Up until now, Intel has been able to charge a little more for its chips, while AMD has charged less. Perceived differences in technology have faded over the past few years, and AMD has started to win the performance comparison.
2. Main products of each company
(* above information comes from Intel and AMD official website)
3. Product differentiation
Intel and AMD have different market strategies. From long time ago, Intel has been in the dominate place in CPU area. Therefore, Intel CPU has better compatibility since many computer devices manufacture need to along with Intel which may enlarge their share of market in their own field. In the new product development, Intel will think more about the system and platform, which may give advantage to continue in the leadership. Intel products are more mature in server and laptop use.
AMD is younger than Intel in the CPU arena. AMD has a very strong research and develop team in order to catch up with Intel. Their product is more powerful than Intel’s in recent years and the price is lower. They first developed physical dual core CPU, and 64 bit CPU. These two most advanced technologies won lot of market share for AMD. Now AMD is trying to promote 4-core CPU which leads CPU competition into a new era.
3.1 Kinked demand curve
Until now, the competition between Intel and AMD becomes more and more severity, in order to avoid antitrust challenges, both companies compared with each other’s price (AMD less to do so) and competed with discretion. But Intel with sagging results and loss of market share has decided to challenge AMD pricing with cut its own. In the US News& World Report there is an article named “chipping away at Tech price" which written on 7/16/06 notes: ‘In an attempt to stem a slow loss of market share, Intel has deeply discounted what computer manufacturers pay for many of its existing processors. AMD has been forced to cut prices as well. And further cuts could be coming, analysts say. That means consumers in the market for a new computer could soon get even bigger bargains'. In discussing the issues in relation to the oligopoly (oligopolywatch.com 2006) the price cuts are lower by 17% to 53% compared to the prices earlier this year. some price sparring is common in this market, but most commentators think that these cuts are extraordinary and damage to both firms and cutting price is hurting both companies' bottom lines. Both AMD and Intel seem intent on racing to the bottom, and their share prices are taking a beating. The great advantage of an oligopoly is the ability to have an unspoken gentleman's agreement about price levels, with no desperate wild card small player being able to disrupt the equilibrium. Finally the one who benefits the most from the price war between Intel and AMD are their product users, as Intel and AMD both cutting their product price. Price is one of the important elements of the demand and supply, when the price is lower the customers' demand will increase. Thus, the demand curve will shift to the right.
4. Conclusion
As Samuelson&Nordhaus defined oligopoly, one of the four major market structures, which is an intermediate form of imperfect competition in which an industry is dominated by a few firms. Like the competition between Intel and AMD is imperfect, both companies are facing the challenges of price, quality of products, etc which are hurting both parties’ bottom line. But because of the competition between Intel and AMD, both companies put their best effort on research and development to launch the new and high quality products within shortest cycle time. However their competition benefits a lot to the customers, as the two companies provide more competitive and high quality choices of their products and offered the lowest price in the price war to attract the market. The competition between two companies helps to push the development of economic accordingly.
Reference
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Information from the official website of Intel, viewed on 24th July 2006,
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Information from the official website of AMD, viewed on 24th July 2006
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Oligopoly – Using a perfectly good oligopoly. Viewed on 25th July 2006
4. Samuelson, PA & Nordhaus WD, Website for Samuelson/Nordhaus’ Microeconomics, 8th Edition, viewed on 26 July 2006-7-26
http://highered.mcgraw-hill.com/sites/0072872071/student_view0/index.html
Who to believe on power consumption? AMD or Intel?
AMD is on a full marketing counter offensive after the unanimous praise heaped upon Intel's new Core2 "Conroe" desktop processor and is claiming that Intel's low-power ratings are based on a skewed metric. AMD's reasoning is that AMD's TDP (Thermal Design Power) rating is based on maximum power draw while Intel's power rating is based more on typical power consumption and therefore exaggerated. Furthermore, AMD argues that we must look at the whole picture by measuring the power consumed on the entire computer. In fact at last month's press conference at AMD's headquarters, everyone was given a power meter to take home to measure power at the wall. But does AMD's argument have any merit? TomsHardware seems to have the answer when they measured power consumption of identical systems with the exception of AMD or Intel motherboards and CPUs.
Intel rates their new C2D Extreme x6800 processor at 75 watt TDP while AMD rates their new Athlon 64 FX-62 Extreme processor at 125 watt TDP which has a theoretical difference of 50 watts.Since Intel uses an external memory controller on the motherboard, that theoretically translates in to an additional 20 watts of maximum power used by Intel based motherboards so the power advantage should be much smaller than 50 watts if we are to believe AMD. Here are the actual system level measurements from TomsHardware:
* Represents power save idle mode
If we are to believe AMD's claims that Intel uses dubious TDP numbers and has more power hungry chipsets on the motherboard, then we should be seeing a difference far lower than 50 watts and perhaps even a wash. But looking at the highlighted figures, AMD's overall power consumption was actually 66 watts higher than Intel! This (based on TomsHardware numbers) would seem to indicate that not only is Intel NOT over exaggerating their power efficiency numbers, but they're actually being more conservative than AMD. I threw in an overclocked Intel X6800 at a blazing 3.46 GHz for good measure and even that uses 51 watts less power than the AMD FX-62.
If that wasn't bad enough news, we also see that Intel's mid-end E6600 Core2 desktop processor at 2.4 GHz savaged the 2.8 GHz AMD FX-62 on nearly every single benchmark while costing more than three times less. Note that these performance numbers are being echoed by every other hardware enthusiast site on the web. If a 2.4 GHz Core2 can do that much damage, it's hard to imagine what a 3.46 or even 4 GHz Core2 can do. The Core2 processors are already showing some really nice overclocking properties while AMD's FX line doesn't seem to have much room to clock. When I issued the dire warning on AMD back in March, I was blasted by AMD fans for posting dubious numbers from a benchmark set up by Intel but it looks like those numbers were legitimate after all. Considering the fact that even the $224 2.13 GHz E6400 Core2 is giving the AMD FX-62 a run for the money on many benchmarks, AMD is truly in a dire situation and they're under immense pressure to cut prices since Intel has already announced massive price cuts on their legacy Netburst CPUs. Now with the power argument out the window, it would take a miracle to AMD back in the race.
