Some people are tom-tomming how cheap the AMD systems are on Dell. I had a look and here's what I found. I configured the Dimension E521 featuring Athlon X2 and the Dimension 520 (featuring C2D) with exactly the same specs and then saw the delta between the two. Before I tell you what I found, here are the specs for your benefit:
Dimension E521:
PROCESSOR AMD Athlon™ 64 X2 Dual-Core 3800+
OPERATING SYSTEM Genuine Windows® XP Media Center Edition 2005
MEMORY 1GB Dual Channel DDR2 SDRAM at 533MHz- 2DIMMs
HARD DRIVE 160GB Serial ATA Hard Drive (7200RPM) w/DataBurst Cache™
OPTICAL DRIVE 16x DVD+/-RW Drive
MONITORS 17 inch Ultrasharp™ 1707FP Digital Flat Panel
VIDEO CARD 256MB NVIDIA Geforce 7300LE TurboCache
SOUND CARD Integrated 7.1 Channel Audio
Dimension E520:
PROCESSOR Intel® Core™2 Duo Processor E6300 (1.86GHz, 1066 FSB)
OPERATING SYSTEM Genuine Windows® XP Media Center 2005 Edition
MEMORY 1GB Dual Channel DDR2 SDRAM at 533MHz- 2DIMMs
HARD DRIVE 160GB Serial ATA Hard Drive (7200RPM) w/DataBurst Cache™
OPTICAL DRIVE 16x DVD+/-RW Drive
MONITORS 17 inch Ultrasharp™ 1707FP Digital Flat Panel
VIDEO CARD 256MB nVidia Geforce 7300LE TurboCache
SOUND CARD Integrated 7.1 Channel Audio
Now here's the price:
E521 w/ Athlon X2 3800+ = $889
E520 w/ Core 2 Duo 6300 = $1139
The delta is 250$.
Now we all know that Intel's desktop pricing is uniform which means Dell gets the same price as everyone else...the price on the price list. Which for the E6300 is $183. Which means Dell is probably paying AMD just 67$ for this part since everything else is equal. A search on Newegg shows the 3800+ parts are priced from $154 - $178. Even with maximum latitude taking the $154 price point, AMD is giving Dell a whopping $87 discount. At 67 bucks, this is just incredibly low margin and going to severely hurt them.
I made a comment earlier in another post that had AMD won Dell 18 months earlier, this would have been far more beneficial to them than it is now...specially as Dell is struggling to find direction and even compete on costs. I also said Dell would be screwing AMD on pricing and using them at the low end to drive volume. I now see how desperate AMD was to win Dell. At these prices the cost of keeping the business and potentially having to save parts to meet Dell's needs is just plain dumb. I'm now less convinced that AMD's quarter will be as good as I thought. They are gaining market share through Dell but at a severe hit to margins. In fact, it's almost to Intel's interest that Dell win low end share w/ this product and hope that HP and other's continue to take the higher end of the market with Core 2. If AMD continues to give their processors at this price to Dell - which it seems they need to keep the business, they are heading south pretty rapidly.
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After I was done posting this, I saw this article on Dell potentially pre-announcing yet another poor quarter:
http://biz.yahoo.com/ap/060920/dell_warning.html?.v=1
Dell is sinking and they are going to take AMD down with them. AMD cannot refuse Dell anything because they have just got into bed with them and that includes the rock bottom pricing Dell wants. But this is not going to be enough to save Dell. Read my earlier posts for my thoughts on Dell...and how HP and Apple will be eating their lunch.
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I posted this in the comments but it appears it isn't getting read so I'm putting it here in the post
Ok - while you guys were all within your rights to slang me for this piece of shammery - only one of you really caught on the calculation was flawed to begin with.
The grand prize goes to Anonymous - who by virtue of being anonymous cannot collect.
Yes...yes - if I really had to extrapolate, AMD is paying Dell to buy their CPUs which would be perhaps one of the most ridiculous things anyone could possibly evey say. Simple math will show you:
C2D system cost: $1139
C2D 6300 CPU cost: $183
Bill of materials + margin = $956
This is more than the entire Athlon X2 cost by...you guessed it = $67.
The real point here is some of you think I'm just pro Intel (or even Apple) and immediately get defensive (see the comments). That's not what this blog is about. I'm trying to call how things are going to play out using reason, some analysis, my intelligence and of course making some assumptions because I don't have all the info.
I apologise if I wasted your time but if you have a sense of humour hopefully you'll enjoy the laugh.
I'm still working on how to interpret the system pricing and I'll post that in the next couple of days. A lot of the feedback in the comments is going to be useful in trying get there so thanks.
Also - pls see my post above this one.
cheers
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22 comments:
"Dell is sinking and they are going to take AMD down with them."
Uhm..No? Commitment means nothing on the part of AMD, and here's why:
AMD sells CPU's to Dell, and after that, there is no more connection between the 2. If Dell goes BK overnight, AMD is not hurting -- They already sold them the CPU's, hence no chance to hurt AMD.
I'm sorry but it is beyond ludicrous to believe that AMD is selling Dell 3800+ chips for $67. However, you've overlooked something. Intel motherboards have both a northbridge and southbridge whereas AMD motherboards have only a southbridge. AMD boards should cost less. If they can get a $50 differential for board cost then that would raise the chip price to $117 which is more believable. I guarantee that AMD is not taking a loss on the chips it sells to Dell.
I'd bet it's probably less than $67. There's markup involved on Dell's end, so I think that cpu is being sold by AMD in the mid $50's
Hi, I am wondering if you would be interested in writing your opinions on a new website Informative Opininons.com.
The point of this website is to create a multitude of opinions, and hopefully all articles will have two points of view, Pro AMD and Pro Intel.
We will not only focus on Inte and AMD though, there is far to much technology out there to be so short sighted.
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You will be given access to write your own post, moderate your own post and decide which category in which to post your articles.
Please take a look, if interested just register and we will contact you on how to create articles.
Thanks.
enumae
I think you misunderstood Intel's price structure here. IIRC, there are still (huge) differences based on order size. So you probably have super sized OEMs (Dell, HP, Apple?) stay above everyone else, and big OEMs are getting better price than channel, big channel players are getting better price than small shops, etc.
The difference in price between the two systems ist $250.
The Conroe-E6300 is $183. If the price difference is only in the cpu price, then the AMD-CPUs has to cost $250 less:
$183-$250 = -$67
==> this would mean, AMD would have to pay Dell $67 to use the AMD-CPU.
But does this make any sence?
Well, while your argument is very convincing, some variables were not factored in your calculations:
1. Power supply requirements - maybe the c2d requires more elaborate power supply which costs more;
2. Main board raw cost - maybe the c2d design requires more elaboration thus, costing more; and,
3. Allocation of resources - chances are that DELL builds some workmen force cost into the price and, somehow/someway, c2d does requires slightly more than the AMD counterpart.
Just some thoughts since you cannot really compare apple to apples here besides the memory, hard disk drive, video card and dvd drive.
Hi, this is Chicagrafo again.
I think you are overlooking something: Your very same analysis of prices for AMD/Intel computers can be replicated with Gateway, Hewlett-Packard, Acer, and so on. Do it and you will see that the price differences you observe in Dell are normal in those other companies.
Why? Perhaps because AMD based computers are inherently cheaper having motherboards with much simpler logic and a higher performance/standard interconnect in hypertransport, besides not paying "Intel" taxes.
Regards
Shari180 - in addition to the board pricing comments raised you are also ignoring the fact that Dell may also just be marking up the Intel system more, due to demand for new product - this markup would not be passed on to the CPU makers (in this case Intel), but be used to increase Dell profits.
In other words (ignoring mobo cost for a second), with a $250 delta you calculated and a $30-40 cost delta between chips, Dell could just be pocketing the difference.
It is interesting that Dell is charging a $250 premium for the 6300 though (although it does outperform the 3800)
To do this analysis accurately you need to do a bottom's up component level cost - which will be impossible to do as there is no way to know what Dell pays for their components.
Ok - while you guys were all within your rights to slang me for this piece of shammery - only one of your really caught on the calculation was flawed to begin with.
The grand prize goes to Anonymous - who by virtue of being anonymous cannot collect.
Yes...yes - if I really had to extrapolate, AMD is paying Dell to buy their CPU. Simple math will show you:
C2D system cost: $1139
C2D 6300 CPU cost: $183
Bill of materials + margin = $956
This is more than the entire Athlon X2 cost by...you guessed it = $67.
The real point here is some of you think I'm just pro Intel (or even Apple) and immediately get defensive. That's not what this blog is about. I'm trying to call how things are going to play out using reason, some analysis, my intelligence and of course making some assumptions because I don't have all the info.
I apologise if I wasted your time but if you have a sense of humour hopefully you'll enjoy the laugh.
I'm still working on how to interpret the system pricing and I'll post that in the next couple of days.
cheers
Hi,
i figured out some numbers at www.geizhals.at (europe)
Sum of parts to build yourself (roughly):
X2 3800 box ~ 130 €,
1 GB 533 ~ 100 €,
160 GB ~ 70 €,
dvd ~ 40 €,
17 " TFT 150 €,
Geforce 7300 LE ~ 50 €,
Case, keyb, mice 100 €,
Mobo : ? ~70 €
Sum : 710 € = ~ 900 $
(conversion = 1.27 $ / 1 €)
Even the sum of parts is NOT AWAY from dell's!
Dell will have AT LEAST the margin as ANY parts retailer has, FOR SURE on the numbers of amount a HIGHER.
I can not figure out ANY danger to amd.
regards juergen
Cost of motherboard will be higher for Intel as it includes two bridges
And Intel may also be pushing partners to share cost of advertising,
I am seeing half page ads for Core2 here in India, and ultimately somebody has to pay those bills
If you truly think AMD is paying Dell to take their CPU's, you...wow...not a word to describe that.
If AMD is giving away their chips for free to Dell, then they must be giving away their chips to HP and Gateway and others too. You can configure similar systems from the other makers for similar prices. Perhaps what you've discovered here is the real secret to why Dell was falling behind its competition all of this time, and why it finally had to go with AMD. It was trying to sell components that cost too much for the same price as AMD components.
The system costs are not just affected by processor prices alone. You have to look at the motherboard costs too. This is where the economics of the AMD Direct Connect Architecture come into play. With Intel you see that you need special motherboard and chipset revisions for just about every processor they produce, and everytime there is a front-side bus speed increment, you need yet more revisions. You can't really get any economies of scale with that scenario. With AMD the same AM2 motherboard can serve for everything from Sempron all of the way upto A64 FX. The chipsets don't need to be upgraded all of the time either, since Hypertransport adjusts to the common-denominator speed of any set of chips connecting to each other. So a speed bump-up for the processor doesn't need a speed bump-up for the chipset too.
Well i allways thought people at dell are idiots, and i dont know how you managed to get that price list.
I set up 2 systems at dell, and this is what i came up with:
intel system: 883€
PROCESSOR Intel® Core® 2 Duo® E6300 Processor (1.86GHz, 1066MHz, 2MB)
BESTURINGSSYSTEEM Legitieme Windows® XP Home Edition, SP2
TAAL VAN BESTURINGSSYSTEEM Nederlandse taal
ONDERSTEUNINGSSERVICES Collect & Return-service, slechts 1 jaar
GEHEUGEN 1024MB Dual Channel DDR2 533MHz (2x512) Geheugen
HARDE SCHIJF 250GB (7200rpm) Serial ATA Hard Drive with 8MB DataBurst™ cache
OPTISCH(E) STATION(S) 16X DVD+/-RW Drive
GRAFISCHE KAART 256MB nVidia GeForce 7300 Turbocache graphics card
MONITOR Dell 19" (48 cm) Ultrasharp Flat Panel - in hoogte verstelbaar, kleur zwart (1907FP)
Amd system: 1062€
PROCESSOR AMD® Athlon64™ X2 3800+ Processor (2.00GHz, 2x512K cache)
BESTURINGSSYSTEEM Legitieme Windows® XP Home Edition, SP2
TAAL VAN BESTURINGSSYSTEEM Nederlandse taal
ONDERSTEUNINGSSERVICES Collect & Return-service, slechts 1 jaar
GEHEUGEN 1GB Dual Channel DDR2 533MHz [2x512MB] Memory
HARDE SCHIJF 250GB (7200rpm) Serial ATA Hard Drive with 8MB DataBurst™ cache
OPTISCH(E) STATION(S) 16 X DVD +/- RW Drive
GRAFISCHE KAART 256MB nVidia GeForce 7300 Turbocache graphics card
MONITOR Dell 19" (48 cm) Ultrasharp Flat Panel - in hoogte verstelbaar, kleur zwart (1907FP)
Note that my system is from europe (belgium), guess people in amerika are allways luckier!
!
Intel can give away all those P4s away in their inventory:D
Anonymous from Belgium - that's interesting. Did you start the config with two different systems from the same product range. For example, were they both Dimension systems? If not, you would end up w/ a price difference.
Perhaps you have all noticed that the least expensive configs cost $279 with AMD Sempron and $379 with Celeron. Where does the $100 difference come from? Everything other than motherboard/CPU is identical. Last I checked, Sempron was a few bucks more than Celeron. $100 more for Intel motherboard? Please...
Also, upgrade to X2 3800+ is $80 ($154 at Newegg), while E6300 is $380 ($180 at Newegg)
Anonymous from belgium:
Same config e520 vs e521. But it is strange that some parts cant be chosen with the other config (example: amd needs an lcd intel can order without).
Guess everybody over at europe allready knows that amd rules, so they do not have to sell them that cheap.
Must be something special that makes your config cheaper than mine.
Anonymous from belgium:
Same config e520 vs e521. But it is strange that some parts cant be chosen with the other config (example: amd needs an lcd intel can order without).
Guess everybody over at europe allready knows that amd rules, so they do not have to sell them that cheap.
Must be something special that makes your config cheaper than mine.
Europe is expensive and the US is not man. Probably as simple as that.
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