Advanced Micro Devices Inc (AMD)

[woggut]

- Why do you only try to estimate current development costs when forming an opinion about 'Itanium profitability'? Shouldn't all dev costs so far be included when discussing this? You can't just discard it like it never happened.

That's the sunk cost fallacy. It's business 101 (ok, maybe 201), you don't consider past costs when evaluating future investment opportunities. It doesn't matter whether the cash was spent on Itanium development or swiss cheese futures. The investment decision TODAY is whether Intc can get a decent return on the incremental resources invested, treating the past development as a fixed cost. There's almost certainly some strategic valuation still in the mix.

You also have to make a distinction between a bad outcome and a bad decision. Given the info that Intc had at the time, they thought they could lock up the 64 bit market with a proprietary solution. That would have been worth giga bucks. The decision was made in the AMD K5/K6 era, who would have thought AMD could come up and deliver something like the Opteron? A posteriori you have to call it a good (aggressive) decision with a bad outcome (or perhaps bad implementation, Intc should have had a better X86-64 contingency).