The Rise and Fall of AMD.

[HypX]

What is driving that market?
Just saying, if I can get my "console port"-fix on the pc with an apu (cause the console IS an apu), why would i "extragrade" with a descrete card?
Sounds silly to me.

Same reason why people aren't satisfied with mobile games and "extragrade" with a console. As long as graphics are superior to APU or consoles, people will continue to buy discrete graphics cards.

In fact, right now the gap is quite large and we are seeing console gamers move to PC gaming with discrete cards. Not the other way around.

 

[mrmt]

If AMD goes under get ready for Intel CPU's to be like $1000 per even for the slowest and cheapest one....no competition Intel can charge what ever they feel like..

Do you have any clue, any theory, any example to back up this affirmation?

 

[Idontcare]

If AMD goes under get ready for Intel CPU's to be like $1000 per even for the slowest and cheapest one....no competition Intel can charge what ever they feel like..

That might be true if it was a monopoly on a consumable like milk or gasoline.

Being a monopoly on something that can function for a decade if need be means the market won't support much of a price change before the demand will fall off a cliff and Intel suddenly finds itself selling a few thousand units instead of a million units per day, and then their revenue falls off a cliff.

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

 

[Ajay]

And the effects of an Intel dGPU should be nothing short of what you described. KC broke Nvidia's back on HPC, if Intel decides to go after the professional market (Quadro line) it will put enough pressure to Nvidia to the point that they will have to change their entire business model.

So far I'm not aware that this is true. PHI is a different chip than Intel's other offerings, so I don't think they are getting allot of benefit from other x86 designs (or any more than NV is getting from it's other GPUs). Long term, it's clearly a different story - and I see great difficulty for Nvidia because of Intel's process advantage and PHI's simpler programming model.

TSMC really needs to gain a large share of the ARM foundry business in order to have enough volume to provide it's higher end customers with more advanced process nodes.

 

[laputan machine]

That might be true if it was a monopoly on a consumable like milk or gasoline.

Being a monopoly on something that can function for a decade if need be means the market won't support much of a price change before the demand will fall off a cliff and Intel suddenly finds itself selling a few thousand units instead of a million units per day, and then their revenue falls off a cliff.

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

Even in the prizes won't increase tenfold it's not unlikely they will increase, nor is it out of the question they will do shortcuts such as inferior TIM that might mean the chips live shorter.
Some here seem to argue that monopoly would almost be a good thing, I just don't see that (nor do I think it would be the complete nightmare some say either).

 

[Torn Mind]

Intel is wetting its pants with regards to competition in the mobile sector. Should they charge massive premiums on their processors, it will be practical suicide on their part. The OEMs can't make a profit and the x86 users will stick with what they have and buy new tablets and stuff. AMD's role in keeping Intel in check has been usurped by mobile processors such as ARM. AMD has largely become irrelevant and will continue to be moreso.

Both AMD and Intel need to realize that the money is in the mobile products now. Intel has realized this, but they are still playing catch up. AMD is still stuck in the heyday of x86 dominance and still seems to be too focused on Intel and not focusing on developing products where the big money is to be made.

 

[CHADBOGA]

If AMD goes under get ready for Intel CPU's to be like $1000 per even for the slowest and cheapest one....no competition Intel can charge what ever they feel like..

Why doesn't Microsoft do this for Windows and Office? :whiste:

 

[Zodiark1593]

Why doesn't Microsoft do this for Windows and Office? :whiste:

They're already gouging. I refuse to buy Microsoft Office myself. Too pricy just for typing and presentations, especially when Libreoffice performs for my needs just as well.

Wish my professors would stop complaining about my not using it though. At one time, they had a class PC that didn't have any .pdf reader installed, so I ended up using my own laptop for my presentation.

 

[Ajay]

Both AMD and Intel need to realize that the money is in the mobile products now. Intel has realized this, but they are still playing catch up. AMD is still stuck in the heyday of x86 dominance and still seems to be too focused on Intel and not focusing on developing products where the big money is to be made.

Interesting that you bring this up, visa vi Intel. There is currently some speculation that Otellini may not being leaving entirely of his own free will: http://www.forbes.com/sites/ericsav...id-the-board-boot-paul-otellini-and-now-what/

Here are a few comments on the situation from the Street:

Doug Freedman, RBC Capital: “Otellini’s retirement is yet another challenge Intel has to fight through in the near-term,” he writes in a research note. “However, his eventual departure is more likely a sign that Intel’s focus could increasingly shift outside of the traditional PC market. While Otellini has done a commendable job as CEO for the past 7 years, growing revenues at a 5% CAGR to our expected $53.5 billion in 2012, the company is feeling the pressure of 1) headwinds in its core PC market and 2) being unable to capturea sizable portion of the mobile SoC market (dominated by ARM) after ~5 years of development efforts. Thus a shift in leadership could be welcome news to investors as Intel could be in greater position to broaden its portfolio into higher growth markets. In our view, we believe the company could be better-served choosing a successor with a product/sales focus in-order to broaden and deepen customer relationships vs. a candidate with a technical/manufacturing focus.”

Hans Mosesmann, Raymond James: “We suspect that times are changing given the emergence of a near-viral architecture from UK-based ARM Holdings,” he writes. “This has been boosted by the rise of all things Apple (uses ARM in its mobile products), and has led to a diminishing importance in the Intel x86 instruction set. Building massive $10 billion dollar fabs just won’t cut it for Intel in our opinion, as had been so effective back in the day when AMD was the company’s sole mainstream competitor….our bet is that Intel goes outside for its new CEO and a search that will not be trivial.”

Craig Berger, FBR Capital: “Intel is quite challenged in the mobile arena, with handsets and tablets cannibalizing core PC sales, and with Intel not achieving solid success in handsets or tablets. As such, CEO Otellini’s departure could be related to the immense challenges Intel faces in competing in the mobile space,” he writes.

Christopher Danely, J.P. Morgan: “[This is a] chance for Intel to stop thinking like Facebook and start thinking like Philip Morris,” he writes. “We believe the move to a new CEO is not an automatic positive unless Intel changes its focus from trying to be a growth company to focusing on its core PC microprocessor business and cutting opex and capex, raising margins, and increasing cash returns to shareholders.”

 

[CHADBOGA]

They're already gouging.

How are they gouging?

I can buy an OEM version of Windows for under a $100 and buy a Office pack with Word, Excel + Powerpoint, which I can install on 3 computers, for $119.

 

[Greenlepricon]

How are they gouging?

I can buy an OEM version of Windows for under a $100 and buy a Office pack with Word, Excel + Powerpoint, which I can install on 3 computers, for $119.

That's cool, especially since I have open office downloaded on all 4 of my computers for free. Microsoft office is good except for I believe it should cost half as much (and the price is about $90 I think for it). Operating systems are overpriced too. When a copy of windows cost 1/4th the cost of the last pc I built, I realized something was wrong. Not saying that I'm paying for a bad product, but considering that it costs that much just for a few simple programs is a little too much for me to be happy with. They're not outrageous prices, but just enough for me to convince myself they're worth buying again rather than switching, which is exactly where they want to be. Especially with me being in college and everyone using word, open office just doesn't work sometimes, and that's something I'm not happy with.

All in all, that's where Intel wants to be now and will want to be in the future too. High prices, but cheap enough to convince us we want to buy. Marketing sucks right?

 

[pablo87]

How are they gouging?

I can buy an OEM version of Windows for under a $100 and buy a Office pack with Word, Excel + Powerpoint, which I can install on 3 computers, for $119.

20 years ago, DOS the equivalent OS at the time was $25 while Windows for small OEM's was around ~$50. During the 90's my understanding is Dell and Gateway paid $60 for full Office. PC's during this timeframe were $2000. So while PC prices were going down, the price of Microsoft products was going up. it's why Microsoft is so vulnerable these days, the value proposition of Chrome OS is so compelling.

 

[CHADBOGA]

That's cool, especially since I have open office downloaded on all 4 of my computers for free. Microsoft office is good except for I believe it should cost half as much (and the price is about $90 I think for it). Operating systems are overpriced too. When a copy of windows cost 1/4th the cost of the last pc I built, I realized something was wrong. Not saying that I'm paying for a bad product, but considering that it costs that much just for a few simple programs is a little too much for me to be happy with. They're not outrageous prices, but just enough for me to convince myself they're worth buying again rather than switching, which is exactly where they want to be. Especially with me being in college and everyone using word, open office just doesn't work sometimes, and that's something I'm not happy with.

All in all, that's where Intel wants to be now and will want to be in the future too. High prices, but cheap enough to convince us we want to buy. Marketing sucks right?

20 years ago, DOS the equivalent OS at the time was $25 while Windows for small OEM's was around ~$50. During the 90's my understanding is Dell and Gateway paid $60 for full Office. PC's during this timeframe were $2000. So while PC prices were going down, the price of Microsoft products was going up. it's why Microsoft is so vulnerable these days, the value proposition of Chrome OS is so compelling.

This is all irrelevant to the initial poster I was responding to, who claimed Intel would be able to charge a $1,000 for their slowest CPU, if AMD disappears.

No one is disputing prices would be somewhat higher, but nothing like the ludicrous example of a $1,000 Celeron.

 

[hansmoleman1981]

This is all irrelevant to the initial poster I was responding to, who claimed Intel would be able to charge a $1,000 for their slowest CPU, if AMD disappears.

No one is disputing prices would be somewhat higher, but nothing like the ludicrous example of a $1,000 Celeron.

AMD fanboys and those with a myopic viewpoint are propagating a myth that AMDs survival is necessary to keep Intel/NVidia in check. This myth is at odds with reality.

1. The HPC era is winding down, from a mainstream consumer perspective. Nobody cares about gigabertz, and cores anymore, its not 2005 (coincidentally the year AMD stopped being relevant). Dwindling PC sales, and virtually every market forecast indicates that the desktop PC formfactor will be highly irrelevant to the average consumer in the coming years.

2. The future is mobile. The future is SoC. "IF AMD NOT THERE, WHO WILL STOP INTEL/NVIDIA 111!!". AMD is just the first casualty. NVidia will also go the way of the DoDo. The future is SoC. No one needs to "stop" NVidia. If they don't adapt they will also die.

3. You don't NEED a GTX 670 to game at playable framerates on most games. http://store.steampowered.com/hwsurvey
A small minority of users have the latest and greatest in their machines. Intel HD Graphics 3000 tops out at 4.25%. The only reason GTX 670s/Radeon 7990s sell is because nerds want e-peen, and frames they'll never see....Almost every PC game is optimized to run on cards from two generations ago.

The industry is changing in a big way. The future is SoC. AMD is just the first casualty, and them dying does not mean you are forced to buy NVidia cards for $700....NVidia will also go the way of the Dodo because dGPUs are legacy, and not the future.

4. DX9 is still the standard. DX11 has been released for 4 years now....but where are all the awesome DX11 games? The most popular PC game (World of Warcraft) still uses DX9. No one cares about Crysis. Windows 8 only brings DX11.1. Nothing significant.
DX11 is here to stay for a while. Basically I'm making the point that you don't need the latest and greatest, to play a video game.

5. The bulk of the market spends less than $200 on dGPus. http://www.xbitlabs.com/articles/graphics/display/nvidia-geforce-gtx-460.html Just because AMD doesn't exist, doesn't mean NVidia can magically start charging $$$ for GPUs.....people will just stop buying them if the price is too much to bear.

$1000 celerons....LOL. Some people have not the slightest understanding of economics. Sure CPUs cost a lot back in the day, but times have changed. Good example is the LCD/HDTV revolution. I held out until this year on buying a HDTV. Replaced my CRT with a 40" LED TV which cost me only $450....Early adopters of HDTVs paid $$$ for their comparatively poor TVs at the time, which are probably in the trash pile now.

As technologies mature, costs go down not up (with the exception of Apple).

So...AMD can burn in hell and nobody will notice.






If you create another account while under vacation, you will be permabanned


esquared
Anandtech Forum Director

 

[pablo87]

well hm1981' I would disagree. dGPU IS NO LONGER MAINSTREAM but its important segment and based on MRQ, growing.

my personal op is Intel should have acquired ATI when they had a chance.

* compatible culture my impression.
* there was real value in SOC, in IP, in IGP
* intel promote integrated when they should promote integrated and discrete both depending on the application. With enthusiasts and gamers, dGPU and CPU are equal partners. if Intel had insided ATI, that business woud be exponentially bigger IMO.
* for fab utilization, capex, depreciation etc.., those GPU'S take up a lot of wafers and they been made on trailing process all along. At Intel, trailing process is pure profit $100 dGPU on it might be more profitable than $200 CPU on latest. Could be wrong but they might occupy half a fab.

AMD Mgmt And BoD is dumb* but it doesn't mean there isn't value there.

* maybe those dummies would accept an offer from Intel...50 cents on the dollar anyone?

 

[pablo87]

This is all irrelevant to the initial poster I was responding to, who claimed Intel would be able to charge a $1,000 for their slowest CPU, if AMD disappears.

No one is disputing prices would be somewhat higher, but nothing like the ludicrous example of a $1,000 Celeron.

I would agree with that.

 

[Greenlepricon]

This is all irrelevant to the initial poster I was responding to, who claimed Intel would be able to charge a $1,000 for their slowest CPU, if AMD disappears.

No one is disputing prices would be somewhat higher, but nothing like the ludicrous example of a $1,000 Celeron.

Just commenting on how these are still overpriced when you claimed they weren't "gouging". So these aren't irrelevant comments. I'm not disagreeing with you that claiming $1000 isn't overdoing it a bit, but prices won't look so nice and happy if AMD kicks the bucket. I'm not as rich as I wish I was, so prices are still high in my eyes, but I can understand where the market is. I just hope if stays similar when big changes happen.

 

[CHADBOGA]

Just commenting on how these are still overpriced when you claimed they weren't "gouging". So these aren't irrelevant comments. I'm not disagreeing with you that claiming $1000 isn't overdoing it a bit, but prices won't look so nice and happy if AMD kicks the bucket. I'm not as rich as I wish I was, so prices are still high in my eyes, but I can understand where the market is. I just hope if stays similar when big changes happen.

One could make an argument that Windows 7/8 is a bit overpriced, especially if someone wants to build a cheap box, but various Office Versions are ridiculously cheap and I am shocked that Microsoft don't charge more.

I remember when WordPerfect, Lotus 123 and AmiPro were around and relevant, and they and Microsoft's Office individual programs were each only available to purchase, at a price 3 to 5 times higher than I can buy Word, Excel and Powerpoint together for, today.

 

[pablo87]

That might be true if it was a monopoly on a consumable like milk or gasoline.

Being a monopoly on something that can function for a decade if need be means the market won't support much of a price change before the demand will fall off a cliff and Intel suddenly finds itself selling a few thousand units instead of a million units per day, and then their revenue falls off a cliff.

http://en.wikipedia.org/wiki/Price_elasticity_of_demand

Idc, probably not a good example. I took economics and when I went into the private sector, almost every theory turned out to be wrong in practice. PC is a particular industry whose growth has more to do with sharply decreasing costs with increased volume, and income growth in LDC's making PC's affordable, than anything else.

A better comparison to see what might happen if Intel were a monopoly would be Microsoft...they didn't raise prices all of a sudden but they certainly charged what the traffic could bear over a number of years thru subtle segmentation ad contract renewals. Thing is, market is shrinking now and they (Microsoft) do appear to be lowering some prices at least in the consumer segment.

But normally we should expect Intel to raise cpu prices to pay for their entry in smartphones which could lose money for years. Even more so if volumes are decreasing. They can't afford it otherwise.

 

[PandaBear]

I also agree that both Intel and AMD's biggest problem is ARM. Usually monopoly like Intel is broken not due to a strong competitor, but because the entire market has shifted away.

If binary compatibility is no longer important, then Windows is no longer important and therefore x86 is no longer important. If one day Apple and Google start the shift of all desktop / work computer movement to ARM on Android / iOS, and the performance is enough, a lot of offices machine would be replaced without Windows or x86. I see this happening very soon, especially if mobility and battery life becomes the key in the future.

When every work machine demands LTE connection instead of wifi, Nividia, AMD are both going to be in trouble and would be replaced by Qualcomm, TI, ST Micro, Intel (who bought Infineon's wireless chip division).

What would happen to AMD then?

 

[mrmt]

Idc, probably not a good example. I took economics and when I went into the private sector, almost every theory turned out to be wrong in practice. PC is a particular industry whose growth has more to do with sharply decreasing costs with increased volume, and income growth in LDC's making PC's affordable, than anything else.
(...)

But normally we should expect Intel to raise cpu prices to pay for their entry in smartphones which could lose money for years. Even more so if volumes are decreasing. They can't afford it otherwise.

Interesting Pablo. I know some guys whose work is price formation in quite a few industries and they use some of the economic theories that you just dismissed. What's your theory for price formation?

Microsoft is a very bad example for the point you are trying to bring here, as they don't have the kind of cost reduction that each node brings to Intel. Every version of office brings more complexity and more costs.

Last, but not least, you are factoring Intel spending too much on mobile. You have to look no further than Nvidia to see that things aren't as hard as you are painting, at least when we are talking about the financial side of the things. Nvidia spent the last two years burning 100-200 million in cash due to Tegra operating losses to buy Tegra market share, and it worked (albeit it isn't clear where margins will stabilize after they stop buying market share). Intel has a balance sheet order of magnitude bigger than Nvidia's, they could make a much bigger effort, let's say, burn 500 million per year for two or three years, and their results would suffer less than Nvidia's. Intel has the money to take on Qualcomm if they want and still make profits, something that Nvidia cannot do even on JHH wildest dreams.

 

[Haserath]

You know... it's hard to tell whether prices would rise or fall in a monopoly scenario.

I'm thinking that Intel might actually leave the bottom prices alone for volume in poor markets and raise quads and such up a bit.

Only those with money&interest/job related reasons buy the high end anyway. 10% more for a processor won't break the bank, even if the consumer doesn't exactly like their new price.

 

[mrmt]

I'm thinking that Intel might actually leave the bottom prices alone for volume in poor markets and raise quads and such up a bit.

I know it's really counter-intuitive but if there is someone pushing prices down in the CPU market it is Intel, not AMD. But what bothers me more is how the fanboys come here and drop things like "I'm gonna pay 900USD for a Celeron" with such a straight face.

Let's give a better look at the assumptions here:

1) "AMD cares for the consumer, it keeps Intel honest and they are the driving force behind low prices!!! Save AMD please!"

No. AMD is having operating losses and their margins are in the toilet. and their strategy is entirely dependent on high ASPS, as only with with higher ASPs 246mm^2 APUs and 315mm^2 mainstream chips become viable. AMD isn't really dictating price as their product isn't the benchmark for anything, so they must follow Intel pricing. In the same marketing environment in which Intel makes 60%+ gross margins, AMD slumped to 38%, and this with dGPU included. Numbers can be a lot worse if not for dGPU, around 35%. So if there is a company hoping for a window to increase its prices it is AMD, not Intel.

2) "But still, they are relevant for the bottom market!"

No. The bottom market is all about price/performance (a price leverage) from the consumer side, and price/area (cost leverage) from the manufacturer side. There is no differentiation here. AMD is already trailing Intel on both disciplines. To make things worse, AMD has only 16% share in the x86 market and about a third of that is Brazos, almost a category on itself, so even if AMD had price or cost leverage they would not have the capacity to meaningfully impact prices. To make an analogy, not only AMD stick is very weak, it isn't big enough to the task at hand.

3) "But but... once AMD is gone Intel will gouge on prices"

Not really. Intel will aim not maximum margins but maximum returns, which will need a certain volumes for their fabs and the right quantity of demand out there, and to get to those points the price may be higher, but also lower than they are now. As we saw in 2), AMD is already irrelevant for price formation, I don't think that the maximum return price is too far above or below current levels.

 

[Budbd]

I don't want to cut into all this computer electronics engineering talk on AMDvsIntel, but as a common consumer who just bought a replacement computer at Wal-Mart last night, a Gateway prebuilt at $448 no monitor or extras of course, with an AMD, a A6 5400K dual core(Windows 8, 1tb hard drive, 6gb ram, HDMI port running through my tv now)who's had a few computers since the 80's, I was a little alarmed at the "AMD is going out of business" pseudo talk, but when you think about it, mass marketting at the big stores like Wal-Mart, I saw several AMD powered setups, including on line for walmart, I figure that can really keep amd alive real well. My uses are small, I haven't been gaming for twenty years, its all about the internet discussion boards, buying things from amazon and ebay, and personal business enterprises, word processing, etc for me. Actually, if I had stuck to what I knew in the late 80's to early 90's, I'd probably have thousands of folks working for me, I mean, I found computer hardware and programs rather simple back when it was simple, now they don't even include manuals or the software cds in the box from the systems I've bought in recent years, though as far as durability, over the years I've for productivity haven't noticed anything better between intel or amd, as of yet, other than my emergency computer I'm typing on now, my 2004 dell Intel p4 with two year old high end replacement power supply that I've kept around for spare and emergency use, I've had a strange run of bad luck with desktops computers using up their power supplies and taking out the bulk of the main parts of computers, laptops not retaining a charge or blowing their hard disk under a year or eight months old, so I aint spending much anymore, I almost wonder if alot of other folks aren't wanting to spend alot either, anymore, I'm just one of those folks whose uses are very small, no more $1500 to $3000 units delivered by a local builder or Gateway or Dell, especially no more lower end laptops for personal use, getting tired of sending those in and breaking a sweat on the phone concerning warranty repairs unless its for making money and a living, I'm completely without a laptop again right now, may never buy another again, technically, the news of laptops, I actually do not want to buy another again, no need to, once again, for my uses, especially with wifi, its a constant struggle for security when lap-topping.

 

[frozentundra123456]

They're already gouging. I refuse to buy Microsoft Office myself. Too pricy just for typing and presentations, especially when Libreoffice performs for my needs just as well.

Wish my professors would stop complaining about my not using it though. At one time, they had a class PC that didn't have any .pdf reader installed, so I ended up using my own laptop for my presentation.

I dont see how anyone can say Office is overpriced. 100.00 for something that can be used for years?? You have to be kidding me. Nearly everyone has a smartphone, the data plan for that can easily be 100 dollars per month. Also, cable/internet, another 100.00 per month. Go out to dinner a couple of times for 2 people, 100.00. Compared to any of these expenses, office is a bargain.