The Price War
Intel and AMD have been dueling for dominance at both ends of the
processor market. Intel brought out the Celeron to compete with AMD
in the value market. Now Intel has a series of chips set to topple AMD's
Athlon at the top end. But the latest scuffle has been in the pricing
arena and not in the speed race.
When the Athlon 700MHz was first introduced by AMD, the chip was priced
at $849 in volume. After Intel's latest Coppermine announcements, where
their 733MHz Pentium III was priced at $776 in volume, Athlon announced
price cuts across its line. The top-of-the-line Athlon 700MHz dropped
18 percent from $849 to $699, to once more more make it the cheaper
alternative.
Intel, although their introductory pricing was relatively aggressive,
will no doubt soon consider price cuts across the board. They have already
cut prices on the older Pentium III chips. However, it is likely that
they will not drop these prices too much more since they want to promote
the new chip and not make the legacy products too attractive.
Intel has several strategic advantages in this price war. The new Coppermine
chips introduced this week are less expensive to manufacture than previous
versions. Also, new packaging on several of the chips (FC-PGA), resembling
the cheaper Celeron packaging, has drastically cut the cost of their
production. This new packaging will eventually be implemented across
the whole line.
Intel's development of the Coppermine 0.18-micron manufacturing process
meant they were able to delay the more expensive future copper-based
chips in development. This means they can amass profits from the cheaper
process, while still increasing processor speeds to just under 1GHz,
until sometime next year when the pressure to produce even faster processors
will be felt.
Also, Intel currently has four manufacturing plants producing the new
Coppermine chips. AMD has only two factories producing the Athlon, one
of which is new and not yet working at maximum production.
On the other hand, there is no doubt that the incursions made by AMD,
and on the chip set side, by Via Technologies, have affected Intel's
bottom line. The competition is also very good for the consumer as it
has pushed both development and lower pricing. AMD also has an expanding
and very loyal following, amongst those who are tired of the Intel monopoly
and its recent bungling of the 820 chip set/Rambus introduction. Both
AMD and Via Technologies have made decent inroads in the manufacturing
industry with such heavyweights as Compaq, HP, IBM, NEC and Micron.
The current pricing on the two competing chip lines is as follows:
INTEL
Pentium III Xeon 733MHz: $826
Pentium
III Xeon 667MHz: $655
Pentium III Xeon 600MHz: $505
Pentium III 733MHz: $776
Pentium III 700MHz: $754
Pentium III 667MHz: $605
Pentium III 650MHz: $583
Pentium III 600MHz (Coppermine): $455
Pentium III 600MHz (classic): $465.
Pentium III 550MHz (Coppermine): $368
Pentium III 550MHz (classic): $348
Pentium III-533MHz (Coppermine): $305
Pentium III 533MHz (classic): $316
Pentium III 500MHz (Coppermine): $239
Pentium III 500MHz (classic): $229
Pentium III 450MHz: $173
Pentium II 450MHz: $173
Mobile Pentium III 500MHz: $530
Mobile Pentium III 450MHz: $348
Mobile Pentium III 400MHz: $348 (low voltage)
Intel Celeron processors were cut by $5 to $10 dollars. The family
now ranges in speed from 500Mhz to 400MHz and sells, in volume,
for between $143 and $64.
|
AMD
Athlon 700MHz: $699
Athlon 650MHz: $519
Athlon 600-MHz: $419
Athlon 550-MHz: $279
Athlon 500-MHz: $209
|
back
to The Introduction
