Cheap Chips Deflate Dual-core Desktop Prices

Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. View our editorial policy here.

Dual-core processor desktops are taking a dive.

Price cuts on processors by Advanced Micro Devices and Intel, which lopped as much as 61 percent off the prices of its Pentium desktop chips on July 27, combined with lower costs on items such as LCD panels, are affording PC makers the ability to offer dual-core processor desktops, whose main chips contain twin processors cores, on the cheap.

PC prices, already at aggressive levels in the corporate space as PC makers combat a slowing market, appeared to have taken on equally aggressive tones on July 28, particularly for dual-core processor desktop PCs. PC makers such as Dell and Hewlett-Packard, perhaps making good on a pledge by Intel to push dual-core processor to lower price points, have begun offering a variety of dual-core processor desktops for prices in the $500 to $600 range for consumers and businesses.

Click here to read about why Intel believes its Core 2 Duo processor is the most important chips since the first Pentium.

Going forward, “I think you’re definitely going to see [dual-core desktops] in the $500 price range…and that’s the sweet spot of the market,” said Shagorika Dixit, product manager for consumer desktops at HP in Palo Alto, Calif. “At that point [buyers] have a good choice between AMD and Intel—both of them offer dual-core for that price point.”

The prices will help dual-core processors proliferate, analysts said.

Following Intel’s Core 2 Duo launch on July 27 there’s likely to be a tremendous amount of activity on the lower-priced Pentium D, said Dean McCarron, principal analyst at Mercury Research in Cave Creek, Ariz.

“The Core 2 Duo will occupy the top bins of the market for dual-core, and the mainstream or even the upper end of the value PC market is going to migrate to dual-core probably this quarter,” he said.

Indeed, Core 2 Duo desktops for consumers, unveiled on July 27, began around the $900 to $1,000 mark.

Time tends to be on PC the buyer’s side as new technologies tend to come down in price as they mature. But PC makers often use price as a lever manufacturers to motivate demand, whether from consumers or corporations.

A $100 or $200 price break on a processor doesn’t always translate directly into a $100 or $200 lower price on a desktop, however. PC makers often spread the savings around by mixing in upgraded and therefore more expensive components, such as higher-end processors or extra memory at a given price point. Sometimes they offer smaller price drops, rebates or even free shipping. Many are now offering discounted flat panels or including the displays in bundles with their new desktops.

HP’s Pavilion a1520y desktop, in just one example, can be fitted with a Pentium D 805—Intel’s entry-level dual-core desktop chip—for as little as $539 after rebates via HPshopping.com, HP’s direct-to-consumer arm.

The site also offers Pavilion a1550 desktops starting at $629, after rebates, with either Pentium D or Athlon 64 X2 chips. For that price, buyers can choose either an AMD Athlon 64 X2 3800+ or Pentium D 805. The machines both come with the same base configurations, which include 512MB of RAM, an 80GB hard drive, a combination CD-RW/DVD-ROM drive, Microsoft’s Windows XP Media Center Edition operating system and a one year warranty. HP was also offering a $50 flat panel monitor upgrade and free shipping for the PCs on July 28.

Dell on July 28 advertised a Dimension E510 with a Pentium D 805, 512MB of RAM, an 80GB hard drive, a combination CD-RW/DVD-ROM drive, a one year warranty and Windows XP Home Edition operating system for $568 after an instant rebate. An n upgrade to Windows XP Media Center was priced at $24. Dell also offered free shipping and an $81flat panel monitor upgrade on the machine on the 28th.

Dell’s Small and Medium Business site, meanwhile, was offering a Dimension 5150 desktop with the Pentium D 805 for a starting price of $499, sans monitor, on July 28. The 5150 machine was somewhat more basic than the E510, offering 512MB of RAM—thanks to a free upgrade, valued at $50—an 80GB hard drive, a DVD-ROM drive and Windows XP Home Edition.

While Intel’s July 27 Pentium price cuts ranged as high as 61 percent on the 3.2GHz, single-core Pentium 4 model 541, the chipmaker dropped its Pentium D prices by somewhat less. Its family of Pentium Ds, which range between 2.6GHz and 3.6GHz, now list for up to 40 percent less. Its least expensive Pentium D, the model 805, lists for $93. Its top-end Pentium D, the 3.6GHz model 960, is now lists at $316, down from $530.

AMD, in a pre-emptive move, lowered the prices on its single-core Athlon 64 and dual-core Athlon 64 X2 desktop chips as well, dropping its Athlon 64 3800+ by 61 percent to a list price of $112. But most of its Athlon 64 X2 chips were cut by between 44 and 57 percent. The chips now list for between $152, for an Athlon 64 X2 Model 3800+, and $301, the price of its top-end Athlon 64 X2 5000+.

Check out eWEEK.com’s for the latest news in desktop and notebook computing.