Re: Would IBM want/let AMD fail?
This speculation in my opinion is a little ridiculous. I saw this a few times on SI that maybe IBM would buy them out, in order to protect choice in the processor market. Say, what...?
Since when has IBM ever attempted a money losing proposition, except for IBM Micro, which allowed them to make use of advanced process technology their Power processor line?
Think about it. It would cost them $10B at least for AMD, and that doesn't count the money it would take to turn the company profitable. Even if they subsidized all the sales by transitioning their entire product line to AMD processors and gave it the IBM seal of approval, it's not like they can instantaneously deliver all of those necessary designs. Many IBM servers have custom chipsets that offer specialized features that their customers are used to. The transition could take years, during while AMD could lose another few billion dollars.
And what then? Assuming Intel doesn't stumble (and I don't know of any logical business decision that assumes that they will), how long after AMD turns profitable will it take IBM to recover the 10+ billion dollars of investment?
And meanwhile, if they accept the alternative Intel monopoly, how long would it take hypothetical insane monopolistic pricing before IBM ends up paying the equivalent 10+ billion dollars for overpriced Intel processors? It's not like Intel can even raise prices too significantly in the lack of competition, given price elasticity.
I've concluded that there are absolutely no business prospects in IBM buying out AMD. With the margins that IBM gets on their server products, they can pretty much continue buying Intel indefinitely. After all, if Intel were to raise prices, it would be a zero sum game. All OEMs would be impacted in the same way, and IBM isn't necessarily held at a disadvantage. On the other hand, if IBM buys AMD while Intel executes, they could be faced with competitive challenges.
Furthermore, I don't think IBM's business is suited at all for low margin or low cost businesses. It would pull down IBM's overall margins, and their stock would plummet. And with IBM's more expensive boutique process techniques, I can't see how they could beat Intel in costs. It could conceivably be a disaster for them.
But that's just my opinion....
AI
