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"Selling at absurdly high price" and "predatory pricing" in the same sentence....

EDIT: Actually, its not. Its considered as "portfolio pricing", which happens a lot in the IT industry. This happens when the top end models are raking in profits, while the lower end models are losing money.

No, that's still a 10% discount.

Assuming that retailer buy products from A and B at the same time, at the same price, 10 bucks. 80% of the inventory belong to A, while the rest of the inventory belong to B. Assuming that there are 100 products in the inventory.

The original cost for the retailer is, 80(A) x 10 bucks + 20(B) x 10 bucks = 1000 bucks.

Now, A would like to offer a discount to the retailer, that if it only carries A products, A will offer 10% discount, which will put A product cost at 9 bucks.

So, the new price for the retailer is, 100 (A) x 9 bucks = 900 bucks.

You can calculate the % difference.

More like 50% + 25% + 10% = 85%, which is still less than 100%.

I'm not going to engage in this meaningful personal attack with you. I'll also prepare another look on "predatory pricing" from various cost vs. fixed cost point of view.

i dont quite get how the 50%+25%

because R&D and marketing is the part before production and can be seem as fix cost. after a CPU have successfully developed there is no further R&D or marketing needed for that SPECIFIC CPU so the 25% cant be add to the selling price or the gross margin.

the R&D and marketing is part of the fix cost which then there is variable cost that go up or down depend on the volume or production, such as cost for the raw material, staff and eletricity.

if they are able to sell more chip which will even out the fix cost then fix cost per chip is going to be lower. this is how business will give discount when you buy more. because it doesnt matter you sell anything or not, the fix cost is always there.

so if you make 100 CPUs and the fix cost maybe is $100000, so the basic cost for one CPU is $100 then the material to make one CPU is $50 then that will make the total cost of the CPU $150. and intel sell it say like 20% profit at $180 and give 10% discount they still make 10% profit.

but if the OEM are willing to buy 200 CPU one off then the total cost of one CPU would be $100000/200+$50=$100. now if intel say will give further 10% discount+ bulk buying 10%=20% on their retail price which is $180 which is about $144.if the each CPU cost $100 to make then Intel will be making more profit.

of course when selling in bulk the % of profit will be slimmer then selling something one by one(normally anyway). but thats the idea behind it about bigger discount on bigger orders.

predator pricing is selling a product at a massive discounted price which intended to destroy competition. i reallly dont think that is the case with intel. because in general preadator pricing is selling goods at a price that wouldnt benefit the business at all or will just break even.

if look at the price point AMD is more like the one who are using pradator pricing. they are selling their quad core at the price below intel's dual core like E8xxx or such. but then again you/AMD could argue their performance offered is at the same level as the competition thats why its at that price point.

what would intel will do if they are looking to destroy AMD is selling their quad core CPU at the price of AMD's dual core. now that is predator pricing.

Keeping with the topic, I would only say that our expectations are sometimes unrealistic compared to a Company's expectations. We are Sunday coaches grabbing info from one source or another, building an opinion, and stating it as a fact or strong argument.
I am not a rocket scientist but I can see that AMD and Intel over the years have both shared issues with development. Rather than releasing ****, or sub quality components, they will decide through their experience...to wait and release on their time tables, not ours. I want AMD to succeed as well as Intel. Waiting for anything in a fast food world sucks for some. But for those that are willing to run the race on their terms will complete the race and find satisfaction.
Exploring and debating uncharted ground or technology is one thing, but to say it is the end or nearing the end for a company based on someone’s bias opinion is ludicrous. Back in the early days of enthusiast, we talked about what was and will be in a positive and informative manner. Now days it is more of the fast food mindset, it is sad where we all have gotten to be, AMD is on track, and will release something. IBM will not let them fall under the carpet IMHO, nor does Intel want them to fall, where else would they get CF? It is a bigger picture than who is better than the other.

Maybe. I'd say that's more in the line of a none-too-recent demo rather than ES samples to OEMs. Computex would have been an excellent advertising opportunity for AMD to show potential investors that their next-gen CPU's are ontrack and that AMD ain't dead in the water just yet. Limiting hype would better be done by not spouting '40% increase across a wide variety of workloads' nonsense, rather than not showing anything at all.

If no ES chips are sampled out next quarter, the Q4 release for Shanghai on the current roadmap will probably get detoured into 1H09.

Apparently the engineering samples were shipped to server vendors after the CeBIT show where the chip was first demoed.

http://www.informationweek.com/new [...] =206901459
http://www.tgdaily.com/content/view/37323/135/
http://www.eetimes.com/news/semi/s [...] =206901553

So, you're saying that Intel's selling price is not the same as A's purchase price, which is the price that a competitor must beat to make a sale!
Why would Intel use exclusivity contracts, when they could tailor the discount to have the same effect? Could it be because predatory pricing is just as ilegal?
The math I learned was if A+B=900, and A=800 then B=100.

all these numbers you are giving dont make sense and doesnt apply to the cost for manufacture pricing. its not simple A+B=C calculation.

Or maybe because Intel wants to gain, or stop AMD gaining market share, therefore offering heavy rebate? Or maybe because the phrase you were looking for is "illegal rebate", but not "predatory pricing"? Or maybe you have absolutely no idea what you're talking about?

Predatory pricing is very hard to define, as it is difficult to distinguish between "predatory pricing", "marginal pricing", and simply "free competition". At the moment, you have 0 evidence on your accusation; you have 0 proof, and you have 0 idea about how pricing works.

As iluvgillgill said, its not a simple A+B=C calculation.

So you want to explain to me again where 50% discount comes from? Or where your "A+B = 900, and A=800" comes from?

I honestly have no idea what you guys are talking about here... all the illogical math...

Isn't predatory prices making your prices lower than it costs to produce or buy so nobody will buy stuff from the smaller company?

Illegal rebates is more like a bribe (kinda like do this and well give you some money back), not like reducing the price of your chocolate to below what it costs for the competitor to buy it...

Free competition is pricing your stuff so it remains competitive with the competition and vice versa...

Anything you'd like to add?

Predatory pricing's definition is "pricing lower than reason", and in most cases, "pricing below cost".

However, the problem is, how do you define cost? Does it mean "manufacturing cost", but no R&D, advertisement fees? Or does it mean "cost of producing an unit", irrespective of units sold?

Illegal rebates, in Intel's case, is more like "forcing sellers to become exclusive partners, willingly or unwillingly." Its actually not "illegal" to offer rebates to sellers for achieving a certain quota, or other accomplishments. However, from what I've gathered, Intel actually not only utilized "rebate tactics", but also "retaliatory tactics", which increased prices for sellers if they do not comply to become exclusive partner.

As for free competition, in the sense of pricing, it just simply means that this market is Free For All, barring some significant crossover in ethics. As a result, Intel can reduce the price to the point where its very close to variable cost, and not constitute as "predatory pricing".

As I noted above, pricing is not an easy task. If its really as easy as endyen suggested, I really wonder why people are getting paid big bucks (marketing team + PM) for doing them.

I have no idea what your talking about... I'm not taking this kinda stuff until year 9...

You're only in 8th grade?

Well I'm 13 turning 14... you seriously think I'm like 20? with like a job and etc.? (Well I do have an unpaid job at the Alt Reality club...)