Monday, June 20, 2005

Slashdot | AMD Athlon 64 FX-57 Review: "I realize the price will go down over time, but seriously, who is going to buy this chip?

You're asking the wrong question. Even if no one buys this chip, the chip is still worthwhile to have on the market.

A few years ago Wendy's found that almost no one was buying their triple cheeseburgers, so they took triples off the menu. When they did this, they found that sales of their double cheeseburgers dropped to almost nothing. The problem, as they discovered later, was that the presence of triple cheeseburgers on the menu helped to legitimize the double cheeseburgers as mainstream items. Without triple cheeseburgers, the double cheeseburgers became the high end item and mainstream buyers went for the singles instead.

Since profit margins on double cheeseburgers are higher, the chain was forced to bring back triple cheeseburgers, even though triples weren't selling at all, because the sales of their double cheeseburgers depended on having triples on the menu.

Point is, although this is a fast food example, the same thing applies to the computer industry. You HAVE to have a high end item available if you are to have any hope of positioning the more profitable midrange items as mainstream."

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