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Topic Title: AMD's impact on ABC
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Created On: 12/25/2003 07:33 AM
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 12/25/2003 07:33 AM
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rina_francis
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Posts: 1
Joined: 12/25/2003

Can anyone help me with this question:

Recently AMD announced a new processor called AMD Athlon 64 FX with a tagline "Simply the Best PC Processor. Period." Study this new product and its impact to the Architecture Business Cycle of AMD.

I can do the first one (study this new product) but I need help with the second one (its impact). Can anyone help me or know where I can find it?
 12/25/2003 10:12 AM
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pcy
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Joined: 10/18/2003

The impact will be AMD marketing documents and budget projections. Some people here are AMD employees, and might have access to such documents, but I can't see them handing out copies.

I don't work for AMD, so I am allowed to guess:



Strategic Position

Since the arrival of the first Athlon processor nearly 5 years ago, AMD has established itself as a mainstream player in the world CPU market, second only to Intel in market share; a credible rival in technology, and the clear leader in value for money.

With the announcement of its new AMD64, AMD has achieved substantial technical superiority, with every expectation of maintining its lead for a considerable period of time.

Up til now AMD's core marketing strategy has been to acquire market share and credability by offereing technically strong products at very attractive prices. This strategy has worked well, particulalry in the price-sensitive comsumer market segment; but AMD have, so far, made limited inroads into the commercial and server markets; and profitability is low.

Crucially, however, the image of AMD CPUs as high quality products has been firmly established.

The clear technical superiority of the AMD64, and in particular is excellent scaling attributes, coupled with this maket perception of quality, means that AMD is now positioned to make considerable gains in ALL martket sectors; and not least in the prestigious and profitable commercial server market, where reliability and TCO, not purcahse price, are key determinants.

It would be foolish for AMD to relinquish it's reputation as a high value provider, but the AMD64 represents a golden opportunity for AMD to improve its profitablity without prejudice to its core values.

These goals appear superficially to be in conflict. Pricing is a crucial in resolving this issue and achieving each goal with affecting the other.


Pricing

The top end CPUs, which are now accepted as world beaters, and particularly the multi CPU varients, will sell for a substantial premium - still undercullting the competion on price; but by a much reduced margin. It is essential that this (relatively) high price is promoted and percieved as a strength and a benefit, not as a weakness. It should be seen as affirming the quality - not just raw performance, but also reliability and scalability - of the AMD64 product line. Strategic alliences with traditional corporate server suppliers to gain rapid penetration of the corporate server market is also key.

Lower down the porformance curve AMD must continue to offer it traditional value for money. A detailed discussion of pricing is in-appropriate, but two key products in effect define the whole product line:

1. AMD Barton XP2500+
This is a sentinel product, defining the entry point into high performance computing. It's combination of low price, performance and overclocking potential makes it a clear favirite with the small (but highly visible) enthusiast community; and it sets expectations for the whole of the value market segment at levels which preclude effective competion against AMD products. Above this point CPU prices can be ramped quite rapidly with performance because the CPU is a relatively low proportion of total price in a high-end system; and also because the enthusiasts who form the bulk of the price-sensitive high performance mareket will simply overclock the XP2500 anyway.

2. AMD64 3000+
This is the entry level to ultimate performance 64 bit computing. It should be priced cometitively against similar performing AMD XP products to establsih continuity between the two product lines and to broaden AMD customer base in the emergant 64bit market areas where Intel cannot currently compete.


The overall affect of this pricing strategy is to produce a product line where the top end is characterized by rapidly increasing price. Though this is hard to justify objectivley, the technical explaination in tems of yields on IC production and the value proposition that ultimate performance and quality should carry a premium remains persuasive; and the market seems prepared to accept this position.






Peter

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