AMD cuts Phenom II prices

[highoctane]

Cheap chip for all benefits everyone but the company.

AMD has reported a gross margin of around 50% for the last two quarters, the cheap chips can't be hurting them very much or this figure would be much lower.

The vast majority of the population using computers are not particularly interested in cpu performance. Whether AMD offers a $1000 high end chip isn't going to drastically impact their bottom line in the retail market simply because there are much less machines sold at that level in retail. If AMD can offer a solid product in the meat of the market they should be able to maintain their margins.

Just look at the success the ATI division has had with targeting the mainstream market with affordable performance while Nvidia was elephant hunting and had its sites on the big dollar enthusiast market.

[moiraesfate]

Price drop on newegg brings it to 235, not 225. Its already up. And I just bought it. Couldn't pass up the deal.

[tajoh111]

AMD has reported a gross margin of around 50% for the last two quarters, the cheap chips can't be hurting them very much or this figure would be much lower.

The vast majority of the population using computers are not particularly interested in cpu performance. Whether AMD offers a $1000 high end chip isn't going to drastically impact their bottom line in the retail market simply because there are much less machines sold at that level in retail. If AMD can offer a solid product in the meat of the market they should be able to maintain their margins.

Just look at the success the ATI division has had with targeting the mainstream market with affordable performance while Nvidia was elephant hunting and had its sites on the big dollar enthusiast market.

If that was the case, AMD would not be losing money at the rate it is. It gross margins are undoubtedly worse than Intels.

I don't think T Flight was saying we need 1000 dollar chips. I think this is the implication of the 1000 dollar chip. When you can sell a consumer level chip at the 1000 dollar level and it will actually sell, that means you have technology that is cutting edge and derivative using the same technology will sell well enough to the mainstream or make a profitable lineup of chips.

AMD cannot produce a 1000 dollar consumer chip simply because its technology is not good enough. Considering the size of the company compared to the competition, it's no surprise.

AMD targetting the mainstream consumer has not been nearly as profitable as NV when they could charge what they wanted because they had no competition.

[AbelJemka]

I don't think you got the point.

I don't think you got the point too. Either T_Flight don't have it.
You speak about competition like in old days, AMD speaks about competitiveness.

Highest performance is not necessarily the key to sucess. Just look at Nvidia-ATI. Nvidia have the performance crown but which company sell the most

AMD targetting the mainstream consumer has not been nearly as profitable as NV when they could charge what they wanted because they had no competition.

2008 Nvidia margins were ridiculous. That's wh they badly needed 55nm. They earned pityful money with 260 and a little more with 280 GTX

.

[alpha_tot]

If that was the case, AMD would not be losing money at the rate it is. It gross margins are undoubtedly worse than Intels.

That actually is true...

Gross margin for 3q08 was 51%: http://www.amd.com/us-en/assets/cont...Financials.pdf

For comparison, Intel's was 59%: http://www.intc.com/secfiling.cfm?fi...50134-08-18805

[highoctane]

You might as well say Toyota won't be successful as Chevy since they don't have a Corvette or that Hyundai and Kia can't compete successfully with their lower prices and smaller margins as the other automakers with flashier faster more powerful models.

AMD doesn't need a fast enough chip to compete at the $1000 price or even the $500 price point to be competitive in the mainstream market where a vast majority of sales are made.

One thing for sure AMD is loosing allot of money paying installments on a multi billion dollar loan and interest for an asset that doesn't generate enough income to cover itself and isn't worth what they originally paid for it.

It can almost be considered like the current housing market where you have someone who bought say a million dollar home only to find out its only worth half what you paid for it but you still have to pay the mortgage, unless you default.

If that was the case, AMD would not be losing money at the rate it is. It gross margins are undoubtedly worse than Intels.

I don't think T Flight was saying we need 1000 dollar chips. I think this is the implication of the 1000 dollar chip. When you can sell a consumer level chip at the 1000 dollar level and it will actually sell, that means you have technology that is cutting edge and derivative using the same technology will sell well enough to the mainstream or make a profitable lineup of chips.

AMD cannot produce a 1000 dollar consumer chip simply because its technology is not good enough. Considering the size of the company compared to the competition, it's no surprise.

AMD targetting the mainstream consumer has not been nearly as profitable as NV when they could charge what they wanted because they had no competition.

[BababooeyHTJ]

Don't say anything, the rants of this guy are hazardous. They can seriously damage your brain

He trolls every AMD/ATI thread. Its best to just ignore it and not let that crap throw a perfectly good disscussion off course.
Yes we all know you predicted the largest global recession since the great depression. We all know.

[rk7p5]

Amd makes money not only by selling these chips but also by generating interest in their products. They also have chipsets and graphics cards to sell for use with their cpu's. System builders have to be informing their customers about the great deals and performance they will get by using amd's products. Even though intel has the perfomance crown atm, with the economy the way it is, people that need a decent performing computer can't afford to overlook amd.

[neo mike]

Amd new chips are pretty good, i use to be a loyal amd fan in the fx days, then i went to intel because thats where the peformance is, i think intel, and amd need to drop prices, with the struggling economy, people are holding tight to the cash, but when prices drop its definitly going get people to buy who were holding back.

My prediction is amd will in the next 2 years take the processor crown back, even though there struggling financialy right now, and rebuilding there company, if they survive these hard times, they will bounch back in a big way, i hope they do, nothing like some good competition between intel and amd, where before when buying, or building a new computer its a no brainer your buying a intel chip. I like it when you have to go which processor do i buy amd or intel.

[Chad Boga]

My prediction is amd will in the next 2 years take the processor crown back,

What has led you to this belief?

[rk7p5]

What has led you to this belief?

Why do you want to know? So you can flame him for his ideas/opinion?

[Chad Boga]

Why do you want to know?

Why does anyone want to know things?

Try being a bit less obnoxious in future.

[User9498]

Well 950 will have 100Mhz higher core speed and also a higher Northbridge speed and DDR3 support(940 has the lowly 1.8Ghz NB clocks,which really is holding it down in a few tests,since this is also the frequency of the L3 cache in NB block).

You guys need to do a better job getting the word out there. Many enthusiasts/avg. users still don't care to understand AMD's architecture, or why higher NB clocks and DDR3 will make AMD that much more competitive. I'm actually most excited about the 950. I have the feeling it's going to gain AMD back a ton of respect.

[tajoh111]

I don't think you got the point too. Either T_Flight don't have it.
You speak about competition like in old days, AMD speaks about competitiveness.

Highest performance is not necessarily the key to sucess. Just look at Nvidia-ATI. Nvidia have the performance crown but which company sell the most

2008 Nvidia margins were ridiculous. That's wh they badly needed 55nm. They earned pityful money with 260 and a little more with 280 GTX

.

I was talking about T flight point. Which just simply talks about margins. I think everyone knows AMD cannot overcharge for the price of the Phenom II because it simply won't sell, especially with the AMD name. I think what he was getting at is AMD needs to release a better product than Intel because competitive is not enough. Remember when people bought celeron over AMD because it had the Intel name?

A product that cannot simply be countered with price cuts(i.e what core 2 initially had) and thus have high profitable margins. This means products in the Intels lineup cannot compete with AMDs with a simple shift in price. I agree the most money right now is between 100-300 dollars considering the economy, but this is obvious. AMD does not need to compete with core i7, but it would not hurt. Forget what I have just said.

AMD needs to release a product with core i7 like or better performance and charge C2Q prices. That's what it will take to beat Intel. This might seem irrational and impossible, but that what Athlon X2 initially offered and this is when AMD was at it strongest, nonetheless just matching intels marketshare.

Say AMD is making 40-50 percent margins(which is a stretch since anand even says the margins on these chips are not fantastic(someone above posted margins) on phenom II, with this pricecut, AMD gross margins have dropped 20 percent, leaving them with a paltry 20-30 percent. Add in the other cost not included in gross margins, debt on interest and they are still not making any money.

You might as well say Toyota won't be successful as Chevy since they don't have a Corvette or that Hyundai and Kia can't compete successfully with their lower prices and smaller margins as the other automakers with flashier faster more powerful models.....default.

You cannot compare the car market to the processor one. I.e Car reliability > processor reliability, fuel consumption > energy use. Car performance is also too difficult to compare to Processor performance.

Heck the graphic sector is different enough that you can't use them as comparisons simply because Intels marketing name is better than AMDs, where name in graphic card does not play that much of a role to the consumer(not fanboy).

As I have mentioned before, AMD needs to diversify with new tech that will trickle down to lower segments. This will involve releasing product at higher price points and reducing its line up to reduce redundancy and also cutting down on AMD own products competing with itself.

AMD has more than 20 processors available for the consumer segment. Yet the highest priced chip is 225 dollars. From my perspective, AMD killed half of its line with the release of phenom II, its too closely priced with the rest of its line. However if phenom II had better performance and thus justified perhaps 499 and 350 and 250 dollar price point. AMD gross margins would more than double and AMD would not need to give their lower end chips away to sell them.

Sure the best selling chip might be the 250 dollar one. But as time goes on, the 350 dollar chip would become the 250 dollar chip and larger price gaps gives the product a longer shelf life as well as create incentive to buy when price cuts do occur. The 250 dollar chip could go down to 180 allowing more mainstream people to adopt. It might be bad for the consumer, but it allows AMD to milk the high profit margins ship as long as possible. It also gives AMD enough time to improve yields to the point where costs have lowered that such a price point is still profitable.

You might say why is core i7 not flying off the shelves. Easy answer, the price of the MB and RAM, which is a cost consumer consumer are less willing to splurge on, makes the entry price of core i7 too high.

[spursindonesia]

Again, shoulda coulda woulda game being played, LOL. Sure AMD should produce something that's so powerful it can put Core I7 on its knees, but CAN THEY at this moment ? Do you have to keep on beating a dead horse ? AMD doesn't have to compete in the high performance segment for atleast the next 6-8 quarters, we know it, Intel know it, AMD know it too, do you suggest they should have stopped doing their bussiness ?

AMD CPU bussiness is just in survival mode at the moment, it's no secret, and Bulldozer seems quite afar in the horizon, fusion is still taking shape, until then, they have to live with what they've got, why is that so hard to understand ?

[Dante80]

AMD Phenom II Pricing Drops 17%

A price war....W00t!..

(not so, but it came close)

AMD doesn't have $$$$ to compete in the high performance segment for atleast the next 6-8 quarters, we know it, Intel know it, AMD know it too, do you suggest they should have stopped doing their bussiness ?

Actually, we know nothing. What happened in the GPU market six months ago, just confirms it. EVERYTHING goes.

[spursindonesia]

Nah, as much i would love to believe otherwise, AMD CPU roadmap is just not too promising, and a revolutionary CPU design that can change the competition scenery, won't come anytime soon. Unlike GPU roadmap that can be more secretful and volatile, CPU roadmap must be more predictable and stable, because of different market target, that's why i don't think there would be many surprise waiting in the corner for AMD CPU division in the near future.

[LowRun]

But that's just the opinion of someone who according to "LowRun" who can't read

Whoahh, you're still pissy because you had to admit you were wrong

I hope we're not going through another round of this BS.

[Donnie27]

Whoahh, you're still pissy because you had to admit you were wrong

I hope we're not going through another round of this BS.

I was wrong! You got a PM!

[LowRun]

You couldn't tell I was pulling your chain LOL! I got an Email asking and I told them you were a %&^K and I'd prove it, you fell for it! I'd said you don't know how to talk or folks are be civil, you proved it. Thanks for playing

You should stop digging that hole you have fallen into

[Donnie27]

You should stop digging that hole you have fallen into

No, I PM-ed you so you would keep the BS out of thread. Looks like you can't help being the jerk that you are and that truly was my point.

[LowRun]

No, I PM-ed you so you would keep the BS out of thread. Looks like you can't help being the jerk that you are and that truly was my point.

Don't try to make yourself look like the nice guy, you bring the stuff in the thread and afterward PM me so you can say "Hu, i PMed you to keep the BS out the thread". You're just mad because you had to admit you were wrong, damn you even suggested i was using multiple accounts and whatnot.
Told you before, i feel sorry for you buddy.

[informal]

Donnie can't you see that even unintentionally you are able to derail AMD thread in an instant? Why you have such and urge to do such things is beyond me.It is not that hard to just stay out of these touchy topics,or at least don't get personal in debates?I understand you are an older man,but some of your posts are pretty childish (no offense,I'm just noticing the obvious).

On topic,techreport says that Newegg already updated the prices on Phenom II.
New price of 940 and 920 models at the newegg are 235$ and 195$.

[Leeghoofd]

Good move for the customer... too bad for the ones that got one already. But that's the price we all pay when buying stuff at launch date...

[Sly Fox]

The only thing I'll say to some of you... Is that you can't just look at one aspect and ignore all others. If you want to be at all fair anyway.

If you think the only way for AMD to be "successful" is to beat Intel in the straight performance race, that's a fine opinion to have.

But there's good arguments for the opposing side that the most effective way AMD can be competitive is in the mid-range. They simply
can't compare to Intel's high end, so they don't try.

I'm sure that if AMD could launch a $1200 3.8 ghz Phenom II 975 that would OC to 8 ghz they'd do it. Of course those chips have a great
margin, that's why Intel even bothers to make "extreme edition" chips. But ultimately, the bulk of sales aren't going to be $1000+ chips.

Your normal computer user, and I don't necessarily mean a complete nub, just doesn't often have that sort of money to spend on one single
part.

But to be honest, if you guys want to debate AMD's profitability, good luck. I suspect that if the solution to all their problems were so simple,
it would have been enacted long ago.

Only on XS will people put down a company for dropping its prices... I don't know what things are coming to anymore. It appears blatant
fanboyism has taken place over well reasoned arguments.

In any case, I don't mean to offend anyone or further derail this topic. But some of you need to consider if what you're saying you truly believe.