AMD vs. AMD Fans?

Full Article - Overclockers.com

From The Article "The Real CPU Battle of 2004" - Ed Stroligo - 7/17/03

AMD posted a loss of $140 million last night. This is actually better than expected, since AMD managed to cut costs more than even they expected.

For more details, you can read Chris Tom's notes on the earnings conference call.

Really, all you can say is that they're betting the company on Hammer: that they can make and sell them in the millions, and sooner rather than later.

For the next year, the question will be "Can Hammer revenues more than offset the inevitably deteriorating revenues from Athlons and get AMD into the black?"

Look into that question more closely, and it really becomes "Will AMD fans pay a lot more for Hammers than they have for Athlons?"

That is AMD's core problem. Most people buy AMD processors because they're cheap. When they stop being cheap, they stop buying them, and "cheap" has become a lot cheaper the last few years.

That's the trap AMD is in, and that's why I've been gloomy about the company's prospects. If they don't get out of it, they'll be history.

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NOTE: This Information Is Edited :- Reading The Full Article Is Recomended

What do you think? Will AMD end up going under if the AMD fanboys continue to buy their cheaper CPU's? Why doesn't AMD just raise the prices? Will the Athlon 64 pull AMD out of the hole, or will the computing community take too long to embrace 64-bit computing, causing the Athlon 64 to die off?

Just wanted to know all of your thoughts on the subject.

I don't buy processors very often, but as long as AMD is still reasonably priced, and they have the best performance per dollar, I would most likely pay more - AMD has always served me well

I also think AMD may go under if they raise prices too much - most retail systems don't sell AMD, so looks like we may pay increased prices for the processors to help them out, or AMD may go...

I would not stop making the xp's and Barton's yet.

Amd will never go under perse(sp?) because they do alot more the processors, atleast i hear they do . If they were to ever go into deep deep trouble they would just sell of their processor division and go on their happy way with their super duper flash memory half leading the way. And then come back some day with more money and more market power.

But on processors amd has been selling below Intel for almost 20yrs now and everyone thinks just because Amd is losing a few bucks, not the first time, that they are going to go under. Guess what the economy sucks now and Intel is facing the same drop in sales. And both companies can live through this recession and even a depression because they can lower output and layoff employees. And perhaps even make their Fab plants more efficient so it would cost less. The only thing AMD has to fight is the recession and if they can make it through that their sales will increase after this recession because everyone will be upgrading their computers from before this started.

Well the fact is that if its not the fastest people are not going to pay top dollar for it. Right now they arent the fastest. It also hurts them a lot when people can get 1700+s bor $50 and achieve the same speeds as their high end chips. But I think that they do need to continue selling their lower chips at such low prices because otherwise people wont buy anything and they would be screwed.

I agree with what you said funnyperson, but since the majority of the people who even consider going with an AMD are either computer enthusiasts or people who have decent knowledge of computer hardware how is AMD going to stay afloat with it';s low end chips? I mean that base for the AMD sales is relatively small, and there is only so much money coming from us, they need quite a bit to insure their survival in this industry. I hope that Athlon 64 will help to keep them afloat for a while when it is released, but since the software industry is nowhere near supporting 64-bit technology, where is AMD going to stand?

I have always been pretty good when it comes to figuring where the tech stocks are heading. AMD is one of the many tech stocks i have watched over 5+ years. If i were asked what percent chance that AMD had of going under i'd say they have a 80% chance of doing so. They have (i think without checking) lost money in the last 7 quarters. Intel is slowly taking marketshare from them. I posted in a stock forum a few days ago that i think Intel will pass the 90% marketshare.
Yes they do have other products besides desktop cpu's. They make flash memory which hasn't gone as expected this year and then the server chip Opteron which we now know is not taking off like they hoped would either.
As for pricing their chips higher it's like Damned if they do and Damned if they don't. I mean if they do then they may lose customers and down they'll go or if they don't they'll keep posting losses and sooner or later they'll go under.

we, as overclockers, really dont make that much of a dent in either amd's or intel's revenue. They must make at least 80% of their profits from selling their cpu's to the likes of Dell and Tiny.

.....well, amd would if they got their act together

I honestly don't care anymore. I'll buy whatever works best at the best price. Right now it's AMD, tomorrow who knows...

I also suspect that Asia may become a bigger player in chip manufacturing in the coming years. They have a lot of R&D going on over there at this time and they're coming up with some nice clocks. I wouldn't be surprised to hear of a third major player coming by 2005/2006, which is about when I suspect AMD will finally file bankrupcy.

james.miller said:

we, as overclockers, really dont make that much of a dent in either amd's or intel's revenue. They must make at least 80% of their profits from selling their cpu's to the likes of Dell and Tiny.

.....well, amd would if they got their act together

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I agree with that. I think that if Dell, Gateway, etc. were to buy from AMD it would help AMD alot. In my opinion i dont think they need to cut out Intel, just let the buyer choose between AMD or Intel, and make preconfigured models for sale with both AMD and Intel. But, since the average computer buyer is definatly biased towards Intel, they would need to make comercials like "Dude! your gettin a Dell with the latest advanced 64bit AMD processor!"
Something like that would give the buyers reason to choose AMD vs. Intel. And having Dell, Gateway, etc. buy and sell computers with AMD processors, it would help not only the computer company out, but also help AMD becuase they would attract the crowd that wants AMD AND Intel.

But, IMO I think that when the Athlon 64 is released the major computer companys will switch becuase they seem to use whatever is the fastest. Back when the Tbirds were making Intel paper launch the Pentium III's becuase they were faster, even GATEWAY used AMD. So, I think this 64Bit, will give the average consumer reason to buy AMD, with the help of advertising of course, and then the major companys might switch.

Personally, I will buy whatever chip has the best bang-for-the-buck. Right now, that's AMD. You can't beat $45 for a good CPU! I'm not brand-loyal, though. I'm wallet-loyal.

IF they make the stupid decision to stop making XP's and Bartons and IF they start only selling pricey chips that can't beat Intel on a cost-vs-performance ratio, then a lot of their current customers, such as myself, will switch to Intel and AMD will probably go under.

I don't think that's going to happen, though. The best thing they could do for themselves is put the brakes on XP and Barton pricing. They have got to stop it from going down. People are willing to pay what they are paying now. They might be willing to pay a little more, but not much. When the prices go down, as they keep doing, it makes their fans happy, but it has to be costing them a lot of money.

From a overclockerpoint of view people may need to make this decision based on a few things that will happen in the future. First of all it depend on how much they raise the prices. Secondly, Things may progress towards a AMD processor that cant have the multi's changed. That could change some peoples decision.
Another thing to think about is the mobo manufacturers. If AMD continues to slip further and further in debt some of these manufacturers may not focus so much on supporting AMD as widely.(they dont want to bet on a dying horse) Whats the good in having a cheap, fast AMD chip if you cant buy a mobo that is current and up to date with all the technologies of a Intel board? I love AMD and will continue buying there cpu's. But they are already lacking in some areas and things will have to get better for them in a big hurry if they are to stay competitive with Intel.

I agree with what Ed had said. Intel probably has to worry more about Via than AMD. Right now as computers get smaller and cheaper, cheap, cool, quiet, and good enough seem to be better choices for the average consumer than cheap, and almost as fast as the market leader.

If AMD raised their prices to Intel's level it wouldn't be good for what I see as two large reasons.

First, their CPUs simply aren't worth the money. Intel simply makes a better processor. Their manufacturing process is superior, and right now, so is their performance.

Second, AMD fans tout cost/benefit ratios as their primary motive for choosing AMD processors. I agree with this. The chip in my rig cost me $110 and it's clocked so fast that I'll not need to worry about upgrading for another year (although I will). Getting performance on a level above what the fastest stock CPU runs at from a $40 chip gets geeks like us all hot. It's a novelty thing more than practical performance, I think. Right now, AMD is the only company making processors capable of this.

But remember: We are an esoteric fragment of the computing industry. Not many people care about manipulating multipliers or core resilience under high voltages and temperatures, although we do. Overclockers don't determine sales - OEMs do. And if AMD jacked up their CPU costs, so would OEMs raise their system prices. And to your average department store patron, if you're juxtaposing equally priced AMD and Intel systems, Intel screams recognized performance.

Performance on a budget is AMD's trump card. If they rid themselves of it, they're outta here.

Silver said:

I would not stop making the xp's and Barton's yet.

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rofl

have fun losing more money

I think AMD's biggest problem is there golden chip, the 1700.

They have sold a load of those because you get hugh dollar performance for a low dollar price. There is really no need to buy a 2800 or something like that. Intel on the other hand has managed to make all of the new "C" chips, upper end & great ocers.

If the tech market turns aroud soon enough, the Opteron could very well become AMD's money maker. The benefits of the Opteron are that it will allow companies to do a partial upgrade. By this, I mean that they can upgrade their hardware, but keep their legacy software. While the software won't benefit too much (if at all) from the upgrade, it would be a much cheaper way to get into the higher end server market for businesses that already use x86 systems. The only other options for them to move to the 64bit world would require at the very least recompiling the code (if the source code is in their possession). Even that can cost quite a bit of money. Worst case, they may have to have their software recoded (huge expense). The other benefits are that the Opteron performs as well as the Itanium according to some reviews, yet it is priced even lower than the Xeon. Of course, that will really depend on when businesses start buying new hardware again. If that takes too long, this could be a big problem. There has been some reporting (I don't know if it is accurate, and I don't remember the link) that Intel may "dump" the Itanium. Due to the extreme lack of sales of this chip, Intel may even to go the AMD route and make a 64bit chip that uses an extended x86 architecture. If that happens, then AMD will be in the same boat with 64bit chips as they are in the desktop market. Value vs. product placement.

If AMD wants to stay afloat in the desktop market, I think they need to make deals with small/medium vendors of systems. Reduced prices. As those companies grow, so will AMD's market base.

I suspect (though I may be wrong, and I haven't read that anywhere) that part of AMD's trouble with big OEMs (while it probably is also related to poor chipsets that the OEMs don't want to support) is Intel may have made a M$-like deal with them. "If you use only our chips, we will give you a substantial rebate," or something like that. If I were them, that's probably what I'd do.

The problem with the price/performance concept of AMD is that even now with the economy so bad, fast (though not top of the line) OEM systems can be had for $300 dollars or so, and that can include a monitor/printer/etc.... While we here generally scoff at OEM computers, they do make the overwhelmingly largest part of the desktop market. While the chip price difference is fairly wide, the system price difference is not (especially when looked as as ratios). The problem is further deepened by the fact that some OEMs do such a large volume of business that the savings they get allow them to out-price a similarly equipped AMD rig from a smaller OEM.

Will AMD die? Probably not, look at how many companies out there right now have filed for bankruptcy and are still going. Even Enron still has it's doors open. Will they become one of those companies? Not even the experts can say for sure. Will they have some rough times ahead? When have they not?

This is the same old song and dance I hear everytime AMD post any results...last year it was...AMD is betting the company on the XP...a few years before it was the Tbrids...and every year everyone says AMD is going to go under...well AMD has yet to go under...so until the day I see AMD belly up...will be the day I believe all of the things that are said...

what am wondering is why AMD hasnt started some large advertising campaing, back when intel took out the first P4 anyone who had any slight knowledge about computers knew that the early P4 were total crap and not many were buying them. Their Ad campaing gave them the power of the masses which dont have a damn clue as to how a computer works and those masses allowed Intel to maintain good profits regardless of the fact they were selling one of the crappiest CPU's ever made.

IMO AMD should be taking out a new CPU every time they start to go in the hole ... what they have to do is stick to the XP's, improve on them and Advertise as much as they can

I agree that advertising may help AMD a great deal. The only thing that I dont understand about your statement merlinx29 is you saying that they should continue to improve the XP line. It is sad to say, but the XP line is almost at the end of its life due to it's architecture. That is why it took AMD so long to come up with the 2800, the 3000, and the 3200. They had to switch to the Barton core so that the new AMD had something to offer despite the fact that the Barton's are clocked lower than the high end thoroughbreds. I dont think that AMD will go under anytime soon, but I do think that their financial trouble could be getting worse and worse.

Hopefully, once the Athlon 64 is released, it will help to pull AMD out of the hole, and boost their sales. the Athlon 64 is very expected in the computing community, and I think that if AMD can do the correct marketing, it may help them out a great deal.