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Price cutting by enough to pull your demand forward is probably a losing strategy for Intel. If they cut their CPU price in half, would they sell twice as many?
by sokoloff 4y ago
Price cutting by enough to pull your demand forward is probably a losing strategy for Intel. If they cut their CPU price in half, would they sell twice as many? I doubt it.
Their gross margin is between 40 and 50%. Call it 50% to be generous and make the math easy. If their selling price today is 6X and they sell U units, their gross profit is 3 * X * U. If they cut the selling price to 4X and sell 2U units, the resulting profit is around 2 * X * U. If they were somehow able to move 3 times as many units with a 33% price reduction, their gross profits would stay about the same as today.
What would a 33% reduction in the price of the Intel components in your laptop mean at retail? A 10% reduction in the shelf price? 15% maximum?