Intel to Slash Pentium Chip Prices by 60%, Dual-Core Chips by 15%

Intel to Slash Processor Prices this July

According to a report from Bloomberg news, in meetings Intel has told its customersit will cut Pentium chip prices 61% and faster dual-core chips by about 15% in order to reclaim market share from AMD.

According to executives at MSI and Gigabyte Technology, two major manufacturers of notebooks in Taiwan, officials from Intel notified them price cuts on processors will kick-in on July 23. When Intel was asked about these majorpricing adjustments, Intel declined to comment.

AMD last quarter was able to capture 20% of the worldwide chip market sales for the first time in over 4-years. Then Dell announced they would be offering AMD chips in high-end servers. To add insult to injury, Intel recently announced they expect 2006 to be the first year in which they actually see a decline in annual sales.

The aggressive price cuts Intel will supposedly be enacting in July is an obvious direct attack on AMD and effort to hurt that company's sales and boost Intel market share at the cost of losing money. According to MSI product marketing manager Alex Lin "They want to kill AMD market share. I believe Intel will steal at least 3 percent because of the price cuts."

Will the Price Cuts be Passed to Consumers?

Compal Electronics Inc. is the world's second biggest maker of notebook computers, they make laptops for companies such as Dell and HP. According to Ray Chen of Compal Electronics the price drop by Intel "means the consumer will get the benefit and the unit price will get lower so we can stimulate demand."

Asustek Computer Inc., another major manufacturer of notebooks in Taiwan, indicated that due to price cuts "from the second half, we believe Intel's product can stimulate the market demand, and will have pretty good performance.''

Expect to see cheap Pentium processor notebooks and desktop computers in the second half of 2006 and a slight drop in the prices of Core Duo processor based machines. LCDs and not processors are the most expensive part of a notebook, a processor usually makes up about15% - 25% the cost of a notebook so a 15% drop in Core Duo processor price would only drop the overall cost of a notebookabout 3% - 4%. Pentium machines might see a 10% - 15% drop in price.

AMD Response

Although manufacturers in Taiwan indicated they do not think AMD is ready for a price war and that it would hurt the company, AMD's President Dirk Meyersaid "The idea of price competition or competition in general is new to the other guy. Price competition doesn't scare us.''

For more news on Intel price cuts: http://www.bloomberg.com/apps/news?pid=10000087&sid=a9bSLIkNBj4M

 

Wow another price cut? They just cut prices May 28! This is good for us i guess, but does that mean instead of ordering my laptop next week, i should wait another month for the price cut?

 

You're looking at $70 saved off a currently-valued Core Duo T2600 notebook, best-case scenario. Is it worth $70 to you to have your notebook one month earlier?

 

Yeah... if you want to save ~$50.00

 

I would say wait. You can add some ram or get another option for that 50-70.

 

i could ..... but i'd just be gettin gthe t2400 so i wonder if i only save lyk 30?... man i dunno... a whole month.......... blargh! $50 would be enough for the artic silver 5 thermal compound =)

 

Even though I just purchased a Vaio SZ with a Core Duo CPU, I guess my Athlon64 X2 desktop makes me want to bash Intel a bit because I'm a big fan of competition... and bashing. So this price-drop announcement seems to beckon the question*:

If Intel can easily drop prices across-the-board on such major processor lines (and by such significant percentages), have they just been fleecing the market and enjoying gross profit margins up until now? Even with the price drop, are they going to remain so increasingly profitable that maybe they're still taking significant and unjustifiable advantage of their customers?

I think there's a crucial difference between sustainable profitability and greedy monopolistic (or oligopolistic) growth on the backs of working people. See United Statesian oil companies' recent profitability and growth figures for a better example.

I wish Transmeta and maybe the Cell processor could provide stable sources of CPU competition for Intel in the future, although it would suck if Intel undercuts others unto demise to re-establish (re-entrench?) their monopoly.

I guess I'm just blathering. I don't really care all that much if Intel dominates since they seem far more benign than Microsoft. Don't mind me. =)

-Pip

* "Begs the question" is an important expression in the discussion and description of philosophical issues which is commonly misused in banal dialog. When a particular speaker is said to have begged the question, this means that they have assumed what they are trying to prove. It is a form of faulty argument which can become contagious fallacy if listeners are convinced by the deception or are not discerning enough to perceive the deficiency of sound reason. People often say "begs the question" to sound smart when they mean to say some particular situation or quote beckons, suggests, compels, summons, etc. a question. This concludes my lesson for the day. Please consult http://En.Wikipedia.Org/wiki/Begging_the_question for further reference. In case you couldn't tell, I'm a pedant. Please take offense if you choose to or feel free to correct me if you find I have erred. I relish righteous rebuke. =)

 

Wow. I followed my own link into several others and have not even finished reading this site yet: http://pagliere.net/alan/subtopics/language/vrarticle.html but I feel I must redact my previous linguistic prescriptivism to say that I have been drawn closer to the descriptivism side of the fence. I know every language can, does, and should change. Some rules seem useful towards clarity and effectiveness of communication (especially in the face of emerging ambiguity) so I don't mind being pedantic in some ways but I'd rather not be so uptight that I make myself out to be more of an authority than is appropriate. Similarly, I might be fighting an already lost (or significantly uphill and ineffective) battle with the "begs the question" phrase. Ah well. If a new meaning takes over (or cohabitates), at least the old should remain a curiosity (or relevant). I'll try to save more of this type of discussion for LanguageReview.Com since it may also be off-topic for NotebookReview.Com.

-Pip

 

If you are interested in finding out if Intel has been "fleecing" the market you should start by analyzing their annual reports for the past few years which you can dig up over at http://www.sec.gov in the EDGAR database.