AMD To Close Plants, Lay off 2300, Lose Gateway

cdrudge writes: "According to this article on CNN, AMD will be closing 2 plants in Austin, TX and also their operations in Penang, Malaysia due to slack demand. 2300 jobs will be cut in the process. The same article mentions Gateway dropping it's 'Select' line of computers. Their 'Select' line of computers were Gateway's only AMD-based systems. A Gateway spokesperson said 'We're consolidating all of our offering behind Intel, which was the biggest part of our mix already.'"

Comments

For Gateway, Intel = cheaper

[Brento]

Here's a quote that stands out in the article:

Separately, embattled PC maker Gateway (GTW: down $0.10 to $6.07, Research, Estimates) said Tuesday it will phase out all of its systems based on AMD processors as part of its broader cost-cutting efforts.

It's cheaper for them to just source Intel CPU's and motherboards than to run two product lines, basically. I'm stunned that the price difference in the CPU alone wouldn't be enough to keep Gateway using AMD, but there you have it. For once, Intel is a cheaper decision.

Re:For Gateway, Intel = cheaper

[garcia]

Intel is still not less expensive. It is absolute bullshit to think that AMD wouldn't be a better choice for Gateway to sell.

The problem here is a lot similar (at least in my eyes) to the Pepsi/Coke college thing. Pepsi came on campus here at BGSU and gave them $8 million dollars to take PepsiCo as the main supplier of soft drinks (rather than having both like they did before).

Intel is pulling the same bullshit. They want to squeeze out the competition so they best way to do that is to force large outlets of computers to stick w/one chip vendor.

I consider this very unethical.

I don't know if this is exactly what happened in this case (but I can only assume that it is)

I can't see why people would want to spend more money for less output on an Intel machine when the AMD is tons cheaper and faster.

Yes, yes, we know the public is misinformed and really believes that clock-size is important but price is what gets most people.

AMD still wins there.

Bad choice Gateway.

Re:For Gateway, Intel = cheaper

[phillymjs]

For once, Intel is a cheaper decision.

Perhaps Intel made Gateway an offer they, in their increasingly-desperate financial straits, could not refuse. An offer like, "If you exclusively sell machines based on Intel processors, we'll give you a significant discount over what you'd pay if you offered your customers a choice."

This is a Microsoft tactic from way back, used with great effect to obtain their OS monopoly. The Microsoft File gives a detailed account of them using this tactic to stop Vobis, a German PC maker from offering DR-DOS. Microsoft gave Vobis a huge discount on the then-new Windows 3.x if they would exclusively sell MS-DOS and stop distributing DR-DOS.

~Philly

Re:For Gateway, Intel = cheaper

[MikeTheYak]

What case would that be? A few years ago, the DOJ investigated Intel on antitrust measures. Intel and the DOJ quietly settled out of court; no harm, no fuss. Considering that AMD DOES make an Intel-compatible product with around 20% marketshare, I don't think you can really show that Intel is a monopoly, even if you restrict yourself to looking at Windows-compatible processors.

The previous poster admits that he has no evidence that Intel is doing anything illegal, but assumes that they must be anyway. I find this to be just a teeny bit presumptuous. Intel may have simply offered better terms than AMD. Since Gateway only has to pass the cost of CPUs on to the consumer, I don't think that price/performance is so much the issue as a streamlined manufacturing pipeline and/or a worry about public perception.

I'm no economist

[sllort]

'We're consolidating all of our offering behind Intel, which was the biggest part of our mix already.'

So, because consumer spending is down, Gateway is discontinuing its' discount line of computers. Because consumers want to buy more expensive computers when the economy is in trouble.

I must be missing something.

While the price war has left scars on each company, AMD's wounds have been more severe than its larger, deep-pocketed rival.

Now is the time for Intel to use all of its' financial muscle to crush AMD once and for all. This is capitalism. If Intel can continue bleeding longer by slashing prices below manufacturer cost, AMD will eventually run out of money. Once the economy picks back up, Intel will look out on the sunny pasture of monopoly, where it can play in peace with Microsoft now that the U.S. government has said "OK" to monopolies.

My advice: buy Intel stock.

big deal

[TheSHAD0W]

Yes, I heard AMD was going to close 2 fabs, and take a $100 million charge against earnings. I also heard it'd save $125 million a year doing it. Getting your money back in ten months isn't a bad thing.

As for Gateway, most of the people who buy them are the ones who are charmed by the sexy "Intel Inside" logo. Those of us who know better don't buy from Gateway anyway.

AMD Products

[mach-5]

I will continue to purchase and recommend AMD products for my customers. Just because Gateway is leaving them behind doesn't mean the rest of the world should too. Buy what you think is best, and what you can trust.

I wish people would stop saying the word recession

[Ghoser777]

I remember when Bush kept talking about our economy being on the path to a recession several months ago. It sent chills down my spine everytime he said it. What kept the boom economy of the 90's going was what Alan Greenspan called "Irrational Exuberance" - people where so confident in the economy that they invested more than any economic indicator would have shown.

But now, if we start talking about out economy in a negative manner, we're settings us up for "Irrational Fear," where people think the economy is worse than it really is and pull lots of money out. Just the word recession can get stock holders antsy.

One of the main reasons that several business are now having problems is that a lot of people are holding onto more of their money instead of spending it and putting these people to work. Recession -> hold onto money -> more job cuts -> more recession -> hold onto more money -> ...

I don't have to remind programmers what happens to their apps when they get stuck in infinite loops...

F-bacher