Advanced Micro Devices, which announced a change in the pricing structure of several of its dual-core Opteron chips Feb. 7, is preparing to lower the prices on several of its dual-core and single-core desktop Athlon processors.
The lower prices will primarily affect the Sunnyvale, Calif., chip maker’s dual-core Athlon processors. However, the price restructuring will also lower the prices of some single-core Athlons, as well as a pair of Sempron processors.
AMD has been involved in an ongoing price war with Intel, of Santa Clara, Calif. While dropping prices have been good for customers, the battle with Intel has taken its toll on the bottom line as AMD explained in its fourth-quarter results released on Jan. 23. Part of those losses stemmed from sluggish sales of its servers chips.
However, the company’s quarterly results and a study by Mercury Research showed that AMD had gained more ground in terms of desktop shipments. With these additional price cuts, the company can show a better price performance comparison to Intel’s Core 2 Duo and Pentium D offerings for desktops.
Intel, on the other hand, has been able to gain in the x86 server space by offering dual-core processors and beating AMD to the quad-core punch by offering the Xeon 5300 seriesformally called “Clovertown.”
AMD’s quad-core chip, called “Barcelona,” will be released later this year.
With time before Barcelona rolls out, AMD has been concentrating more of its efforts of on its mobile and desktop processors and the announcement of price reduction is the latest news from the company in that area.
David Schwarzbach, the division marketing manager for desktops, said that AMD was simply adjusting to the demands of the marketplace and listening to feedback from its partners and customers.
The demand for dual-core chips, Schwarbach said, is driving the PC market now and AMD decided to drop its price based on that demand. While Schwarbach said the company does keep tabs on what Intel’s prices are, these latest reductions only reflect the desire for more dual-core processors.
“We make our price moves independently,” Schwarbach said. “It is based on demand in the market and right now dual-core is hot. That is what is driving this.”
While notebooks now have the potential to make more money for OEMs than desktops, Schwarbach said AMD was seeing demand for its dual-core desktop products driven by the release of Microsoft’s Windows Vista operating system and more sophisticated applications that can take advantage of this type of processor power.
The most dramatic drop in prices involves the high-end Athlon 64 X2 5600+, which is clocked at 2.8Ghz and has a total of 2MB of L2 cache, which will fall from $505 per 1,000 units to $326, according to the company.
The other major price job involves the Athlon 64 X2 5400+, a processor that runs at 2.8GHz and has 1MB of L2 cache. AMD will reduce the cost of this processor by $218, from $485 to $267, the company said.
The rest of the dual-core Athlon models will drop in prices ranging from $14 to $63, according to AMD. These include the 5200+, 5000+, 4800+, 4600+, 4400+, 4200+, 4000+ 3800+, and 3600+ models. Included in these cuts are the Athlon 3600+, 4000+, 4400+, 4800+ and 5000+ models that are made using the 65-nanometer manufacturing process.
AMD introduced its 65-nanometer manufacturing process in December, which has helped the company lower the price of its desktop processors.
In addition to these dual-core Athlons, AMD will reduce the prices of three, single-core Athlon chips. The Athlon 64 3800+ will now be priced at $93 per 1,000 units shipped, while the 3500+ model will fall to $88 and the 3200+ model will be $78, according to the company.
Finally, AMD will reduce the price of two, single-core Sempron processors. The Each of the Sempron 3400+ models will drop from $71 per 1,000 units to $67 per 1,000 units.
Several of these processors, including the Athlon X2 3800+, 4000+, 4200+, 4400+, 4600+, 4800+ and the 5000+ models, were part of an earlier price cut that happened in January. When those prices were posted on the company’s Web site, the price reduction ranged from $11 to $27.
Roger Kay, an analyst with Endpoint Technologies of Wayland, Mass., said the two price cuts by AMD are unusual since the company tends to only change its prices once a quarter. While good for OEMs, such as Hewlett-Packard and Dell, the changes also represent the current state of the race between AMD and Intel for greater share of the market.
“Certainly the price war between both companies has a lot to do with it,” Kay said. “Both companies are in a race to keep the volume of their products up in the market place.”
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