AMD is turning into Intel

[ksoth]

Intel spends about $4.3 billion in R&D, while AMD spends about $700 million. That's a pretty huge difference, but Intel has about 10 times the revenue as AMD.

"We put the <i>fun</i> back into fundamentalist dogma!"

 

[spud]

Thats sounds about right but um its still a huge difference when intel pulls in around 8 billion profits while AMD pulls 4 something i think (dont quote me) intel has other expenditures too 80 r&d labs is probably pretty expensive to run plus they have a ton of other companies too but thats the way business is.

SPUD

I saw the future intel's written all over it

 

[ksoth]

In 1999, AMD pulled in about $3 billion while Intel pulled in $30 billion. Intel had about $7 billion profit off that, while AMD showed a $90 million loss. So, about 1/4 of Intels sales was pure profit, while AMD was operating in the hole.

But, in 2000 things were a little better for AMD. Intel had $33 billion in sales with $10 billion profit. AMD had $4.6 billion in sales with a profit of $1 billion. AMD works off of a 20% operating and profit margin, Intel works off of a 30% operating and profit margin.

Those figures are why Intel processers are more expensive than AMD processors. It has nothing to do with quality or the cutting of corners. Intel sells their products for more so they can make a bigger profit. Just to even compete, AMD has to be cheaper or else they won't be able to compete because Intel is the 800-lb gorilla.

It is kind of a shame that that's the way things are. But, because Intel was basically a monopoly in the consumer CPU market before the Athlon came along, they got away with it...

"We put the <i>fun</i> back into fundamentalist dogma!"

 

[spud]

The figures look right but we best get this straight we the lowly customer does not get to know what what the stock holder knows we dont know where all that money is going we cant fairly assume the more money either company makes is what dictates the cost of them its what they spend in the end thats gonna be the cheif factor in final cost its economics (note i dont know much about it but i know enough to know how it in theory is supposed to work), for all we can know both companies maybe are over chargeing fr processors cant say for sure and go to the amd website and listen toone of there conferences they aim for the low cost market thats what they specialize in .

SPUD

I saw the future it had intel written all over it

 

[ksoth]

Actually, being publicly traded companies, Intel and AMD pretty much have to divulge everything. If you look hard enough, you can exact details on pretty much everything. Looking at SEC filings is a good way to do that. We know exactly what each company is doing. Intel is charging more for their processors to make more money, clear and simple. Intel makes 50% more profit on its products than AMD does. That's a huge difference. Pentium III's don't need to be 50% more than Athlons, but they are because Intel knows that they can charge more and sell them, because the average PC buyer doesn't know squat about computers. Business alliances with major PC manufacturers ensures that they keep the edge. Pretty much until the Athlon, Intel was the best choice. This idea remains in the PC industry, even though it is not true anymore. Only until recently have all PC makers begun using AMD chips. I think Compaq is the only one left that isn't (obviously because of a deal with Intel). NEC just announced they will use AMD chips in their European business market. It is very possible that one of the reasons Intel is in the trouble that it's in is because of AMD nipping at its heels, and PC makers really seeing that they have more than one choice when it comes to building quality PCs. We have to wait and see until Intel and AMD both release their quarterly earnings reports. Intel is obviously doing bad, with a 25% decrease in revenue over last quarter. If AMD posts the same trend, then Intels troubles are probably because of a slowing PC industry. If not, which was the case last quarter, the trend shows AMD gaining big ground on Intel, stealing more and more market share.

We can tell AMD is not overcharging for their processors. A 20% profit margin is fairly standard in todays business. In my company, I put a 50% markup over the physical cost of the goods I manufacture. After all total costs (advertising, processing, etc.), my profit margin is somewhere around 20%-25%. Even if both are overpriced, Intel's would still be far more overpriced than AMD's would be...

AMD is no longer in the value sengment. Instead, it seems like AMD is merging the value and performance segments together, by bringing excellent performance at great prices. And, it seems to be working.

"We put the <i>fun</i> back into fundamentalist dogma!"

 

[khha4113]

<b>I think Compaq is the only one left that isn't (obviously because of a deal with Intel).</b>
You meant <b>'DELL'</b> right? Because as far as I know <b>'COMPAQ'</b> has been selling Duron and Athlon comps for quite some time.

 

[Guest]

Any company has only two obligations to their buyers, 1)a good/reliable pruduct 2)at a fair and reasonable price.

We the consumer benefit from the battles waged between companies for our dollars. We should not complain when they
use a valid/sound stratagy to save or make money, if it was your company you would have done the same thing. I know I would have. It's the law of the jungle.

Take Care.

You might have a point. But who cares!

 

[jlbigguy]

<font color=blue>"intel has other expenditures too 80 r&d labs is probably pretty expensive to run plus they have a ton of other companies too but thats the way business is."</font color=blue>

Very often large companies venture into new business, and lose focus on their core products. This has happened to Intel. So while they may spend 4.3 billion in R & D, it is not all concentrated on their core (cpu chip) products.

The 5,000 employees being laid off won't all be from the core product, most will be from other business units. Expect Intel to sell some of these other business units as well.

 

[Guest]

Maybe so...

But if I saw you driving a $50K sportscar able to go 195 MPH, and I had a $20K sportscar that could only go 175 MPH, I wouldn't envy you. $30K for an extra 20 MPH of speed that I can't even appreciate (try going 175 MPH on the freeway and see how many cops come after you) is a waste of money.

That's what it comes down to. If I had a spare $1000 to upgrade my machine, I'd go with the Athlon and a good motherboard for it, because I could then afford a 19"+ monitor, a nice 64 MB video card, and a ton of RAM for the machine. But for $1000, I'd be spending more than half that just on the P4 processor alone, with most of the rest going to the motherboard and the Rambus memory. In other words, I'd be looking at an additional $500-1000 on a P4 system to get all the other goodies with the upgrade versus an Athlon system. Oh, and as far as benchmarks go, it's not the spread between the marks, it's the RATIO. Beating the Athlon by 30 points in a benchmark when both have a benchmark rating of 400+ isn't that impressive, because at best it's only a 7% difference. If I'm going to shell out twice the money for the CPU, I'd better get at LEAST 40-50% more performance, and preferably twice the performance. P4 doesn't deliver the speed for the cost.

The adage "you get what you pay for" doesn't always apply.

 

[Guest]

Which means that, while Intel spends more actual money on R&D, AMD spends a higher percentage of their revenue on R&D.

 

[ksoth]

Kinda. In 2000, or 1999 maybe, probably because of AMD, Intel increased R&D spending by some 32%!!!!!! At the same time, AMD CUT R&D spending by some 7%. Those are pretty impressive figures.

But, one thing is important. AMD and Intel don't only make CPUs. Intel has a huge telecommunications chip business, and both AMD and Intel are bi in the Flash memory sector as well. I do believe, however, that CPUs are both companies core business and bring in the majority of their revenue. It would probably be very difficult to find a breakdown of exacty what each company spends their R&D budget on.

"We put the <i>fun</i> back into fundamentalist dogma!"

 

[Sojourn]

Since almost all Athlon 1.2GHz have proven to be easily overclockable to 1.3GHz or more (I hit 1370MHz without upping my voltage, on a 'B' CPU) without special cooling, its pretty obvious AMD has no problems meeting 1.3GHz production specs. AMD does not want to start a clock war right now, because it doesn't believe it can scale faster than Intel. The 1.3GHz would undoubtedly be met with a 1.6GHz or maybe even 1.7Ghz P4. The tbird core is getting fairly long in the tooth now, while the P4 core is fresh and built for scaling. Intel has always been willing to sit on potential clock speed to make more money. AMD will probably restart the war with a vengeance once their palamino core is released. AMD and Intel have to think not only of today, but of tomorrow and next month and next year as well. By scaling too quickly now they may leave themselves without an upgrade path down the road, and that means no revenue.

/Athlon-1.2GHz@1370MHz(137MHz*10)/Asus_A7V133/