Back To The Same Old

Historically, AMD processors have been priced at an average discount of about 33-40%, somewhat less at the high-end, somewhat more at the low-end.

For about the last six months, AMD has attempted to upvalue their CPUs by trying to price them at or near the prices Intel charged for its processors.

It hasn’t worked, and, outside of one exception, AMD has given up on this.

If you look at today’s pricing, you’ll see that we’re back to the good (for you)/bad (for AMD) days of big discounts:

The 3200+ doesn’t have an Intel equivalent as yet, but when Intel introduces the 3.2GHz PIV, the current AMD price will represent around a
25% discount from the expected 3.2 price.

Indeed, as XBit Labs pointed out the other day, AMD’s pricing from the 2400+ down is now equivalent to Intel Celeron pricing.

Will You Ever Pay A Lot For Their Muffler?

While these prices are by no means the worst AMD has ever had to contend with, AMD’s failure to sustain pricing even close to Intel’s raises a serious long-term question:

Will people ever pay a lot for their muffler?

I’m not talking about overclockers, they’re hopeless. 🙂

But for the rest of the market in general, it doesn’t seem like AMD can sustain prices adequate for even break-even, much less enough to finance the billions and billions of dollars necessary to keep up with Intel.

Yes, there’s always the possibility of using IBM as a foundry, but foundries have to finance those billions in fab costs, too. Using AMD as a foundry simply means AMD has to pay for IBM’s fabs rather than their own.

It’s not like AMD has to charge Intel-like prices to stay alive. If they could just average $100 a processor (Intel now gets around $150-175), they’d be in good shape.

But they can’t get $100 a processor even when they’re doing well. The last couple years, it’s been more like $60-$75, pretty much no matter what they did, or how well their offerings compared to Intel.

Opterons are not the answer. They’ll help, of course, but if AMD averaged 100,000 Opterons at $500 a pop per quarter from now through 2004 (a figure they’d be delirious about), that would only increase their average selling price about $10.

Clawhammers? Well, ask yourselves, AMDers. Are you ready to change your habits and stop saying, “I’m not going to pay a lot for this CPU?” Every indication I’ve seen say “No,” if anything, the opposite.

If I had to predict what is going to happen over the next year or so, I’d say that on the whole, AMDers are going to let AMD keep their Hammers until they’re about as dirt-cheap as the Athlons have become.

If that’s what happens, I don’t think AMD can survive that. They can’t continue to exist year-in, year-out on ASPs hovering around $60-$70, but the AMDers seem happy to back AMD up to their last dollar.

From AMD’s perspective, with friends like this, they don’t need enemies.

*** P.S. If you live outside the U.S., and are baffled by this phrase, there’s a U.S. discount muffler company named Meineke that uses the catchphrase, “I’m not going to pay a lot for this muffler.”

Ed