Ok guys I'm tired of throwing away money in computer hardware. Namely AMD based hardware.
Well we all know it is a fact that stuff we buy today isn't worth the same value 6 months or a year down the road. But some hardware devalues a heck of a lot quicker. And I think that AMD should do more to protect the value of their older technology (and they make more money in the process and perhaps actually turn a profit, so they won't leave the CPU market).
I purchased a 1Ghz Athlon around Jan/Feb 2001 for I believe around $120-130 (consider the 1.33Ghz was the fastest I think).
Now what is it worth? $40 if I'm lucky? About 18 months later and it devalues to about 31% of my purchase price.
If I'm not mistaken 1Ghz Pentium 3s were running about $200 at the same time.
Now what is it worth? $100, So 18 months later it only devalued to 50% of the purchase price.
So what does AMD need to do to stop the rapid devaluation?
1. Destroy Duron, and it looks like they will too (BTW if you check the roadmap it says "As market requires" to the future of Duron). AMD is already a lower cost solution why need a lower low price solution? Also it doesn't seam like AMD makes money on them so what is the point?
2. Processor prices cannot drop too low. Quite honestly for AMD to make money they can't sell a processor for less than a $70-80 price break. Not to fear though AMD would still be a low cost processor as Intel sells only the lowest end Celerons (currently 1.7ghz) at that price break. Why do you think the 1Ghz Athlon is so cheap? because you can purchase a 1600 AthlonXP for $52? $12 and 400mhz faster (yea I know QuantiSpeed BS AthlonXP rating system, I'm just ignoring it).
3. AMD must keep their price spread between processors small. Meaning if AMD's cheapest CPU is $80 then the most expensive shouldn't be more than 3 times (just an example but seams about right) the lowest thus $240 for the top end CPU. That is AMD's edge over Intel as for the P4 the lowest priced CPU is around $130 and the highest $500 close to 4 times the lowest priced P4.
Something else to consider:
Theoretically no one person controls the price of anything. It is a mix between Supply and Demand, and you would be stupid not to keep track of what price the Supply and Demand dictates. But you see if AMD were to stop making the processors that are dropping to low in price they could artificially inflate the price. Thus preserve the rapid devaluation of their processors.
If you actually think it costs any more to produce a AthlonXP 2000+ than a AthlonXP 1600+ your sadly mistaken. The cost are exactly the same, it's just AMD's manipulation of jumpers and voltage settings. So AMD makes more profit on an AthlonXP 2000 than a 1600. This isn't totally unjustified as AMD is a huge R&D company and R&D is expensive. But the key is that need to make a profit no matter what. If they don't make a profit at all then it detracts from higher profits from faster processors.
I think AMD can actually get away with charging more per processor. Because what are your options Intel or AMD (Via and whoever else doesn't have any serious competition). But AMD must still keep their CPUs lower than their Intel counterparts by a fair margin. Right now you pay almost 2x for Intel counterparts of AMD chips.
The Bottom Line:
Well some people are going to hate this, but this means that CPUs will need to cost more. You won't see any super cheap processor deals (with the exception of a price mistake or something like that, or you screw Staples by PMing and Coupons etc) under my model. But this isn?t a bad thing as AMD badly needs some profit to continue (5 quarters worth of losses if you don?t know). And most people would agree that AMD leaving the CPU market or going out of business entirely would be worse. I think this course of action seams to be a nessecary evil for AMD to survive.
Well we all know it is a fact that stuff we buy today isn't worth the same value 6 months or a year down the road. But some hardware devalues a heck of a lot quicker. And I think that AMD should do more to protect the value of their older technology (and they make more money in the process and perhaps actually turn a profit, so they won't leave the CPU market).
I purchased a 1Ghz Athlon around Jan/Feb 2001 for I believe around $120-130 (consider the 1.33Ghz was the fastest I think).
Now what is it worth? $40 if I'm lucky? About 18 months later and it devalues to about 31% of my purchase price.
If I'm not mistaken 1Ghz Pentium 3s were running about $200 at the same time.
Now what is it worth? $100, So 18 months later it only devalued to 50% of the purchase price.
So what does AMD need to do to stop the rapid devaluation?
1. Destroy Duron, and it looks like they will too (BTW if you check the roadmap it says "As market requires" to the future of Duron). AMD is already a lower cost solution why need a lower low price solution? Also it doesn't seam like AMD makes money on them so what is the point?
2. Processor prices cannot drop too low. Quite honestly for AMD to make money they can't sell a processor for less than a $70-80 price break. Not to fear though AMD would still be a low cost processor as Intel sells only the lowest end Celerons (currently 1.7ghz) at that price break. Why do you think the 1Ghz Athlon is so cheap? because you can purchase a 1600 AthlonXP for $52? $12 and 400mhz faster (yea I know QuantiSpeed BS AthlonXP rating system, I'm just ignoring it).
3. AMD must keep their price spread between processors small. Meaning if AMD's cheapest CPU is $80 then the most expensive shouldn't be more than 3 times (just an example but seams about right) the lowest thus $240 for the top end CPU. That is AMD's edge over Intel as for the P4 the lowest priced CPU is around $130 and the highest $500 close to 4 times the lowest priced P4.
Something else to consider:
Theoretically no one person controls the price of anything. It is a mix between Supply and Demand, and you would be stupid not to keep track of what price the Supply and Demand dictates. But you see if AMD were to stop making the processors that are dropping to low in price they could artificially inflate the price. Thus preserve the rapid devaluation of their processors.
If you actually think it costs any more to produce a AthlonXP 2000+ than a AthlonXP 1600+ your sadly mistaken. The cost are exactly the same, it's just AMD's manipulation of jumpers and voltage settings. So AMD makes more profit on an AthlonXP 2000 than a 1600. This isn't totally unjustified as AMD is a huge R&D company and R&D is expensive. But the key is that need to make a profit no matter what. If they don't make a profit at all then it detracts from higher profits from faster processors.
I think AMD can actually get away with charging more per processor. Because what are your options Intel or AMD (Via and whoever else doesn't have any serious competition). But AMD must still keep their CPUs lower than their Intel counterparts by a fair margin. Right now you pay almost 2x for Intel counterparts of AMD chips.
The Bottom Line:
Well some people are going to hate this, but this means that CPUs will need to cost more. You won't see any super cheap processor deals (with the exception of a price mistake or something like that, or you screw Staples by PMing and Coupons etc) under my model. But this isn?t a bad thing as AMD badly needs some profit to continue (5 quarters worth of losses if you don?t know). And most people would agree that AMD leaving the CPU market or going out of business entirely would be worse. I think this course of action seams to be a nessecary evil for AMD to survive.
