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."

My god

[thePig]

Does this mean, I was paying up to 160% more than what I should have, till now?
Grrrrrrrrrrrrrrrrrrrrr.

finally

[ystar]

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.)

capitalism!

[minus_273]

yay! capitalism! good.

Re:My god

[SolusSD]

no.. it means if a chip costs $100 now, it'll cost as little as $40 after the price drop. In this case you are paying 250% of the new price, or 150% more.

I have to wonder

[Conspiracy_Of_Doves]

I have to wonder how Intel is going to rationalize it when people STILL choose AMD over Intel.

Today's a good day to buy AMD stock, then!

[larsoncc]

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?)

Too late

[sidfaiwu]

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.

Quite Possibly

[WombatControl]

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.

Price cut or garage sale?

[Gadzinka]

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

This should have hurt Intel's stock more than AMD

[attemptedgoalie]

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.

The prices drops are for the P4

[ajiva]

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.

Drop prices TO instead of BY please.

[Vo0k]

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.

Re:The prices drops are for the P4

[fitten]

Yeah... amazing at how the obvious is completely ignored. This price drop is *obviously* to get rid of any inventory of chips that no one would otherwise buy because of the release of Core2. Price drops on P4s have little to do with "regaining marketshare", they are to cut losses of shelved inventory.

AMD is laughing

[popsicle67]

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

Re:My god

[aristotle-dude]

No, you were paying the price that the market could bare. Now Intel is sacrificing some of their profitablity in order to regain market share from AMD.

Re:My god

[morethanapapercert]

which of course means that once they have enough of the market back in the palm of their hand, it'll be time to resume squeezing......

Re:Fantastic!

[Anonymous Coward]

Who is gonna want Athlon64s when Conroe is there? Faster, cooler, cheaper.

Re:Today's a good day to buy AMD stock, then!

[ShapeGSX]

Huh? Intel's Pentium D 805 is a dual core 2.66GHz processor that supports 64-bit that is going to be cut to just $93 in another month. Right now, it is $119.

AMD's cheapest dual core is the Athlon 64 3800+ for $297 at NewEgg right now.

Did you not know that Intel added 64-bit support to the Pentium lineup a while back?

Price correction? How about old-model clearout!

[Mr.Fork]

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!

Re:My god

[Neoncow]

So technically, original poster is correct. They said up to 160% more and 150% is well within that bound.

<Wanders back to algorithms assignment ;)>

Re:My god

[Surt]

No, it means you already bought your chip. Prices change. No doubt if you bought a pentium 1 on the day it was released all those years ago for $600 you're feeling like a real rube now that you can get them essentially for free?

Just accept that you amortized the higher price you paid with the additional CPU cycles you got by not waiting.

If nobody's buying them anyway, drop the price

[doodlebumm]

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?

Re:Today's a good day to buy AMD stock, then!

[japhmi]

Did you not know that Core 2 Duo is the first intel dual-core with AMD64... er, I'm sorry, EM64T?

Did you not notice the chip that he pointed out, which had EM64T?

Intel has been shipping EM64T-enabled chips for a while now.

Re:This should have hurt Intel's stock more than A

[bagsc]

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.

Re:Processor lock-in more important anyway

[Anonymous Coward]

the rapid adoption of AMD by Dell

If by rapid you mean slowly dragging their feet.

Re:My god

[ChrisGilliard]

I hope you've qualified that statement, because it's rather close to baiting.

I actually wasn't baiting. I'm stating fact. From Wikipedia: "As an economic system, socialism is usually associated with state or collective ownership of the means of production.".

There are many existing socialist nations where no one goes so far as the abolition of private property.

If you define a socialist nation as one that has some social policies, then yes every nation is a socialist nation. In the US we have a welfare system and a graduated tax system, not to mention social security. These are all social policies. There's no pure socialist nation and no pure capitalist nation because both would be very difficult to maintain. In a purely capitalist nation, people who couldn't work would starve. In a completely socialist nation, there would be no reason to work because if you didn't work, you would still get your allocated food, shelter, etc. This causes a downward spiral as no one works.

Whenever we grant major tax breaks to corporations, we aren't becoming more capitalist, we're taxing everyone else to give gifts to these corporations.

I don't see your logic. The dollars that corporations send to the government in the form of taxes currently go to fund programs they do not benefit from. Some examples of this are: Social Security, welfare, etc... Instead, it benefits all of us if we allow them to reinvest this money to create more jobs. It's so simplistic to think that we should tax corporations heavily. One of the best things we can do for our economy is to reduce the cost of capital for corporations. This will create jobs and raise the standard of living. We do this by lowering taxes on corporations.

Wal-mart would die in a truly competitive landscape where values actually competed with pure dollars.

Walmart is in a truly competitive landscape. If you don't want to shop at Walmart, you can go to Albertson's or Safeway, or another grocery or various other forms of retail stores that Walmart competes with. The thing that many people don't like about Walmart is that they do not employ Union workers. The reason Walmart makes so much money is that they have competed very well. This is in part due to the fact that they don't employ union workers. But they also have created many innovations around their distribution system, their use of RFID, etc.

Lower prices are not the answer. Proposal.

[Futurepower(R)]

More Intel employees should say in public what they have told me in private: Intel CEO Paul Otellini [intel.com] 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.