AMD has terrible market share. A few years ago Intel slashed their own CPU prices when the core architecture came out to flood the market with their chips and maintain brand loyalty. This worked and core now dominates the market. AMD is in trouble with nVidia's branding and they might want to recruit an entirely new generation of customers right now - they could provide a superior product, at a lower price, make a-ton of sales, converting millions of users and setting themselves up for a coup in the next generation. If they do slim their own profit margins, they have months to sell to users before GT300 is even a threat, and when it does come out nVidia would be forced to take a loss coming to market late with lower yields.
It's a trade-off - give up some profits right now, in effect "buying" loyalty and market share, and then hope to exploit this in the future for profit then.






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