Intel is Trying to Manipulate AMD Ryzen Launch

Discussion in 'Frontpage news' started by Hilbert Hagedoorn, Feb 27, 2017.

  1. schmidtbag

    schmidtbag Ancient Guru

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    That doesn't change my point. Servers always sell in large quantities, and their parts are always more expensive regardless of whether they're faster than their desktop counterparts or not. AMD is selling 1 million consumer flagship products. Considering their tiny market share and how niche of a market these products are, I assure you that S&D is not an issue.
     
  2. Chillin

    Chillin Guest

    But there is no compelling reason for Intel to do anything in reaction to Zen, all these "Intel panicking" clickbait articles are absurd factually. That's what I'm saying. The numbers don't lie.
     
  3. Fox2232

    Fox2232 Guest

    I wrote about this before in this very thread. Your idea of: "AMD is not in the building as Intel, much less the same competition floor. "

    Face it, AMD is in same market as intel is. And you plainly do not project effect of reduced revenue or prices of product.
    Intel: revenue 59.3, net income 10.1
    AMD: revenue 4.2, net loss 0.5

    If we look at your Gross Margin values as true (I did not went to confirm that, and for this demonstration, I simply consider them as true.):
    Intel product production costs: 59.3 - (59.3 * 0.61) = 59.3 - 36.2 = 23.1
    AMD product production costs: 4.2 - (4.2 * 0.23) = 4.2 - 1.0 = 3.2

    Think about it. Intel spends $23.1 B on making products, then they sell it for $59.3 B. And their net income is only $10.1 B. They burn $26.1 B on stuff every year. (59.3 - 23.1 - 10.1 = 26.1)
    If intel sold mentioned $23.1 B worth of products for "only" $49.2 B, then their net income would be $0.
    1 - (49.2 / 59.3) = 0.17 = 17% (This shows how much they can go down on revenue = how much they can reduce prices.)
    - - - -
    It correlates with my previous statement. Intel can afford situation where AMD takes 10% of their revenue. And it already will have very bad effect.
    But intel can't afford to lose 20% of their revenue.

    So, in scenario that Ryzen delivers higher performance at lower price, Intel can:
    - Reduce prices by up to 17% and have potentially no profit.
    - Or keep prices and hope that AMD will not produce enough chips to take more than $10.1 B from their revenue.
    - or otherwise ensure that AMD will not be able to sell those chips

    Intel is not stupid:
    - Global reduction of prices even by 17% is off the table (it would be planned suicide)
    - intel is not naive to have "hopes"
    - So, other business practices are here...
    = = = =
    Intel has few more options:
    - dropping chips which make no money and are in market just to choke AMD (Atom).
    - reduce on that $26.1B which is invest/give to investors
     
  4. schmidtbag

    schmidtbag Ancient Guru

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    I don't necessarily disagree, but I don't see how the quantity of CPUs being shipped is relevant to your point. That's kind of like saying "Lego feels threatened by Megabloks because of a highly desirable new kit they released where only 1000 will be sold". That just doesn't make sense. Lego is gigantic compared to Megabloks. They will always sell more kits, even if they're limited edition. Lego will always cost more than Megabloks, and they can get away with that. But Lego can still feel threatened by them, if they happen to release a product that makes them look bad. Why for any reason would quantity be a primary factor to consider? It's all about image.

    Only enthusiasts look at graphs. Only enthusiasts even know what AMD actually is (the vast majority of people never heard of the company). Enthusiasts have a strong influence on what others will buy. AMD's marketing has been notoriously lacking or dishonest. Intel does not want AMD gaining enough attention where people are aware of them or willing to switch. Intel especially doesn't want the press saying things like "look how much better this is than <Intel counterpart>!". The only thing Intel is scared of is being associated with words like "dethroned", "poor value", or "inefficient". So for the time being, they've lowered their prices to either soften blows they receive, or, make themselves look even better than they already look (assuming Ryzen isn't so great).
     
    Last edited: Feb 28, 2017

  5. SaLaDiN666

    SaLaDiN666 Guest


    I am awfully curious now, had you been working for Goldman Sachs or Lehman Brothers banks before the financial crisis started?
     
  6. Chillin

    Chillin Guest

    Haha. I think the best thing that can happen to Intel is for AMD to hire him as CEO.
     
  7. Fox2232

    Fox2232 Guest

    You probably meant CFO. Not that baseless "Ad Hominem" is an argument. But hell, I am used to it here.
    Btw. Did you really made account just for this thread? For thread which would be already gone if people did not go "Full Retard" against possibility that intel tries their past practices?

    They sure took break from them (as AMD was really not competitive much). If we excuse Atom chips. But who would really be surprised if they brought them back moment AMD delivered competitive product again.
     
    Last edited by a moderator: Feb 28, 2017
  8. Chillin

    Chillin Guest

    Nope CEO, you always know everything so might as well go to the top.
     
  9. Chillin

    Chillin Guest

    I hear what you're saying, and you're right that image is important, but so is the ability to deliver.

    Again, both of these companies are looking out for their shareholders, that's it. None of them really gives a **** about the average consumer as long as they buy, and if some positive marketing spin will do that, what do they care. No idea why people get emotional about this sh.t, we are talking about freaking CPUs here, not sport teams....
     
  10. Glidefan

    Glidefan Don Booze Staff Member

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    I think that's good. Remember how intel was happy and then AMD threw in Thunderbird?
    And then Athlon XP? and Athlon64. That sort of made them into release Core.
    Keeps everyone from stagnating.
     

  11. Clouseau

    Clouseau Ancient Guru

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    Intel has to respond in some way or form. Depending on how well received the new AMD products are going forward has the ability to start to erode market share away from Intel. As proof, look at IBM. Where in the consumer market are they? They had the same attitude towards PCs. How on earth could PCs harm their market share?

    Business markets are constantly in motion, always evolving. Google complained that Microsoft was bulling them with unfair tactics. Microsoft backed off and now look. Bing is still not considered to be as good by the masses. Google has become a part of common vernacular like Coke when asking for a cola.

    Being underhanded in reacting to situation is uncalled for. Then again, how is business looked at...generally speaking, business is war and all is fair in love and war. No?

    Consumers are supposed to be able to dictate how companies act in the marketplace. A lot of people have become so weak to this concept that courts have tried to intervene. If Intel is so horribly awful then do not buy their products till they reform, plain and simple.
     
  12. schmidtbag

    schmidtbag Ancient Guru

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    The ability to deliver is irrelevant. Unless AMD manages to sell out of their entire 8-core lineup (which I highly doubt will happen) then you have a point. But, that's a rash assumption. As has been stated by both us collectively, AMD is tiny with little market recognition, a recently poor track record, and these 8c/16t chips are a niche market. Considering AMD's books are in the red, I don't think their shareholders would appreciate it if they made 10 million 8-core chips where the vast majority of those won't sell in a timely manner. So again, S&D is not an issue for AMD; it just won't be probable.

    Consider the following scenarios within the next few months:
    A. Ryzen 7 does so poorly that AMD doesn't even return a profit from manufacturing.
    B. AMD manages to sell every single CPU.
    C. AMD returns a decent profit but doesn't sell all 1 million units within the first year.

    Let's look at the results of those scenarios in a financial perspective:
    A. Intel is happy because they know their name still holds power/prestige, and therefore will continue to rake in billions of dollars per year.
    B. Intel is happy because that means AMD can't keep up with the S&D, so Intel makes those sales instead. Since Intel lowered their prices, the PC market as a whole sees an increase in sales. AMD running out of stock also buys Intel time to come up with a good response.
    C. Intel is satisfied because that means those potential sales went to them instead.

    Now, let's consider those same scenarios but in a non-financial perspective:
    A. Intel is worried, because AMD still can't make anything decent and might go under, leading to Intel as a monopoly.
    B. Intel is worried, because AMD now is now threatening Intel's image.
    C. Intel is satisfied because AMD still isn't a threat, but, they're not doing so bad that Intel will monopolize.


    There's more to a business than appeasing shareholders. Intel doesn't want AMD to fail, but, they sure as hell don't want want them to take too much glory either. Think of AMD's sales as a "business expense" for Intel - it's a lot of money but in the long term it keeps the money flowing.


    You keep saying that, but I'm not seeing too many people getting emotional over routing for AMD. I see a lot of people getting emotionally negative toward Intel, I see a lot of people making rash assumptions, and I see a lot of people getting annoyed about people's misjudgment, but that's about it.

    Regardless, sports teams are, in my opinion, worse to get emotional about. A sports team has very little to do with your personal life whether they win or lose. Being computer enthusiasts, if AMD screws this up, we all lose.
     
    Last edited: Feb 28, 2017
  13. vase

    vase Guest

    The thing is.
    He was copy pasting basic financial stats out of reports/articles (which is not a hard thing to accomplish) but coming to completely false conclusions (apart from his looked up numbers being correct) & also he wasn't able to follow/understand your correct detailed analysis, that obviously is "original content" and achieved through proper calculations and applying macroeconomic tools/theory.
    So I wouldn't take his ad hominem too serious, as it is based on a very weak assessment.
     
  14. Clouseau

    Clouseau Ancient Guru

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    Intel can lower prices greater than 17% in the mass consumer market. They just cannot go below fixed costs. So that assessment of not being able to afford to lower prices less than 17% is incorrect. The other business segments would keep that particular issue afloat. One never cuts the cord on a losing segment as long as fixed costs associated with that segment are exceeded.

    EDIT: Not everything above the line is fixed. Variable cost components are included as well.
     
    Last edited: Feb 28, 2017
  15. MadGizmo

    MadGizmo Guest

    That's the wrong way to look at it. You perfectly well know that those Intel processors end up in data center, mobile device, NAS, IoT and other markets. And yes, some end up in enthusiast PCs. Then all of a sudden AMD's million is a large number, because Ryzen is intended for that specific market.
     
    Last edited by a moderator: Feb 28, 2017

  16. Fox2232

    Fox2232 Guest

    You wrote same thing as I did, in very short version. Intel can cut up to 17% of their revenue. (Revenue is total, not one segment)
    And I wrote that they would have to do sacrifices on other places. I mentioned those $26.1 B cash which is invested into something.

    And as far as cutting off cords. I did mention Atom chips, as those are in red numbers.
    - - - -
    When I look at 1 million Ryzen 8C/16T chips, I see prices $300, $400, $500. I presume that there will be certain volume of each and average price will be $350 per chip. Therefore revenue from those chips may be ~ $350 million.
    But what does that mean for intel? When AMD sells $500 chip, which performs as well as intel's $1000+ chip, Intel just lost very profitable sale.
    I guess that each $350 of revenue AMD gets from Ryzen will result in reduction of intel's revenue by $500~1000.

    You know, Chillin is right about that huge difference between production cost and price chips are sold. But that's average value.
    There are chips where intel get nothing else in return than presence in given market.
    There are chips which make few %, and there are chips which make hundreds of percent.
    And this time AMD puts Ryzen against those highly "overpriced" (profitable) chips.

    Intel has 2 more highly profitable segments. High cost Ultrabooks CPUs (they are even more profitable than high performance desktop chips). And Xeon platform, no longer that premium pricing as in the past, but still equal to desktop high-end.
     
    Last edited by a moderator: Mar 1, 2017
  17. Clouseau

    Clouseau Ancient Guru

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    We did not write the same thing. Gross Margin only accounts for costs directly traceable to the services and products being offered. It does not include SG&A (selling, general and administrative costs). Having a gross margin of 0% means the whole operation is in the red so they would be burning their cash reserves. That is why one can only state how this one segment of the market may be affected in the short or long term.

    It would take a long time before AMD could be in a position to make significant inroads in all the segments Intel is in. Regarding that aspect, yes that one million in production volume is not significant today. Throw a rock in a calm pool of water. It creates ripples. If left unchecked those ripples can turn into waves as bigger rocks are tossed in. That is also why how that one million in production volume is received is significant to their operations. Rome was not built in a day.

    I am not saying that AMD is taking aim to blow Intel out of the water once and for all. That would be silly. Like I asked earlier, what happened to IBM's market share in the mass consumer market?

    EDIT: Gross Profit does not include general and administrative expenses. Within gross margin and gross profit, there are variable costs. As long as those variable costs are in some portion contributed towards by the profits of that segment, that segment will be allowed to continue unless that portion of the market is exited. Fixed costs are deducted first.
     
    Last edited: Mar 1, 2017
  18. HeavyHemi

    HeavyHemi Guest

    No offense fellows, but this is literally an entire page of pasta. Ha ha.
     
  19. Clouseau

    Clouseau Ancient Guru

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    Would you believe we are carb loading before an important race?
     
  20. lost89577

    lost89577 Guest

    first review listed on google

    http//*************/amd-ryzen-7-1700x-1700-official-gaming-benchmarks-leak/

    first review listed five hour ago

    "AMD’s Ryzen 7 1700X ($399 US) processor against Intel’s Core i7-6800K ($434 US) processor with a NVIDIA GeForce GTX 1080 graphics card.
    AMD Ryzen 7 1700 up against the Intel Core i7-7700K processor. These chips are $329 US and $339 US respectively with a NVIDIA GeForce GTX 1070 graphics card.
    All games were tested at maximum settings at 1440P tests"

    AMD Ryzen 7 1700 (3.0-3.7ghz) with Geforce GTX 1070 has twice the the performance scores of the AMD Ryzen 1700x (3.4-3.8ghz) with Geforce GTX 1080 according to this review
     
    Last edited by a moderator: Mar 1, 2017

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