Does a Strong AMD Really Drive Prices Lower?

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Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 10:46 am

Hey guys, I've been thinking about AMD (as I always am) these past few minutes and I guess I've been wanting to throw this question for a while now: Does a strong AMD with a very competitive lineup really help the x86 industry have lower prices?

I remember back in the days when AMD was nothing more than an x86 clone provider. They cloned everything from the 8086 to the 80486. I was yet to be introduced to PCs during the 8086 - 80286 era so I don't really know how they priced their alternative offerings against Intel and my first 'proper' PC was based on an Am386DX-40 (my 'really first' PC was an old NEC V20 but it was getting old by the time I got it). IIRC, back in the early 90's AMD peddled their Am486 chips as better value (i.e. cheaper) for money than Intel's i486 chips, and this trend was generally true during the days when AMD was quite behind Intel. The K5 wasn't exactly expensive during its time compared to Intel, and it wasn't until AMD revealed the K6, which snagged quite a few benchmark wins during its early life, that AMD got a taste of pricing their chips high against Intel. When the Pentium II really got going (or should I say, when AMD and Cyrix started falling behind the Pentium II later on), AMD was relegated to the back seat again and I remember buying a K6-2/450 instead of a Pentium II/450 back in 1999 because it was half the price.

Now when the Athlon came out, we all remember how it totally spanked Intel and I remember buying my first quite-expensive AMD CPU: an Athlon 800 T-bird. Pentium 4 came out and it was a game of leapfrog between AMD and Intel from 2000 to around 2001, with both camps pricing high, and it was only when the Pentium 4 started to pull ahead that AMD started to simmer down a bit and price lower. Athlon 64, same story. I remember AMD pricing their Athlon 64 FX and X2 chips like a BOSS, and it was only when the Core 2 Duo came out that AMD was again thrown to the bargain bin. And the rest is history.

Do you guys see a pattern here? It's only when AMD is behind that they are forced to price lower, making their chips more accessible to more folks. During the times when they had a very strong lineup (early K6 days, early Athlon days, and most especially their K8 days prior to 2006), they've always priced quite high and Intel never really budged. Intel stuck to their guns regardless of how AMD priced their stuff. As it were, Intel still priced high and AMD was alongside them. There wasn't really a price war. When AMD was on top, they didn't really price low to squeeze Intel down the price ladder; they priced high to rake the profits in while they still could.

What do you guys think would've happened if Bulldozer ended up bulldozing Sandy Bridge? Do you think we'd be able to buy an FX-8350 8-core CPU for $190? Would it make the Core i7-3960X just $300? I don't think so. I bet I would've spent much more for an FX CPU, perhaps not $900 (ok, let's not consider the stupidly conceived FX-9590 here), but perhaps not $190 either. Perhaps an FX-8350 would've been around $340 or $500 or $1,000, depending on which Intel CPU it matched well against.

So am I right? What do you gerbils think?
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 10:58 am

I think the more important question would be

If there was no AMD would prices decrease and would innovation increase?
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 11:08 am

That might be a good question, but I made this post based on what actually happened, not what could have been if AMD never existed (which wasn't even possible to start with given IBM's condition to Intel for IBM to use Intel chips), or what could happen if AMD suddenly packed up and left the x86 industry.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 11:11 am

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Totally missing the bigger picture

Postposted on Wed Oct 09, 2013 11:32 am

You're focused on skus and artificial market segmentation, these are symptoms of the disease, not the disease itself.

You should be thinking about how things would be if itanic didn't sink, rambus lawyers controlled dram design and we didn't get AMD64 but instead got whatever hobbled crap intel felt like releasing to mainstream years later when standard dimms were 2GB+. (if someone tries to nitpick: PAE is garbage, don't go there)

I can say without any doubt computers would cost more and do less.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 11:38 am

Back in the '486 days, even Intel's "mainstream" parts were rather expensive. It was only with the introduction of the K6 series (and Intel's answer to the K6, namely the Celeron) that "good enough" CPUs became very affordable.

A strong AMD would mean that AMD could legitimately charge big bucks for their top-end desktop CPUs, and these CPUs would be competitive with similarly priced CPUs from Intel. Sure, their top-end CPU would cost more than $190, but there would still be a CPU at the $190 price point which was competitive with whatever Intel had at $190.

Back when the Athlon was going head-to-head with Intel's best, both companies still made cheap CPUs too -- AMD Durons, Intel Celerons, and (a little later) AMD Semprons. Furthermore, because CPU tech was evolving rapidly at that time (and let's not forget that this rapid evolution was largely driven by competition between Intel and AMD), even those cheap entry level CPUs performed roughly on par with high-end CPUs from just a few years prior.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 11:49 am

ARM will keep x86 pricing in check.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 11:52 am

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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 11:55 am

End User wrote:ARM will keep x86 pricing in check.

Only on the low end, or for markets where lots of cheap CPUs will do just as well as fewer expensive ones (i.e. certain server use cases).
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 12:04 pm

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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 12:17 pm

A Duopoly behaves much like a monopoly.

However, you are correct that AMD has never been an equal partner in the Duopoly.

However, a simply competitive business practice model hardly accurately describes the complexity of technology advances...(advantage to the disruptor)...government regulation,markets, capital flows and geopolitical economic imperatives...intellectual property laws and their application(or lack of equitable application)...etc. etc. etc.

Without competition...things get ugly quick...

But maintaining open and honest competition....a level playing field...well that is easier said then done. :wink:
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 12:31 pm

clone wrote:
Hey guys, I've been thinking about AMD (as I always am) these past few minutes and I guess I've been wanting to throw this question for a while now: Does a strong AMD with a very competitive lineup really help the x86 industry have lower prices?
a strong AMD lowers prices, a dominant AMD does not.


That's just about the perfect way to put it.

And the OP is missing something else- demand. Not only do vendors have to be competitive, but they also have to have something to compete over, and they have to actually be trying to meet that demand by increasing production and associated economy of scale.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 1:24 pm

just brew it! wrote:
End User wrote:ARM will keep x86 pricing in check.

Only on the low end,

The majority of people here only think about the low end.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 1:32 pm

clone wrote:ARM is the ant

The sales numbers don't suggest that. Roughly 700 million ARM based devices will be sold this year.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 1:38 pm

End User wrote:
clone wrote:ARM is the ant

The sales numbers don't suggest that. Roughly 700 million ARM based devices will be sold this year.

That actually supports the ant analogy!
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 1:46 pm

I don't feel like prices have changed much in the last decade plus or so.

I recall paying around $500 for a Pentium III (Katmai) 500MHz. IIRC the 600MHz was closer to $1K and the 450MHz closer to $300.

To me I don't see how that's any different than the situation now with the 4770, 4930, and the 4960.

The area with the most new diversification was the low end.

Intel was marching in the direction of more diverse product lines regardless of AMD. Bob Colewell (Intel Engineer of PPro and P4) notes that Intel's marketing had been pushing for years to have a product line with at least three chips in it (i3, i5, and i7) due to the way people mentally evaluate and make purchases.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 1:48 pm

just brew it! wrote:
End User wrote:
clone wrote:ARM is the ant

The sales numbers don't suggest that. Roughly 700 million ARM based devices will be sold this year.

That actually supports the ant analogy!

A total of 349.2 million PCs were shipped worldwide in 2012. That number is projected to fall to 315.4 million for 2013. Sales of ARM based devices are steadily increasing.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 3:10 pm

That's a lot of little ARM CPU crawling about.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Wed Oct 09, 2013 6:30 pm

In my view we need a three way race for both the GPU and CPU markets to see any real price competition. As it stands now we have AMD versus Intel for CPU and AMD versus Nvidia for GPU, that needs to change.

Intel needs to get a discreet GPU line going and stop focusing on imbedded video in the CPU.
Nvidia, or someone else, needs to jump into the desktop CPU market.
AMD needs to get its quality control issues fixed for both hardware and drivers.

Will any of that happen? Anything is possible but I don't think its likely.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 1:59 am

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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 3:12 am



Given AMD's prominent (though no longer dominant) position in the high-volume server market, it's hard to see them messing this up.

Though I still want to see AMD (or Nvidia!) bolt an ARMv8 core or two to their high-end GPUs for on-board logic and so forth; maybe even a skeleton SoC that would allow for a hypervisor OS to be hosted on each card, then shove as many cards as will fit in a chassis, completely skipping all the other mess usually associated with building compute arrays.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 5:14 am

End User wrote:ARM will keep x86 pricing in check.

A followup - x86 sales in the consumer space have dropped below 2008 levels while ARM devices have driven all the growth:

Image


Look at the impact ARM based tablets are having on x86 growth rates:

Image
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 9:56 am

Airmantharp wrote:

Given AMD's prominent (though no longer dominant) position in the high-volume server market, it's hard to see them messing this up.

I wish them luck. While they do still have a presence in the server space, I question whether it is enough of a presence any more to drive adoption of ARM. Intel certainly isn't going to push ARM for servers, given that they sold off their ARM division a few years ago.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 10:20 am

just brew it! wrote:
Airmantharp wrote:

Given AMD's prominent (though no longer dominant) position in the high-volume server market, it's hard to see them messing this up.

I wish them luck. While they do still have a presence in the server space, I question whether it is enough of a presence any more to drive adoption of ARM. Intel certainly isn't going to push ARM for servers, given that they sold off their ARM division a few years ago.

While it's great that AMD has jumped onto the ARM server train they won't be alone. Companies such as Calxeda are beginning to appear. The next 5 years are going to be very interesting in the ARM server space.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 10:22 am

Airmantharp wrote:Though I still want to see AMD (or Nvidia!) bolt an ARMv8 core or two to their high-end GPUs for on-board logic and so forth; maybe even a skeleton SoC that would allow for a hypervisor OS to be hosted on each card, then shove as many cards as will fit in a chassis, completely skipping all the other mess usually associated with building compute arrays.

I'd love to see both AMD and Nvidia innovate in this space.
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 10:47 am

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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 10:56 am

clone wrote:
The sales numbers don't suggest that. Roughly 700 million ARM based devices will be sold this year.
look at the revenues.... arm is the ant, not ants, just an ant in comparison to Intel who not only dominates the desktop PC space but several other far more lucrative segments as well which is why they are the elephant.

iPhone revenue alone beats Intel revenue (iPhone also beats Microsoft):

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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 11:09 am

How is it that Home Depot has several times the revenue of McDonald's!?
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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 11:14 am

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Re: Does a Strong AMD Really Drive Prices Lower?

Postposted on Thu Oct 10, 2013 11:15 am

clone wrote:a strong AMD lowers prices, a dominant AMD does not.


This is a concise way of summing it up.

Static Relationship: Dominant vs Subjugate
Sure, when Intel has indisputably superior performing CPUs, you get relative bargains on AMD chips from time to time. Unfortunately, because they are generally inferior, they do little to affect the pricing of Intel chips. It becomes like any budget brand competing on price with a dominant brand (eg, Tide laundry detergent vs Gain). Sure, the cheaper product may end up being better value, but if you want the "best" you have to pay for it.

Static Relationship: Equal vs Equal
If, someday soon, Intel effectively runs out of ways to improve performance increases with silicon-based X86 chips and AMD "catches up", then we'll probably see a duopoly develop. Both companies will go for years will little advancement. At some point, it will become detrimental to both to keep competing on price (ie, race to the bottom for profit) and in, effect, collusion (whether purposeful or not) as a baseline price becomes established. A good example of this are wireless/cable providers.

Dynamic Relationship: Dominant/Subjugate vs Dominant/Subjugate
This is the best for the consumer. Every generation or two companies swap dominance. One company comes out with superior product, followed by the other coming out with something as good or better, for which it has to charge the same or less than the competition to regain market/mindshare. This is almost what we have with Nvidia and AMD on graphics. The companies are pretty dynamic in this sense on the low/mid-range gpus (though AMD is suffering a bit in mindshare/marketshare). Nvidia, however, has been dominant on the top end since Titan - much like Intel is now with x86 CPUs, allowing them to pretty much charge what they want for these halo products.
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