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Intel To Slash Prices Up To 60%
Chuan-kai Lin writes "According to Bloomberg, Intel will slash product prices by up to 60% in order to regain market share captured by AMD." From the article: "Intel said it will reduce prices of faster dual-core chips by about 15 percent, according to Alex Lin, a product marketing manager at Micro-Star, Taiwan's third-largest maker of motherboards, which connect electronic parts in computers ... Shares of Intel have fallen 33 percent since Otellini succeeded Craig Barrett in May last year. Advanced Micro's stock has gained 77 percent during the same period. Intel fell 31 cents to $17.08 at 12:06 p.m. New York time in Nasdaq Stock Market composite trading. Advanced Micro dropped $1.55, or 5.5 percent, to $26.45 on concerns that Intel will lower prices."
Does this mean, I was paying up to 160% more than what I should have, till now?
Grrrrrrrrrrrrrrrrrrrrr.
rajmohan_h@yahoo.com
Does this mean even cheaper macs are forthcoming?
Ira
It's about time! Intel has been gouging prices for too long. AMD's chips have repeatedly performed better than Intel's chips at a lower cost. It's good to see Intel learning from their mistakes, and the new Conroe and Merom architechtures have a lot of promise in them. (Lower prices are only going to make the R&D budget tighter, though, which will continue to hurt Intel even more in the long run.)
This is just what I've been hoping for! Thank you, Intel, for addressing my needs as a consumer and forcing AMD to drop the prices on those Athlon 64s I love so very very much.
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yay! capitalism! good.
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I have to wonder how Intel is going to rationalize it when people STILL choose AMD over Intel.
Technoli
Hey, news that Intel is dropping prices a bit doesn't change the near-to-mid term outlook for AMD. They produce some of gaming's monster chips, and power users know that. They continue to establish high profile deals, and they're still leading the move to 64 bit.
Jeez, a buck and a half off of shares. Buy!
(what do you think?)
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AMD has already captured this share of the market (me). Their chips have provided my home assembled computers with excelent processing power, no glitches, and at a lower cost.
Ok, that's a start. No one wants your chips anymore, drop the prices.
Some other things for you Intel guys to try:
1) Start leveraging your compiler to inflate SPEC scores - special case and hardcode as many parts of SPEC as you can
2) Keep adding more cache so more synthetic benchmarks fit completely in high speed memory to inflate those SPEC scores
3) Dump truckloads and truckloads of cash on x86 hardware sites
4) Leverage Steve Jobs - there is no limit to how much he will lie about performance - you saved his ass when he got his annoying ass dumped by IBM, he's owes you guys big time
I could go on, but you get the picture.
Good luck guys!
If they are doing it to capture the AMD market I think that it is going to fail because those of us on this side of the fence are here for more reasons than the "Hey, its cheaper... right?!" crowd. This will however be amazing if the price drop makes its way into the Macs, I have wanted one since they get their upgrade but I can't justify the cost...
--Valthan
It will either mean cheaper Macs, or Macs with more features for the same price.
Remember that Apple is not a company that tries (too hard) to compete for the bottom end of the market. Even the Mac mini isn't designed to compete with a bargain-basement Dell. Apple might very well cut their prices with cheaper chips, or they might sweeten the deal with larger hard drives, making the low-end mini use a Core Duo rather than a Core Solo, etc.
However, as a Mac owner and someone who's looking to replace an iBook with a MacBook (Pro) in the near future, this is good news indeed.
I'm too lazy to RTFA (hey, this is /. ;), but isn't the price cut the same I've read couple of days ago, which basically boiled down to cleaning up inventory of crappy Netburst processors (a.k.a. Pentium D) in order to focus on PentiumPro-derived Core architecture? Yeah, go buy yourself dual core netburst processor. With both cores communicating via external, shared FSB...
Gawd, I was afraid that Intel would never put to sleep this monstrosity...
Robert
Bastard Operator From 193.219.28.162
This would imply a significant source of free profit is being slashed. They're going to hope to make it up in volume, but they've got an uphill battle. Less profit in the stock should have reduced its value.
The amount of profit they had built in could absorb a class issue in the past. Now, an expensive problem with their chips could hurt their company even more. No more soft landing.
They have to prove they're better than AMD. While there are some that will buy the big name with the new pricing, there are a lot more that will stick with AMD.
My mom says I'm cool.
Notice that the price drops are the same day as when Core 2 Duo is released (July 23rd), that means
the price drops are on the older P4s. That's great if you don't mind getting a P4, but Intel is doing what any other company would do. Drop prices on older products to clear out space for newer ones. Makes sense.
How will Intel products fare compared to AMD, benchmark point per dollar now? The main problem with Intel was that it offered worse bang for the buck, you'd have a faster AMD for the same money or same AMD for less. This will certainly make Intel more competetive, but HOW competetive? ...now I expect AMD to slightly cut on their overall profit margins and drop the price too. Just to remain a step ahead. Let the price war begin, likely there will be no casualities, but the winners will be us, customers.
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Begun these Price Wars have.
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Intel could give the damned things away and I'll still buy AMD. Along with cheaper power the company also has a lot of good board makers behind it. I couldn't believe it when I could build a screamer with second string stuff for nothing darn near. I had been a faithful Intel drone for years and turned my brain off to everybody saying good things about AMD, a bad socket 7 box years ago, so I was surprised at how well low end stuff was doing against intel's best. I got a sempron 3100+ in a biostar Tforce 6100 skt754 1 gig3200 ddr and a nvidia 6600le pcie card. It blows everything away including the dell xps my dad got this year. Intel will have to really blow everybody away to get market share back,cheaper crap is still crap
This is either fantastic news or the start of something truly terrible. For the last couple of years, I have encouraged everyone I know who was upgrading to go the AMD route for this very reason. Out of pure curiosity, I would really like to know where we would be if AMD wasnt on the scene, still dragging along at 2Ghz perhaps? Now my concern is that at some point the two companies decide to stop competing, Intel goes off and corners the ultra high-end server processor market, and AMD sticks to standard desktop processors, and we are all left we were before AMD came along. Then Cyrix will come back into the picture with an Athlon killer processor, now I dont know about you, but im not really interested in going through this whole cycle again. Im buying a Mac just in case. Disclaimer: This post may contain traces of nuts.
But can they also slash the energy requirements and the heat produced by their CPUs? Seriously, between choosing an Intel CPU, or an AMD one that runs cooler and uses less energy, I'll go with the AMD.
This is NOT a price drop but a price correction for Intel since they've introducted a new product line. Sort of like when Chevy does for their 2007 models arrive this fall with their 2006 still on the floor. It's NOT a 'let's get our marketshare back from AMD' but a 'oh crap, we still have a tonne of P4 chips left. Sheesh!
Management is doing things right; leadership is doing the right things. - Peter F. Drucker
Intel's current CPU strategy:
Nobody want them. The new CPUs are coming, so that gets rid of your loyal customers. AMD is kicking your butt, so you don't get the loyal AMD customers to buy your CPUs. So drop the prices so that you can clear off your shelves of the CPUs nobody is buying anyway, and you can force AMD to lower their prices. You loose profits yourself, but you leverage your action to hurt your competitor.
So, what should AMD do?
as an Intel shareholder, I'm glad to hear this. Now if Sony would just announce a price drop for the PS3 to get Blu-Ray lock-in, I might invest in them.
For the longest time, Intel shares have been based on the projection of 90+ percent market share - while Motorola has been knocked out now that Apple is using Intel chips, the rapid adoption of AMD by Dell and other suppliers has meant the market dominance model was in danger.
The geek in me, of course, loves AMD - I have one in my home laptop, and most of our lab's computers are dual core dual processor AMD Linux boxen with dual hard drives.
But looked at from the market perspective, this makes a lot of sense.
I predict, however, that this news will cause the non-techie investors to bail out of Intel - more cheap shares for techies like me, I guess.
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I wonder what announcements such as this will do to the relationship with Apple over the short and long term. When news like this is broadcast to a wide audience, people begin to question their vendors. "Hey, will I get a price break now on the products with Intel processors?"
Yet Apple's pricing model has always been pretty strict - normally you can count on paying the same price for a MacBook or MacBook Pro in another couple weeks or a month barring any product line updates. But this type of news may have more people asking why that needs to continue to be the case - if suddenly that Core Duo chip is x% cheaper, why can't my MacBook Pro drop in price a bit to reflect the component cost?
Getting 40% of list on an obsolete product you can't sell gives you a higher margin than 0% of list.
The key issue for Intel (and AMD) is covering their fixed costs. A $5 billion fab is extremely expensive to have not producing. The marginal costs are actually shockingly small.
From a strategic standpoint, Intel needs to get more aggressive with AMD now. If AMD can afford to open new fabs, that's a long run bad thing for Intel. Capacity drives this industry.
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The big price cuts will supposedly start on July 23, which is also the day Conroe (LGA775 Core 2 Duo for desktops) will be introduced. Conroe will be replacing the current Pentium D and Pentium 4 processors, and eventually Celeron D (Apple will not use any of these CPUs). Compared to Conroe, the current high-end Pentium D will look like a mid range CPU. The mid-range Pentium 4 will look like a low-end CPU. The big price cuts will look appropriate. Note that Pentium D, Pentium 4, and Celeron D will work in Core 2 Duo desktop motherboards.
Apple so far has only used Yonah-based Core Duo and Core Solo, which don't use the same chipsets and sockets as Core 2 Duo for desktops. Core 2 Duo for notebooks will not be introduced until late August at the earliest, so I'm sure the big price cuts will not apply to Yonah CPUs. The smaller price cut mentioned in TFA (15 percent) makes sense because a 2.33GHz Core Duo will be introduced on June 25. This new fastest Core Duo should be priced about the same as the current fastest model (2.16GHz) and the second-fastest model is usually about 15 percent cheaper than the fastest.
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More Intel employees should say in public what they have told me in private: Intel CEO Paul Otellini is not a competent leader. He lacks social ability. He has added to the adversarial management style in which employees are pitted against other employees, rather than encouraged to do their best.
It's very, very sad to see Intel on the way down. Intel processors have literally helped the world become a better place.
Self-destructive behavior at Intel did not start with Otellini. Long ago, Intel closed its consumer division because it could not manage it effectively.
Do I think I could be a better CEO of Intel than Otellini? Yes, I do. I told one Intel employee that I thought of applying for Otellini's job, not because I thought I could get hired, but because I might possibly be able to educate the Intel board of directors about what needs to be done to pull Intel out of its long-term slump.
First, I would re-organize Intel's marketing, which has become Zombie-like in that it has been minimally connected with reality. Last year Intel sent me several email messages offering an "Intel BunnyPeople(TM)" doll if I would be involved with one of their marketing efforts. Possibly there were those who make purchasing decisions who were not offended by an offer of a free doll. However, I've never known one who would be influenced by such an offer. There are plenty of other examples of the scary disconnection of Intel marketing from Intel's needs.
For example, I would re-organize Intel's web site. I haven't checked recently, because we stopped buying Intel motherboards. But before, the part numbers for Intel motherboards were not immediately available. To get the part numbers necessary to place an order, it was necessary to jump through hoops with an online registration, and then have an Intel employee direct you to the proper web page. The result was that it was difficult to call a distributor and order Intel motherboards. The salesman at the distributor would offer plenty of choices, but there was no way to know which one to choose unless you had done Intel's hoop jumping.
Second, I would change the culture at Intel. Business is NOT a place for top executives to act out their anger. Top managers should go into therapy if they need to deal with their anger. They should NOT make their anger a problem for the corporation. But that's what has been happening. I think it was perhaps 15 years ago that I became acutely aware of this. I could give several examples, and I've heard others from Intel employees.
Third, very important, I would take good care of the technical staff. At present they are not treated sufficiently well. If I were Intel CEO and I saw a floor that needed to be sweeped to give the technical staff a better work environment, I would sweep it myself if necessary. Intel's business DEPENDS on creativity. It's difficult to be creative in a poor social environment.
There's more, but this is is not a complete proposal, of course. It is just a Slashdot comment.