this is outright economic warefare by Intel.

This pricing might not be as radical as it first seems; it may simply be a case of Intel bringing forward the pricing of their 45nm chips and applying it to their 65nm parts for a quarter or so to put pressure on AMD.
$266 for a 45nm 3GHz 1333 FSB 4MB cache chip doesn’t seem so radical since these parts are likely to have a lot of headroom so 3GHz is a mid range bin. It still gives them space for higher priced parts. Possibly the only thing stopping them from releasing higher clocked C2Ds on 65nm is the TDP. But with the Quads breaking the C2D’s TDP anyway, this may well not be the issue. Is Intel going to go above 3GHz with C2D?

So the plan is to keep AMD’s ASP low whilst Intel transition from 65 to 45nm, by introducing the price cuts early! But if AMD’s new architecture arrives on the desktop later than Q3, why drop your prices so early? Hey, when the bell goes, there’s nothing stopping you from throwing some haymakers from the off. I remember Mike Tyson knocking out Michael Spinks in 91 seconds in round 1 back in the 80s. Spinks was well regarded, a former heavyweight champion and unbeaten. He never boxed again after that bout; no chapter 11 for him. Ding ding, seconds out.
PS. I hope AMD have a good cuts man.

it's much bigger than that. the plan is to keep AMD's asps low forever by starving them and keeping them small and scrawny. this isn't a 15 round fight. it goes on forever. because intel slacked off with netburst, they have to bring the other fist out from behind their back until AMD tires. then they can coast again on 65% gross margins. at least that is the theory. AMD contends that the only reason intel was able to coast in the first place was because of the co-marketing thing (pure genius by the way), the OEM thing, etc. it may be the case that intel can coast purely on brand name and process tech lead alone. we will find out over the next year or two.
March 11, 2007 10:27:23 PM

Quote:
[ ....

it's much bigger than that. the plan is to keep AMD's asps low forever by starving them and keeping them small and scrawny. this isn't a 15 round fight. it goes on forever. because intel slacked off with netburst, they have to bring the other fist out from behind their back until AMD tires. then they can coast again on 65% gross margins. at least that is the theory. AMD contends that the only reason intel was able to coast in the first place was because of the co-marketing thing (pure genius by the way), the OEM thing, etc. it may be the case that intel can coast purely on brand name and process tech lead alone. we will find out over the next year or two.


I think you're right that's O.'s plan for Intel. I don't think it can really be made to work because enough average people now have the idea that and AMD based computer works fine, so AMD will be able to sell it's products to the OEMs and public, and if need be, even advertise (!). So, to do that plan, Intel would have to keep margins low for so long that the owners of Intel (big insitutional shareholders) would rebel , because they will not tolerate their stock being $17-$20 (or less) for years.
March 11, 2007 10:49:41 PM

Netburst really was a blessing in disguise. It allowed AMD to make large gains with their far superior technology which resulted in Intel kicking itself in the arse and getting back in shape. So they both know desperately want to raise their games again which is great news. It’s the most interesting of times for desktop CPU development in my recall. I can see why people go to boxing matches now, they like the threat of blood and destruction. That’s all we need now is a global recession to shake up the status quo even more.
March 11, 2007 11:19:47 PM

Quote:
[ ....

it's much bigger than that. the plan is to keep AMD's asps low forever by starving them and keeping them small and scrawny. this isn't a 15 round fight. it goes on forever. because intel slacked off with netburst, they have to bring the other fist out from behind their back until AMD tires. then they can coast again on 65% gross margins. at least that is the theory. AMD contends that the only reason intel was able to coast in the first place was because of the co-marketing thing (pure genius by the way), the OEM thing, etc. it may be the case that intel can coast purely on brand name and process tech lead alone. we will find out over the next year or two.


I think you're right that's O.'s plan for Intel. I don't think it can really be made to work because enough average people now have the idea that and AMD based computer works fine, so AMD will be able to sell it's products to the OEMs and public, and if need be, even advertise (!). So, to do that plan, Intel would have to keep margins low for so long that the owners of Intel (big insitutional shareholders) would rebel , because they will not tolerate their stock being $17-$20 (or less) for years.

if the plan does not work, i doubt that that will be the reason. what is the reason AMD gained share in the first place? their chips were better. "average people" will change their minds again if AMD cannot make good chips -- the same way average people changed their minds about american cars in the 80s when detroit punted on quality and gas mileage and fixated instead on waving the american flag and making fancier cupholders. what was the time delay between when AMD's chips started beating intel's and when they gained share? that is roughly the amount of time AMD now has to leapfrog intel in performance. the theory is that if AMD loses share, they will not have the money to keep up with a "full throttle" intel. it currently costs them more money than they take in in profits to keep up. their debt/market cap ratio is now 66% http://finance.yahoo.com/q/ks?s=AMD and growing *fast*. this cannot continue forever. i think that if the intel plan fails it will probably be for one of the following reasons:

1. the need for faster and faster CPUs diminishes for some reason. if the avg consumer does not need better CPUs, then they become a commodity like memory chips and intel's edge translates into much smaller profits.

2. intel's co-marketing and OEM agreements were indeed the major barrier to competition, not the cost of developing next-generation chips. (yet to be seen) the reality is probably somewhere in-between with intel's new "coasting" gross margins being a little lower than the previous 65%.

3. CPU development hits a fundamental physical barrier and intel loses its process tech edge over AMD. i.e. both companies hit a wall and the new lead goes to whoever has the best CPU architects.

4. intel management totally screws up again, ignores its engineers, and pulls another netburst

5. a company like IBM steps in and then all bets are off
March 11, 2007 11:34:20 PM

"a little lower than 65%" could be 45% all too easy. You know it's around 49% lately.
March 11, 2007 11:57:01 PM

Quote:
"a little lower than 65%" could be 45% all too easy. You know it's around 49% lately.


as far as intel's plan goes, in the near term it doesn't really matter what their margins are. what matters is AMD's margins. intel has made a profit every quarter since... god knows when, and they have $10billion in cash with almost no debt. they also seem to be thinking long-term. if intel executes well, AMD's margins will be too small for them to go head-to-head with intel on the high-end. this means intel can slow down and bring their margins back up sometime in the future. they will then make a heapload of money and are in the driver's seat of the CPU industry. if the comarketing and OEM agreements really did add 20% to their margins i think that just turns intel from a "great" investment into a "good" one. we will see.


correction: intel currently has $2 billion in debt
http://finance.yahoo.com/q/ks?s=INTC
March 12, 2007 12:04:55 AM

The concensous seems to be that Intel is attempting to interfear with, and reverse the growth of AMD, by sacrificing margin, through pricing.
Got proof?
Make no mistake, this is ilegal. It constitutes predatory pricing, and is in breach of anti-monoply laws.
Intel does not want to be caught. They would be broken up, and AMD would gain some serious resitution.
Are the world's FTCs keeping an eye on Intel? Yah, they are under investigation in multiple jurisdictions.
If Paul says the wrong thing, expect the head of the FTC to have a chat with him. Then prices will go up.
March 12, 2007 12:19:35 AM

Quote:
The concensous seems to be that Intel is attempting to interfear with, and reverse the growth of AMD, by sacrificing margin, through pricing.
Got proof?
Make no mistake, this is ilegal. It constitutes predatory pricing, and is in breach of anti-monoply laws.
Intel does not want to be caught. They would be broken up, and AMD would gain some serious resitution.
Are the world's FTCs keeping an eye on Intel? Yah, they are under investigation in multiple jurisdictions.
If Paul says the wrong thing, expect the head of the FTC to have a chat with him. Then prices will go up.


it's not illegal if intel still makes money on its chips (it does). intel isn't trying to drive AMD out of the cpu business. intel is trying to drive AMD out of the high-end high-margin cpu business.
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