Hammer Clawing At Your Wallet

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This CNN story seems to indicate Joe Sixpack is saying, “I’m not going to pay a lot for this computer.”.

Far more ominously for the CPU manufacturers, they’re chasing MHz less and less.

The article indicates that the percentage of Intel’s “value” (read Celeron) sales jumped from 30% to 35% last quarter. Comments from AMD during their conference calls indicate that AMD Duron sales appear to have gone from a little over 40% to a figure approaching 50%.

I find myself configuring systems for the Joe Sixpacks in my life, and I see myself putting together what I call to myself the “last system.” Not that I literally think they’ll never need another computer again, but that for what they do, I can’t see ahead to that time.

For instance, someone I know just went from a four-year-old 300MHz K6-2 to a 2.4GHz PIV. Even after making MHz adjustments for the PIV; an equivalent future jump would be to a 15 GHz machine, and I don’t see any 15GHz machine around in 2006 or anytime soon thereafter, much less what improvement someone who browses webpages and email is going to get out of one.

For sure, there are some segments of the population for whom nothing will ever be enough, people reading this website being (mostly) one of them.

But how many of you are out there compared to those beginning to say, “No mas?”

For Right Now

AMD has sort of hinted at this before, but they seem to be under the impression that they’ll be able to suck in big bucks for quite some time with Clawhammer.

As the statements here indicate, AMD doesn’t expect the price of a Clawhammer to drop to the point where you could put in inside a $1,000 box until the end of 2003. A $1,000 computer implies at least a $200 processor.

This presumes some very high prices for Clawhammer when they come out (and even higher ones for Sledgehammer; though acceptance, not cost, is the challenge there).

Now if AMD can get $300-400 for a million or two Clawhammers a quarter, and even more for the Sledgehammers; their financial problems go away just like that.

It seems like they’re betting the company on just that happening, fast.

Will it? Would you pay $400 for a Clawhammer, motherboard extra? Or does a Barton start looking really good to you; especially when you already know tomorrow’s Barton will become next year’s Duron?

Whether Clawhammer is worth it or not isn’t even the immediate issue; that’s question number three.

Question Number One is “To how many people is ANY processor worth $400 nowadays?”

Question Number Two is “Of those who said “Yes” to Question Number One, how many are willing to pay $400 for an AMD processor?” (after all, those doing this nowadays are Intel buyers)

We only get to “Is it worth it or not” by Question Three.

How many of you are left?

If this segment of the community won’t pay those kind of prices, how many others will?

AMD’s problem is that they stumbled at the worst possible time. They are trying to transition in the midst of a tech sales recession and a tech finance depression.

If AMD had another half-to-a-billion dollars around to burn, no problem. Given enough time, no doubt they’d pull out of this: the essential strategy is good.

But it’s pretty hard to find another half-to-a-billion when you borrowed a half-bill just six months ago, the stock market is only valuing your company at two billion, and that market has lost all patience with struggling tech firms.

Perhaps this talk of high-priced processors is just a ruse to get the financing needed to get AMD over this hump.

But the fate of this company is going to be decided yea or nay on Wall Street, not Tech Street.

Tomorrow, the longer term . . . .

Ed

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