Competitive pricing and learning in CPU sockets

An Intel processor can be electrically attached to a PC motherboard permanently or via a component called a socket. Intel defines the critical interfaces between the socket and the processor. Independent suppliers then manufacture the sockets and Intel validates the design of the sockets before they are sold to the original equipment manufacturers (OEMs). Sockets are the preferred mode of processor attachment for OEMs; however, the increase in price when a new socket is introduced has been a source of complaint by OEMs. This project seeks to better understand what factors contribute to socket costs and what can be done to better understand the increase in price when a new socket is released. This thesis provides a complete analysis on socket supplier development costs and determines that there is an optimal market situation that will minimize the socket cost for OEMs. After investigating different factors it is determined that the number of suppliers and level of competition are most strongly correlated with socket price. Furthermore, research shows that experience curves using competition as a factor are the most useful way of understanding socket price. Recommendations on ideal market share by supplier are provided as part of the results.

Department dc:contributor.department

Leaders for Global Operations Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2011

Author dc:creator

• Rahman, Mehrafshan Tabassum

Advisor dc:contributor.advisor

• Duane Boning and Donald Rosenfield.

• Engineering Systems Division.
• Sloan School of Management.
• Leaders for Global Operations Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/67760

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/67760