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The price increase of AMD products stopped scolding customers



In economic theory there is a concept of price elasticity of demand – the curve of this function shows the dependence of the goods sold on its value. If the demand for a product or service does not depend on prices, then the demand is considered non-elastic. Such price and demand dependence is generally proven to be essential, although in a competitive market, demand for prices can not be completely elastic or completely non-elastic.

The study author at the Seeking Alpha source site used IDC analytics agency data to determine elasticity of demand for AMD products. Since IDC data did not mean separating statistics by product type and assortment, the report shows certain suspicious product units and their average selling price. However, the aim of the research was to study the characteristics of demand for AMD central processors, and hence the results may have an important practical meaning.

It should be noted that in terms of sales, Intel processors usually bypass AMD 4-6 times, and the average sales price of the products from the first company is 2-3 times higher. Therefore, Intel's revenue exceeds AMD ten times as a minimum, and this feature is usually used to compare the business scope of these two companies.

Image source: I'm looking for Alpha

Image source: I'm looking for Alpha

In the first quarter of this year, the average AMD processor price reached 91 USD, and from the spring of 2017, when the first Ryzen processors were introduced, it was constantly increasing. By this time, the average selling price of AMD processors did not exceed $ 53.

Image source: I'm looking for Alpha

Image source: I'm looking for Alpha

In the first quarter, according to IDC data, AMD controlled around 13.6% of the processor market. That is, the company has been able to strengthen its position after launching the processor from the Ryzen family, even taking into account the increased average sales price. AMD itself at every investor event is not tired to say that profit growth rates and average selling prices are the main factors determining its financial well-being.

Image source: I'm looking for Alpha

Image source: I'm looking for Alpha

How far can AMD go looking for more expensive processors? The author of the study argues that the sales volume of the refineries of this brand stabilized after the average price exceeded $ 70. Remember, in the first quarter of this year, it reached a level of $ 91, and this fact did not adversely affect the sale of AMD processors. The original source believes that the company can continue to increase the share of more expensive products in the sales structure, not least fearing the decline in demand, as it is in its mid-term interest rates. However, let's not forget that Intel for the first time after many years decided to cut the prices of its current generation of processors, even uninformed. This means that the element of price competition returns to the market, and when planning AMD marketing policy it is not necessary to write it down.

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