"The Travesty Continues"

[Graystar]

However, the way supply and demand is supposed to work is that the higher prices created by demand is supposed to increase the supply.

I think the California energy crisis soundly shot that theory to hell.

The new theory is "why increase production (and hence, costs) when low-production/high demand produces the same profits?" I think that theory of operation takes precedent when you’re the sole supplier of an item in high demand.

 

[PingSpike]

Yeah, that theory only works when there is more than one player offering the item in demand. If its a monoply then they might as well just jack up the prices and increase the profit margin. They'll probably actually go for the net profit maximizing production point though, which often still consists of screwing the customers.

 

[z0n3]

Even though I have no plans to get an Operton (waiting for yonah) I am still mad at AMD and the resellers. AMD for being so stupid and the resellers for jacking up the price.

 

[PingSpike]

Ok, so I actually read the article. I think I was kind of out of it when I posted last.

I'm not sure what Ed is saying in this article. He says they ought to make more chips because there is an obvious demand. But his last article suggested that we were seeing the affects of a war between opteron and A64 branches within the company, with opteron moving in on the A64's consumer level territory. It seems like the shortage, and move to chips being installed in a package by a different vendor is AMD realigning things. If everyone starts buying opteron for desktop usage, then they will have a lot of left over A64 and a shortage of offerings to their server customers. Seems like turning the valve off on the retail opteron availability is their way to correct this.

 

[cV]

Well, to be true all but the stupid companies these days perform rolling tests where they cascade the prices downward to see the optimal profit maximization point. It's not optimal to raise the price even a little too high because that can result in not enough people purchasing the product. Conversely, if the price is too low the profit is not maximized, assuming infinite supply. The best price point lies right in between the two extremes, and depends on the income/financial maneuverability of the customer demographic.

To simplify, high prices ! always = high (or maximum) profits.