AMD cuts prices again at the same time trimming their product line of single core at the bottom.
This is pre-empting Intel's July 22 price cut. It will reduce their Q3 margins so they will need to re-gain share to balance this out. However, the key issue here is once again they are shafting their channel by dropping prices at short notice. All the guys who bought inventory in the last couple of weeks are going to be ticked off that they are going to be stuck with parts that are about 15-20% more expensive and thus hard to move.
AMD is making it harder for themselves to re-take the DIY channel. I'm also surprised that they are dropping prices across the desktop stack when Intel's cut is only on Quad Core. The only thing I would think they'd have to be worried about is the Q6600 at $266 which was a little too close to their 6000+ part originally at $229. Which leads me to believe AMD has not been as successful as they would like in re-taking share in the channel in Q2 and they're using this opportunity to try and do so.
More losses for AMD is all I can say...!
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"I'm also surprised that they are dropping prices across the desktop stack when Intel's cut is only on Quad Core. "
No, it is not only quadcores, dualcores get a massive drop also. 3GHz E6850 will drop down to $266 and E6550 at 2.33GHz will be around $160 with almost the same performance as 6000+.
"However, the key issue here is once again they are shafting their channel by dropping prices at short notice."
While somewhat true, the channel should have realized that with Intel's upcoming cuts, AMD would do a similar cut, much like last Feb and many times in the past. Granted they may not have known the magnitude of the cuts, or exactly when they would occur, but if they had any business sense they should have seen this coming and slowed their purchases accordingly.
Though given AMD's problems in getting product mix right, the channel may have wanted to buy as much as they could when it was available given AMD's "uneven" supply.
What will drive AMD's profitability is whether they can take back some server share, continue to increase mobile, and/or whether the entire industry x86 market grows.
Desktop pricing is probably a small part of the profitability equation - you also need to consider the "official pricing" is not what the Tier 1 OEM's are paying anyway. They are alredy at lower pricing, and even if AMD cut there as well, the magnitude would not be as great as that is starting at a lower price to begin with.
All the guys who bought inventory in the last couple of weeks are going to be ticked off that they are going to be stuck with parts that are about 15-20% more expensive and thus hard to move.
The PCs that the sub-$100 CPUs goes into has very little margins. In this segment the performance of the processor has little importance compared to the cost. Apparently Semprons are flying off the shelf quicker than the cheap X2's. AMD is building up 65nm dual core CPUs inventory. Hence the price cuts.
But I guess if I was AMD i'd also take the opportunity to cut prices before Intel does.
Agreed, Intel is going to be introducing new Dual Core's with better price/performance ratio hence why the need for AMD to preempt the cuts with cuts of it's own on it's Dual Core.
E4500, E6550, E6750, E6850 are going to be released, and a cut on the E4400 threaten AMD's Athlon 64x2 processors.
All the guys who bought inventory in the last couple of weeks are going to be ticked off that they are going to be stuck with parts that are about 15-20% more expensive and thus hard to move.
actually this statement is not true. The channel will be paid back the difference base on what inventory that they still have at the day when the price is cut. I do not know the full details of the terms, but logically there must be a limit on what kind of inventory can claim this benefit and how long from the date of purchase. This is also the reason you won't OEM or channel complains on the price cuts.
those AMD fanbois had claimed that Intel's previous cuts hurts its customer ... but i was just lazy to explain to them.
Ha
Pointer - that is not correct. Price drops are effective on a specific date. Any parts purchase before are at the old price - period. It's up to the OEM/channel to plan their inventory. Often, the channel guys are not all given advance warning of an impending price cut because the sales guy from AMD (or Intel) didn't tell them. Also, sudden price cuts means they could get with inventory.
Pointer - that is not correct. Price drops are effective on a specific date. Any parts purchase before are at the old price - period.
well, in my company, we pay back the difference to the distributor on price cut. i do not know the full details, as i obtained the information through a marketing meeting several years ago. things might change, thus i do not know for sure, as i never work in the marketing.
"Also, sudden price cuts means they could get with inventory."
Ok to the average person, this appears to be a 'sudden' cut but you fail to consider 2 things:
1) If the OEM had any reasonable business sense, they knew about the Intel July price cuts for a while and had to have known AMD would respond in kind much like they did last Feb. It's not like this is a new strategy by AMD. Again they wouldn't know the magnitude or exact timing, but they would know or be able to predict that it would be some time before Intel's cuts and at least on a similar magnitude as the Intel cuts.
2) You are assuming the channel was informed at the same time as we all read about it on the web... it may be possible that the channel was informed early (at least the bigger channel partners). The smaller channel partners probably were not.
If I'm a channel buyer and I see Intel doing desktop cuts coming Jul 22, I'm not going to decide to stockpile /buy large amounts of AMD parts in June when I have already seen not 6 months earlier that AMD's strategy is to preempt the Intel cuts with their own.
If a channel buyer got screwed on this then I have zero remorse and they need to learn - not like this is the first time this has happened and they are lacking business sense.
New 3Ghz Quad Core and Dual core benchmarked: http://www.xbitlabs.com/articles/cpu/display/core2extreme-qx6850_2.html#sect0
This is blazing fast performance. A clean kill for Intel. The only benchmark AMD won in was Science Mark! Intel won all other tests.
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