Core 2 Duo launched: Intel and AMD slow to slash pricing on legacy chips

Core 2 Duo launched: Intel and AMD slow to slash pricing on legacy chips

Summary: The problem with this performance-aware pricing is that it would devastate the entire line of legacy Intel processors which are still abundant along with AMD's entire line of existing processors. The current pricing may simply be a reflection on current inventory levels it will take some time to clear out Intel's legacy inventory and fully transition to Core 2 Duo production. Even by Intel's own estimates, the full transition to Core 2 won't even be close to completion by the end of this year. While Intel expects to ship a record-breaking million Core 2 Duo processors in 7 weeks compared with a year to ship the same number of the original Pentium CPU, it isn't anywhere close to being enough.

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TOPICS: Processors
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Intel had one of the biggest CPU launches in the history of its existence yesterday at its Santa Clara head quarters.  Although the event was held in side of a "tent", it was big enough to be considered a miniature convention.  This was a massive air conditioned tent that could have held a circus performance and at times it did have a circus performance feel when two of the "Frag Dolls" appeared on stage to demonstrate the gaming prowess of the Core 2 Duo processor (no offense to the Frag Dolls or their presence since the two ladies behaved professionally).

The theme at the event was "believe the hype" with all the media accolades flying around on big screen projections.  But this is one of those rare instances where the product actually does live up to the hype because of the massive jump in performance corresponding with an equally massive drop in power consumption.  The numbers quoted by Intel was a 40% performance jump along with a 40% drop in power consumption.  This isn't just a small leapfrogging effect where one processor manufacturer regains the lead and edges out their competitor, it's the kind of jump where even the second slowest Core 2 Duo processor makes AMD's flagship extreme processor look bad.  But it isn't all good news for Intel since Core 2 Duo makes their existing massive inventory of "NetBurst" Pentium 4, Pentium D, and Pentium Extreme processors obsolete.

As I mentioned earlier this month, the release of the Core 2 Duo or "Conroe" would put massive pricing pressure on AMD's entire line of desktop processors along with Intel's previous generation products.  The problem is that the new price list for both AMD and Intel are unrealistic compared to any Core 2 Duo processor.  Intel wants $999 for their old "NetBurst" 965 Extreme Edition processor and AMD wants $827 for their FX-62 processor.  By any reasonable estimates based on processor performance (even ignoring the power inefficiency issues of the AMD FX-62 and the even less efficient "NetBurst" processors), the price of the AMD FX-62 should be around $225 and the Intel 965 Extreme Edition processor around $200.  Anyone taking power efficiency and overclocking performance in to consideration will simply skip the "NetBurst" CPUs altogether.  The AMD FX-62 might be worth consideration if the price was dropped well below the $180 price tag of any Core 2 Duo processor which will likely be able overclock beyond the performance of any AMD CPU while consuming less power.

The problem with this performance-aware pricing is that it would devastate the entire line of legacy Intel processors which are still abundant along with AMD's entire line of existing processors.  The current pricing may simply be a reflection on current inventory levels it will take some time to clear out Intel's legacy inventory and fully transition to Core 2 Duo production.  Even by Intel's own estimates, the full transition to Core 2 won't even be close to completion by the end of this year.  While Intel expects to ship a record-breaking million Core 2 Duo processors in 7 weeks compared with a year to ship the same number of the original Pentium CPU, it isn't anywhere close to being enough.  We will probably see many more gradual price drops in both "NetBurst" Intel and AMD CPUs as Core 2 Duo availability rises.

Of course this strategy of gradual price drops will only work so long as corporate and home buyers remain ignorant on the performance and energy efficiency gap between Core 2 Duo and the non-Core Intel and all AMD CPUs.  The majority of consumers who don't know the difference will hopefully (from the vendor's perspective) buy up all the current inventory of obsolete Intel and AMD CPUs.  The truth of the matter is that they wouldn't be getting any less of a deal on the non-Core CPUs than they were getting before and in fact just the opposite.  It's just that the new Core 2 Duo price/performance ratio is out of this world and I'm going to buy one as soon as it's available.  One day after the launch of Core 2, I only see one very expensive Dell E6600 2.4 GHz Core 2 Duo system available and one vendor selling the C2D E6600 processor $50 over the list price of $316.  There will most likely be more vendors offering the Core 2 Duo processor soon but don't be surprised if supply is short and the prices remain higher than list.

[Update 2:20 PM:] I had a chance to meet John C. Dvorak yesterday who I've been reading for more than a decade.  John posted this blog this morning on the event.  Fellow blogger Tom Foremski was also at the event and had this to say.

Topic: Processors

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  • Intel has only 37 Conroes per vendor

    AMD winning the price war

    A few days ago, at www.newegg.com, Intel occupied three of the top selling CPU spots, they were Pentium D 930, Pentium D 805 and some Pentium 4 chip. After AMD's price cut, the only Intel CPU in the top five is a Pentium 4 524.

    Top 5 Sellers

    * AMD Athlon 64 3400+ 1600MHz HT Socket 754 Processor - OEM $99.00
    * AMD Athlon 64 X2 3800+ 2000MHz HT Socket 939 Dual Core Processor - Retail $159.00
    * AMD Athlon 64 X2 4200+ 2000MHz HT Socket 939 Dual Core Processor - Retail $199.00
    * AMD Athlon 64 X2 4200+ 2000MHz HT Socket AM2 Dual Core Processor - Retail $195.00
    * Intel Pentium 4 524 533MHz FSB LGA 775 Processor - Retail $81.00

    This is a no brainer decision: X2 3800+ frags Pentium XE 965.

    posted by Sharikou, Ph. D @ 7/28/2006 01:39:00 PM 15 comments links to this post
    Thursday, July 27, 2006
    AMD market shares grows amid Intel pricing crash

    We saw those Pentium D 805 at $110 which George Ou at ZDnet touted as cheap SUVs and the zillions of $30 Celerons flooding the 3rd world markets. Did they help Intel gain unit share? Joe Osha thought Yes. The reality is No.

    These are the newest Mercury Research stats: AMD overall unit share 22%, Intel 73%; AMD revenue share 18%, Intel 81%; AMD server unit share 35%, DP server grew 45% in one quarter. Intel did gain 0.4% unit share in the mobile space. Turion X2 should push AMD's mobile share up in Q3.

    Going forward, with AMD's massive price cut and DELL alliance, expect its unit share to rocket.

    posted by Sharikou, Ph. D @ 7/27/2006 10:17:00 PM 25 comments links to this post

    Conroe volume is negligible

    Intel will ship 1 million Conroe CPUs in 7 weeks, or 0.14 million per week. Since the world's weekly PC consumption is 4 million, Conroe represents less than 4% of the market. It's non zero, but close. 550 PC makers will produce Conroe desktops, 1,000,000/550/7/7 = 37. On average, each PC maker will get 37 Conroe CPUs per day. Now you know another reason why Michael Dell has to go AMD. Only AMD can save Dell from going down like Enron.

    Looking at Intel's new price list starting from $30 for a Celeron, I seriously question the IQ of Intel management. There is only so much demand, once you sell a chip at $30 and at a loss, the market shrinks by 1. Intel's inventory has piled up to the neck - $8.66 billion worth of legacy chips and more are produced every day. At the end, a lot of these legacy chips will be sent to the landfill. A rational move should be selling the higher priced CPUs first, and give up the low end crap -- they will be written off later.

    AMD's Sempron starts at about $50.

    I reiterate my projection that Intel will post operating loss starting 3Q06, and BK in five to seven quarters.

    http://sharikou.blogspot.com
    sharikou
    • You need lay low longer... it;s not over

      I advise you to lay low just a tad longer. Any sunshibe you see is just the eye of the Core 2 Dup hurricane.

      In a couple months or so, it'll be safe for you to come out and pontificate on just how well AMD is doing. In the mean time, you look likea fool.
      Prognosticator
  • Strangely Opeteron's are still selling like...

    ...hotcakes.

    Not that you would do anything like ignore the entire server business where the real margins are there fan boi.
    Robert Crocker
  • So why did P4's and Celeron's sell?

    Fan Boi,

    Really, don't you think you're engaging in just a touch of hyperbole here? Consider that AMD was eating Intel's lunch over the entire CPU line for the last few years and that Intel has only now finally "launched" a chip that is better than AMD's current offerring. Currently this wonder chip isn't available in any real volume amounts (as in "good luck buying one") and Intel is chock full of inventory of their old technically inferior chips that seem to have enjoyed three years of ignorant user purchases...(I'm having trouble finding your articles over the last three years about how AMD had utterly destoryed Intel and they might as well just close shop since their price/performance sucked...)

    Do us all a favor and dial back the fan-boi-ometer. Yeah, it's a good chip, it may even be the best desktop chip out there right now but it's not going to change the world and it's not going to run AMD out of business.
    Robert Crocker
  • Prices will fall as product becomes available

    This situation reminds me of a story that a friend told me-
    A customer contacts his company to buy fencing to be installed around her property. She asks for a certain brand and installation and asks the price. He quotes a standard price per foot and she responds that his price is too high and that his competitor quoted a much lower price. He tells her that she should buy the fence from the other company. She replies that she can't because he doesn't have any in stock. My friend tells the lady that his price is on that product is much lower when he doesn't have any in stock - the same as his competitor.
    WiredGuy
  • Still waiting..

    Conroe may have launched, but they don't appear to have enough inventory to cover but a few vendors. And no, I don't care to go to Dell to buy a processor.

    Oh well, I can still get my AMD chips fast.
    nucrash
    • I saw one vendor on pricewatch

      They had it for $50 above list but when I clicked on the link, it wasn't available. Dell and the other major hardware makers probably ate up most of the inventory, we'll probably have to wait 2 more weeks. I'm looking for the E6600.
      georgeou
      • I want 5 of them

        But As Dell did consume the inventory, this does frustrate the average PC Builder.

        We want to build top of the line, the day a processor is released, but Dell and other major vendors soak them up way too quickly.
        nucrash
      • I found one

        TigerDirect has it, but I had to go through the ad on the front page to buy it.

        If you try to hunt through any other way, it doesn't exist.

        http://www.tigerdirect.com/applications/searchtools/item-Details.asp?EdpNo=2341239&sku=CP2-DUO-X6800&CMP=ILC-FPM08
        nucrash
        • Thanks, $359 for the E6600

          Prices are still above list, but that's still WAY better than an FX-62 at $800 or even at $230. You intend on clocking these things?
          georgeou
          • If I had the cash to burn

            I think I will still wait for the 4x4 chipset.

            I think AMD needs to drop a bit more, but all things in good time. I think AMD just cut the prices across the board, but not nearly enough for their high-end CPUs. $159 for a 3800+ isn't bad. I need a CPU here very shortly, so I may just splurge on it just so I can get that Socket 939 box up and going.

            Are you still building that Pentium D 805 George?
            nucrash
          • No way

            A 4x4 will not do well even against a single Core 2 Duo CPU clocked at 3+ GHz on the vast majority of applications. Furthermore, you can get a dual-socket Woodcrest 2.4 GHz Core2 motherboard and CPU for less than $1000 which is less than 2 AMD CPUs alone. A dual 2.4 Woodcrest core2 setup would absolutely MURDER any dual AMD solution and it even exists today.

            At $159 for a 3800+, that's high way robbery compared to the 1.8 GHz Core 2 Duo at $180 (though prices maybe $40 higher for now). You can probably clock the lowest end Core 2 Duo to the point that it beats an AMD FX-62.

            There is no way I'm buying any non-Core 2 CPU from Intel or AMD. The Pentium D 805 at less than $100 is attractive but it's very power hungry. With the cooling requirements to over clock it, you might as well get a Core 2 Duo 1.8 GHz. I'll consider the sub-$80 AMD CPU/Motherboard combo deals for dirt cheap systems though.
            georgeou
          • All about multithreading here

            I think the 4x4 is geared torwards multithreading much better than the even Woodcrest processors. Just what a little bird told me though.

            As for buying the X2 3800+, I had a 939 board dropped in my lap with an AGP card and a couple spare IDE drives. Granted, it won't be a beastly system for games, but it should play pretty much everything I want to toss at it. I am trying to talk my AMD vendor into dropping an Opteron 185 in my lap, but that hasn't happened yet.

            Got better ideas before this weekend? In the fall after a few bills fall off, I will be glad to build dual core dual proc verses what ever you are willing to spend and see which one clocks better overall.
            nucrash
          • Based on what do you say that?

            4x4 is just a 2 socket AMD system. Intel's Core2 based 2-socket systems have caught up because it's basically quad-channel 4 x 566 MHz frontside bus. The benchmarks on the two socket Core2 murder the two socket AMD Opteron systems.

            AMD still has a lead in 4 sockets but 4 sockets aren't a whole lot better than 2 sockets to begin with on most applications. The four socket systems cost a lot and you don't get anywhere close to double the performance anyways. We'll have to see what Intel does with their Core2-based 4-socket system next year.

            But multi-socket systems are for servers and maybe workstations where you're rendering 3D or something. It doesn't do you much good for gaming. SLI is a ripoff to begin with. Why would you even want quad-SLI or quad-Crossfire?
            georgeou
          • Curse my fanboy attitude

            I am just patiently waiting for AMD to play catch-up again. Hoping that they happen to have something cooking in that R&D department of theirs.

            We shall see come fall. I may just be waiting for Intel to slip up again.
            nucrash
  • whatever

    How fast of a computer do you need for Microsoft word? I think it's a little overkill for most businesses.
    mlrodman9
    • CPU speed

      who need fast CPU chip
      most people have got the compter to use them any was
      a compter only as fast as the slow part
      so add a fast cpu to a normal compter, and you still got a normal compter
      what the sence in that
      dirtfarmer
      • Please tell me English is your Second Language

        If not third or fourth langauge.

        Either that or learn to type with more than one hand.
        nucrash
        • Can you communicate in ANY other language?

          At least the man knows more than one language. Can the same be said of YOU?
          Zeppo9191
          • I don't know that

            Hence I asked.

            As for myself, I know bits and pieces of four langauges as well as am fluent in English. And Old Kingdom English, not this American dung that some blokes speak so poorly.
            nucrash