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The thing to remember is that AMD is a small fraction of the size of Intel, and they have to cover the same market segments. Not sure what you mean by this st
by brk 17y ago
The thing to remember is that AMD is a small fraction of the size of Intel, and they have to cover the same market segments.
Not sure what you mean by this statement. Should AMD get some sort of special consideration because they are smaller than Intel?
- netcan 17y agoThe point does not stand alone, you are right. drewcrawford said "If they try to specialize (say, servers, or notebooks), Intel will just sell that segment at a loss" That's the point & that is arguably anticompetitive. IE, they are small and they have to spread wide to avoid being open to predatory pricing.
- brk 17y agoYes, but they voluntarily entered in to their business. What is AMD's competitive advantage? The best I've ever seen is that they are cheaper than Intel for a given processor class/speed. However that doesn't seem to have gotten them much traction. Competing on price alone rarely makes for a successful company.
- netcan 17y ago" Competing on price alone rarely makes for a successful company" You sure?
- brk 17y agoYes. It's fairly established that chasing down the lowest-price path usually doesn't make for a very stable business model in the manufacturing businesses. This is even more significant when the competitive options are significantly limited (eg: processors). In larger markets (eg: automobiles) there is more room for low-cost competitors to make some money, but they are not often powerhouses of the industry. If you have data to the contrary please post (and by data I mean more than just 1-off examples).
- netcan 17y agoWell, first you said companies not just manufacturing companies so I would have pointed to Wal Mart. But since you have limited the range it's more difficult because manufacturing companies are not as high profile as retailers. I will point to China as a whole as a contemporary example. Chinese companies have consistently beaten the previous generation's manufacturers by achieving lower costs. Anyway, since you say "it is fairly established" the burden should be on you to tell me where & by who. What I know is established is that internet marketing gurus speaking to small & micro businesses recommend finding non price differentiators. This arguably makes sense for small businesses where market size is not an issue. Most large companies however, need to go after large markets & that means lower prices. My old marketing textbooks say that there are two broad positioning strategies & corresponding pricing strategies niche(differentiated) & penetration(low cost). The larger share of the pie usually belongs to the latter with high margins often going to the former. I would argue that low cost strategies are probably more "stable" since they do not rely on innovation & other constant miracles. Even Apple may flop two or three major products in a row & die again.
- rdl 17y agoBeing a low cost producer is a great survival strategy, even for a new entrant. Walmart, Amazon, and PC vs. Minicomputer are good examples. You can either use your cost advantage to undercut prices profitably, or use your large margins to outspend on R&D, marketing, etc. Selling at low prices given the same cost structure is not a good survival strategy. "We lose money on every unit but we'll make it up on volume!"
- sandGorgon 17y agowhat about Honda vs.... I dont know.. Detroit ? That is a good example of manufacturing companies winning on cost.
- brk 17y agoHonda, Toyota, et al got a leg up on the US Automakers by delivering a higher quality and more efficient product. They also managed to do it cheaper, but their competitive advantage was NOT primarily price. Car companies that tried to deliver a low-cost product without the quality behind it (eg Yugo) ultimately failed.
- krakensden 17y agoBack when the opteron and amd64 instruction sets came out, they were pretty convincingly beating intel in performance, and for quite a long time, and after that they made a big advertising push about their processing power/watt.
- rbanffy 17y agoAMD voluntarily entered the desktop processor business, IIRC, at a time the US government required a second source before they could buy x86 chips. How does that make anti-competitive behaviour from a company many times their size nice?
- anc2020 17y agoIt is anti-competitive to sell anything at a loss.