New Intel Chips Fuel Price War - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Business & Finance
07:35 PM

New Intel Chips Fuel Price War

Intel slashed prices on its older chips when it introduced its new dual-core processors for desktop and notebook PCs, so buyers should be looking for bargain computers.

A microprocessor price war, ignited by a new generation of chips from Intel, means computer buyers should be able to find some PC bargains, especially if they don't need the latest and greatest chips.

Intel completed an overhaul of its processor lines last week when it introduced its long-awaited, next-generation dual-core chips for desktops and notebook computers and slashed prices on older chips to reduce inventory. Rival Advanced Micro Devices has been making its own cuts to keep pace.

"Processors are like bananas: They don't last very long on the shelf," says Nathan Brookwood, an analyst with Insight 64. "They don't get brown and mushy, but they become less and less competitive every day. [Intel] definitively had to move out the old season's inventory."

The price war has produced cuts of 50% or more for many PC processors, but it hasn't had much impact on server processors. Some of the cutting is typical of a competitive market; Intel and AMD have duked it out for decades. But this round of cuts was exacerbated by Intel's introduction last week of the Conroe processor platform for desktops and the Merom for notebooks, which are based on its new Core architecture. The new portfolio has rendered Intel's inventory of older processors that use the NetBurst architecture virtually obsolete.

Intel is pinning a lot of hope on the new Core 2 Duo processors, which have garnered favorable reviews compared with AMD's product line. Intel CEO Paul Otellini calls Conroe and Merom "the best [microprocessor units] we've ever designed, the best MPUs we've ever built."

The Bottom Line
The pricing battles are likely to continue as Intel ramps up production of the Core 2 Duo chips. Otellini predicts Intel will ship 1 million of the new chips in less than two months. Once Intel has shifted most of its factories to producing the newer models and clears out the older ones, chip prices should stabilize and PC bargains may be harder to find. The price war has hurt the bottom lines of both Intel and AMD, and they may have to choose between profits and market share as they set future prices.

Not to be outdone by Intel, AMD last week provided details of one of the more intriguing "bargains" it plans to offer later this year: its 4-by-4 product line for desktop PCs. The product will combine two dual-core Athlon 64 FX processors on a motherboard for less than $1,000, or about the same price that AMD charges for a single high-end Athlon 64 FX. The 4-by-4 is expected to appeal to gamers and others with high-performance needs.

Both vendors also plan to introduce over the next year quad-core chips, which will set new standards for computing power. The good news for buyers: They'll probably set off a new price war.

Return to the story:
In Depth: Software Vendors Try New Pricing Schemes For A Virtualized World

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
COVID-19: Using Data to Map Infections, Hospital Beds, and More
Jessica Davis, Senior Editor, Enterprise Apps,  3/25/2020
Enterprise Guide to Robotic Process Automation
Cathleen Gagne, Managing Editor, InformationWeek,  3/23/2020
How Startup Innovation Can Help Enterprises Face COVID-19
Joao-Pierre S. Ruth, Senior Writer,  3/24/2020
Register for InformationWeek Newsletters
Current Issue
IT Careers: Tech Drives Constant Change
Advances in information technology and management concepts mean that IT professionals must update their skill sets, even their career goals on an almost yearly basis. In this IT Trend Report, experts share advice on how IT pros can keep up with this every-changing job market. Read it today!
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll