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AMD is introducing its B3 quad (and B2 tricores) Phenoms.

Here’s all you need to know about them:

  • The old Q6600 still beats the fastest Phenom almost all the time.
  • The old Q6600 still can overclock a lot more than these chips.
  • AMD will not have a chip with a fighting chance of beating the Q6600 most of the time until they put out 45nm chips towards the end of the year.
  • While inital prices are a bit cheaper than the Q6600 at the moment, the moment will end April 20, when the price of the Q6600 will drop about $40. AMD will no doubt match and beat these cuts in a few weeks, so even if you want one, why pay more now?
  • Tricores? Looks like you’ll pay 75% of the price for 75% of the chip, no great bargain there.
  • It’s hard to see why anyone would have a good reason to buy one of these things any time soon. You wouldn’t want to build an overclocking system around one, you’d be better off paying more for a Penryn system. If you have an AM2 system, you’d be better off waiting for a 45 and drop that into a current box. I don’t even see a great deal of appeal these chips in OEM boxes: if you want to save money, why are you buying a quad system to begin with? Unless AMD is giving them away, Phenom boxes aren’t going to cost much less than Intel boxes.

  • Yes, all these arguments get a lot weaker if the price of these chips drops a lot, and people start settling for less bang for a lot less buck. That’s not the case now, but that’s exactly what is going to happen with these chips in the months ahead, and we suggest you wait at least that long for that to happen.

    When Performance Decides Price

    Some have reasonably asked, “Does it really matter if AMD doesn’t have the fastest CPU? After all, only a few buy those.”

    Yes, it does matter when Intel has all the fastest CPUs. It gives Intel almost complete control over the price of AMD’s chips.

    It’s one of the great ironies of the CPU industry that many people have a special space in their hearts for AMD because of their generally low prices. They really ought to be thanking Intel for that. When AMD offers bargains, it’s not because AMD loves you. It’s because Intel hates AMD and forces them to do that.

    When Intel has the upper hand, the prices it charges set the upper limit for what AMD can charge. If Intel processor X has Y level of performance, and it costs Z; AMD can’t charge anymore than Z for any product that offer Y-level performance or less. Indeed, since extra performance means a premium price, AMD usually finds itself having to offer a big discount on its products. Historically, that discount has been along the lines of 33% or more when the AMD product is in regular production.

    Some may say, “Joe Sixpack doesn’t know squat about performance levels. True, but the OEMs who buy the chips for Joe’s boxes sure do, and they have even more reason to want a low price than Joe.

    When Intel has all the fastest chips, that means the price AMD can charge for its best chip in a class has to be lower than what Intel charges for its worst chip. This leaves Intel free to low-ball the price of their worst-chip, while charging whatever the market can bear for anything above that.

    Would you like to see an example of this? Let’s see what Intel will do with its prices on its 65nm quads next month.

    The price of the Q6600 is $266. The 2.5GHz Phenom isn’t quite as good as the Q6600, so you would expect the price of the 2.5GHz Phenom to be less, and it is.

    Intel will cut the price of the Q6600 to $229 on April 20, which means AMD’s entire Phenom line will have to go down in price accordingly. One price cut on one Intel product means many price cuts from AMD.

    The 2.5GHz Phenom does get close against the Q6600 pretty often, so when AMD comes out with a 2.6GHz Phenom, that chip will win some of the close matchups. Does that mean AMD will be able to break free from Intel’s pricing? No, because Intel will cut the price of the Q6700 to $270, and that will certainly beat any 2.6GHz Phenom. Later in the year, Intel will have slightly better Penryn replacements to cover these strategic price points.

    This means AMD will remain stuck in the price ghetto, guaranteed, at least until 45nm chips show up.

    Absolutely none of this would matter if AMD could make a decent profit at these price points, but that’s the rub. The way the company is structured today, they can’t.

    Does that mean the company is doomed? No, but it probably means AMD is going to have to make some radical changes before the year’s out, and we’ll talk about that tomorrow.


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