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If they're supply-limited, they can increase price all the way until demand falls to meet supply. Selling widgets priced below the equilibrium point achieves no

If they're supply-limited, they can increase price all the way until demand falls to meet supply. Selling widgets priced below the equilibrium point achieves nothing for capturing market share, it just loses potential revenue. I.e. if they can only manufacture 1000 widgets, but 10,000 people want to buy one at the given price point, the gained market share is still only 1000 individuals. The number of people who want one but can't get one due to lack of supply is not market share. Temporary under-pricing might be a valid strategy if AMD is planning to ramp up manufacturing capacity, but comments further down in this thread suggest they lack the fabs to do that.

imtringued 7y ago
You're completely forgetting about the future loss of sales when someone only looks at AMD CPUs once. The buyer will switch to Intel immediately and then when prices are finally down again won't be shopping around for prices. The impression that AMD is overpriced remains.
- missosoup 7y ago
  They could have priced higher and still dominated intel price/perf ratio wise. The supply/demand equilibrium point is somewhere higher than the current price and lower than intel break-even price. The only way they'd set the impression of overpricing is if they actually overpriced. They did the opposite. Whether it was a mistake in pricing or some calculated second-order strategy, we'll never know. What we do know is they're leaving cash on the table whether intentionally or not. Temporarily (keyword) underpricing to hurt competitors is not unheard of but I don't see how it will hurt intel unless it significantly shifts mindshare for the next ~2 years and allows AMD to get a real foothold in the server market.
  - zwaps 7y ago
    They have basically one opportunity to set the expected price point and as it turns out, they prefer to get all the positivity and hype on their side, than perfectly optimize to marginal demand. I am not sure it is a bad choice.
keithnoizu 7y ago
Selling out of inventory isn't a bad move if you seeking to raise capital or debt to increase production capability. E.g. were profitable and selling out at this price point and arguably would continue to do so as we ramp up production. Especially if looking down the road long term. In the short term it generates buzz, thus this very post here on hacker news, which isn't necessarily negative unless it is a prolonged inventory shortage.

imtringued 7y ago

You're completely forgetting about the future loss of sales when someone only looks at AMD CPUs once. The buyer will switch to Intel immediately and then when prices are finally down again won't be shopping around for prices. The impression that AMD is overpriced remains.

missosoup 7y ago
They could have priced higher and still dominated intel price/perf ratio wise. The supply/demand equilibrium point is somewhere higher than the current price and lower than intel break-even price. The only way they'd set the impression of overpricing is if they actually overpriced. They did the opposite. Whether it was a mistake in pricing or some calculated second-order strategy, we'll never know. What we do know is they're leaving cash on the table whether intentionally or not. Temporarily (keyword) underpricing to hurt competitors is not unheard of but I don't see how it will hurt intel unless it significantly shifts mindshare for the next ~2 years and allows AMD to get a real foothold in the server market.
- zwaps 7y ago
  They have basically one opportunity to set the expected price point and as it turns out, they prefer to get all the positivity and hype on their side, than perfectly optimize to marginal demand. I am not sure it is a bad choice.

keithnoizu 7y ago

Selling out of inventory isn't a bad move if you seeking to raise capital or debt to increase production capability. E.g. were profitable and selling out at this price point and arguably would continue to do so as we ramp up production. Especially if looking down the road long term. In the short term it generates buzz, thus this very post here on hacker news, which isn't necessarily negative unless it is a prolonged inventory shortage.