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Open Market Benefits for CPU Buyers


Consumers have been the real winners so far in the CPU wars, as more and more niche market products have been released by Intel and AMD and created a huge product mix of innovative processors.  If you are into gaming, there is a CPU for that.  If you are into multimedia, there is a CPU for that.  If you are into spreadsheets, or surfing the Internet, or carrying around a small netbook, there is a CPU for that as well.  Even if you are into Apple, there is an Intel CPU for that (and as far as the iPhone, there IS a CPU for that, but it is made by Samsung).  It seems every possible usage has a specific processor that would be ideal, and the consumer is the primary beneficiary of the technological evolution of the processor.  Faster performance, lower price, better efficiency, simpler interaction with other components...  a more "responsive" product for the end user as far as the current product mix of Intel and AMD processors.

But what about the builders?  How has it affected them, and the market?  I have spoken with several OEM's, a few mid-tiers, some planners, many buyers, and few product managers.  Almost all speak of the difficulty in selecting which items to forecast for production in regards to CPU's.  This is a huge expenditure for manufacturers, and overbuying can be a devastating inventory blunder, and under buying can leave them exposed to the mercy of Intel or AMD if they need more parts.  Trust me, it was much easier for OEM's to plan around the 233MMX, Pentium 2.8, or Athlon 3200 because they were THE processors that everyone was using, and they had a decent life cycle.  Current products can become irrelevant almost overnight as a new chip with more cache, lower wattage, new form factor, better performance, or lower price trumps it upon release.  This reality is what makes the open market so relevant to today's CPU buyers.  There is a robust global market for CPUs.  This market offers manufacturers a forum for marketing excess product or purchasing product that is short, no matter what the reason.  It can also offer options for cost reduction when open market CPU pricing falls below direct pricing.  So far, consumers have been the primary beneficiaries of the CPU wars, but the open market affords manufacturers a way to start seeing some of the same benefits.

Todd Traylor, Vice President, Global Trading
Written on Friday, 13 November 2009 00:00 by Todd Traylor, Vice President, Global Trading

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