Big Daddy,
From your remarks can we assume that Intel is not allowed to compete with AMD, and should allow AMD to keep taking market share?
First of all, Intel is not a monopoly, I think AMD has proven that by winning market share. Just look at the beating Intel has taken in stock price, because of market share losses. This is the way competition works, when you have a lousy product, your competitor takes market share. When you have a better product, you win market share. This assumes reasonable pricing, of course. Microsoft has been putting out garbage for over 20 years and have lost no market share. That's a monopoly. AT&T was a monopoly when they controlled all the phone lines. Intel suffers from bad products, and is vulnerable when they put out junk. That's real competition, although AMD is such a poor company they are lousy competition. IBM needs to buy them and really create some competition.
Secondly, Intel is doing what any company would do, and it is not even an attempt to knock AMD out of business. They have excess inventory, and capacity and want to hold market share until a time they can start selling the P8s. I am sure at least some of this is to placate Dell too, so they stop losing market share. They are not selling these processors at a loss, since getting them to these clock speeds is trivial considering the overclocking they are capable of. Also, considering they are 65nm on 300mm wafers, they are not expensive to make. So, it is a perfectly legitimate move.
If they were to sell them at $50 a pop and losing money for a few quarters to run AMD out of business, then I'd be inclined to agree with you. But, selling processors at a profit, to stop losing market share is a perfectly legitimate action.
Besides, Intel does not want to knock AMD out of business, even though it would be easy. AMD is a very easy company to compete with, they have poor manufacturing vis-a-vis Intel, can not develop any innovative technologies, although are good at implementing existing technology well, and have a very limited product offering. This is perfect for Intel, and the only way they lose is when it is their fault.
AMD will NEVER go out of business completely, it is too lucrative a market for a bigger, more powerful company (IBM, in my mind) to not buy when the company is nearly dead. AMD owned by a big company like IBM would be a most formidable competitor to Intel, and surely Intel never wants this to happen. They want AMD alive, but not very strong, and so far they have been able to keep them there. Any change in that is just as bad for Intel as it is bad for AMD (assuming they go into a death spiral).
So, they'll knock them down to sub-20% market share, and let them bottom-feed and survive. AMD had their chance with all of Intel's mistakes, but that time is over and they will become Intel's pawn again. They failed to expand their product offerings, or broaden their company to offer solutions instead of parts. They failed to create a truly new processor since the K7, and now find themselves seriously outgunned. The irony is, in their success, they probably failed more that at any time in their past. There is always a lag between failure and market reaction to it, and we're about to enter that stage for AMD. They are in deep, deep trouble because of their terrible failures to become a real technology company. Just watch and see.
[Posted by: TA152H | Date: 05/05/06 02:39:58 PM]