You've heard all about
Intel (Nasdaq: INTC) killing its only rival,
Advanced Micro Devices (NYSE: AMD), in the
high-end part of the processor market.
Nehalem-class chipsare pretty much untouchable in a fair
fight, and AMD's
Istanbul chipsare putting up a fight only by essentially
putting more chips into the same processor package.
But it's a very different story in the lower regions.
Reviewing AMD's latest slab of budget-friendly processors,
longtime industry observer
AnandTechnoted that AMD is "killing Intel" below the
$90 price point. Compared to Intel, the reviewer would take
AMD's new three-core chip -- but it's not the best deal AMD
can offer. The gaming gurus at
FiringSquadconcur: "Obviously Intel's willing to
concede this business to AMD for the time being," and "you'll
just have to pick which value AMD CPU to choose from."
Intel could become more competitive in this space by
simply dropping the price of a few strategically chosen
processors -- but that has arguably been the case for a
while, and Intel ain't going there. In part, I'd imagine that
Intel wants to protect its
nice, fat gross marginsby keeping unit prices on the high
end. That strategy also reinforces Intel's image as a
luxury brandnext to AMD's budget proposition --
a tactic that has worked wellfor
Apple (Nasdaq: AAPL) against cheaper but not
always worse offerings from
Hewlett Packard (NYSE: HPQ),
Lenovo , and
Dell (Nasdaq: DELL). Image and branding makes
a difference when you're talking about consumers.
Then again, Intel's pricing plans could be designed to
keep antitrust regulators at bay. AMD and Intel are
playing a high-stakes game of whodunit in courtrooms and
government agencies around the world, and Intel would be
silly to give its prosecutors fresh ammunition today. Yes,
price changes are an everyday toolfor every business.
That's not important; it's the perception of strong-arming
the competition that Intel needs to avoid.
That's how these reviews illustrate one reason why I
believe that AMD will be around for years to come. At worst,
the company could be buyout fodder for
longtime partner
IBM (NYSE: IBM) or
hungry multinational giant
Samsung , but that's no disaster. Many
investors would happily settle for the mandatory buyout
premium. And in the meantime, AMD remains unmatched in a
high-volume (albeit low-margin) market segment.
That's good enough for me. How about you? Share your
thoughts in the comments below.
This article was originally published as
Why Won't Intel Kill AMD?on
Fool.com
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