Is AMD Really a Sinking Ship? AMD Phenom Is Around The Bend

[ibleet]

The word Lose only has One "O"
/spelling Nazi

LoL there are about 100,000 other spelling and grammar errors in our posts. Feel free to correct them all.

Seriously though, we don't get real excited about English class here.

[FeRaL]

*After a release of the GPGPU today I just had to make further comments.

As I see it, the biggest problem for AMD at the moment is the debt they incurred by acquiring ATI. So to survive they have to start making a profit. And as Duke3d87 points out

... there is some pretty stiff competition.

This applies to both CPU and GPU product lines. What puzzles me is that AMD has the gall to price their products so high. Just for the sake of argument let's take their GPGPU card as an example. It appears to be a reconfigured RV670 chip with 2GB of onboard memory. And they're going to price it at $1999. Now I understand that there are no competing products, and for a small sector of the market there is a high demand. Maybe they intend to only make enough of them to satisfy that "target customer" niche? Still I question that strategies like this make allot of sense.

Economics describes a principle, called "Price Elasticity Gain", which describes how they can make more profit by lowering their profit margin and selling in greater quantity. In fact it seems that they are being forced to implement this principle when it comes to their dual-core CPUs. But then they turn around and over-price their Phenom line, and they over-price their GPGPU card, and possibly over-price their next line of video cards... (the last part remains to be seen, but still there seems to be a pattern here...) One has to wonder if the upper management of AMD has ever heard of the previously mentioned economic principle. To put it bluntly, I'm sure that a Harvard MBA program requires both Macro and Micro Economics courses, and this principle had to have been brought up! So why is AMD's management so obviously ignorant?

Here are some plausible explanations: (Hector Ruiz and his fellow managers will be referred to here simply as "Hector")
1. Hector thought Economics were supremely boring, so he found the subject matter difficult to retain.
2. There was some really fine babe in Hector's Economics classes, and he couldn't help but be severely distracted.
3. There were some special extra circular activities keeping Hector up at nights, and his Economics classes were always early in the mornings.
So he couldn't help but fall asleep in class!
4. Hector paid someone to help him pass his Economics courses, because of a combination of previously mentioned factors...
5. Hector suffered a serious trauma which impairs his memory of said Economics classes and the principles he learned there.
I'm not sure if any, or all, of these things are true. All I do know is that companies that don't make a profit go out of business.
...And AMD has not been making a profit!

AMD could make more of a profit, from all of their products, if they increased their efficiency and lowered their prices. Assuming they could produce enough to meet demand... (something they haven't been too keen on in the past). This is just as true for products like their new GPGPU card as it is for product lines like the Phenom. However, they (Hector & Co.) don't seem to be paying attention. In fact, at least from my perspective, they seem to be occupying some kind of delusional state where they are "superior to Intel" and can do whatever they feel like!

Now some of you might ask: Could you do a better job? To which my reply is YES! Frankly I could do a better job. But the way our society works I will not be afforded that opportunity, because I didn't attend a school like Harvard. So as it stands the real "problem" at AMD is not their products performance, it's their management. And I seriously doubt AMD will be more than a memory by this time next year. They have too much Debt to survive many more quarters at a financial loss.

I wish this wasn't happening >> (AMD at C2D Launch) ... (AMD now) ... (possibly AMD at end of QTR1-08) ... (then ...)

Quite possibly the most insightful post as to why AMD is blowing it.

[Apoptosis]

I agree that was one heck of a post...

The market is starting to react to all this though and sent AMD's stock to a multi-year low yesterday: AMD Stock Price Lowest in Years - Hit $10.52 Today in Trading

[FeRaL]

It's a mixed bag really... The Phenom is definitely not what everyone sans Intel was hoping for, but the Spider platform with the CrossfireX and the OC utility in general are rather refreshing. I guess what it all comes down to if you are into gaming is this; what is the sweet spot, dollar wise, going to be in regard CPU and GPU to when it comes to FPS? You can only throw so many graphics cards into the equation before you get no tangible improvements. Who is going to lead, who is going to eat the dust, and how much will each cost?

It honestly is looking like AMD is going to be trying to make this more a platform war than a CPU war.

[Tyron]

AMD was once considered better than Intel. Now Intel has pulled ahead again. The difference is Intel was bigger and better able to withstand a setback. Can AMD withstand the setback if their new line flops? I don't know. I wouldn't buy their stock though.