Will A Recession Cut Bloomfield Prices?

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The head of Intel says that the current slowdown “is the deepest I’ve seen in my lifetime.”  AMD said much less, but laid off 500 people.  OEMs like Dell are battening down the hatches, too.  Will this cut Bloomfield prices?

While we haven’t seen cold hard numbers on how the downturn has affected computer and components, other economic indicators seem to indicate that the pricier (either absolutely as in cars or relatively, like in designer clothes) a category of merchandise is and the more “postponeable” the purchase is, the more sales have dropped.  Since computer equipment ranks pretty high in both categories, sales have probably dropped considerably, probably in the neighborhood of 10%, perhaps more than that, probably more than that if measured by sales dollars. 

This is a very big reason why we don’t think Bloomfields are going to do too well.  Launching a luxury brand in the teeth of this economic drop is bound to be challenging. 

We’re moving into a buyer’s market.  As long as your income doesn’t get cut, bad times means good times for the person with cash.  So how can you take advantage of this when it comes to, well, Bloomfield systems?

Don’t expect much from Intel.  When it comes to pricing, Intel is very, very methodical.  They even methodically panic, all they do when they decide they really need to cut prices is to push up the already scheduled price adjustments up a quarter.  It should also be noted that Bloomfields were never meant to be mainstream products, so if sales fall a bit below projections, that just means a smaller cherry on top of the cake. 

The roadmaps we’ve seen show a faster Bloomfield showing up 3Q 2009.  This is usually the time Intel will adjust prices.  If they’re going to cut prices faster than that, they’ll probably cut prices in 2Q 2009, with or without a faster Bloomfield ready.  

It should be emphasized, though, that the low-end Bloomfield just won’t be cut very much.  If I had to venture a guess, maybe it goes from $284 to around $240.  The Bloomfield that would get the sizable cut would be the 940.  That would go from its current $562 to around $300, which is very nice if that’s what you want, but this is not exactly Walmart pricing. 

What is more likely to become cheaper a bit sooner are the two other expensive items in the Bloomfield platform, the DDR3 RAM and especially the motherboards.  While DDR3 RAM is far more reasonable than it was even a couple months ago, prices are likely to slip sooner and faster due to the economic downturn.  It’s really the mobos that need some attitude adjustment, though.  $300 is not going to cut it as an entry price for any length of time, and I would expect steep declines in those prices once 2009 comes around, down to more like $200.

Knocking $200 or more off the price of a Bloomfield platform still leaves it a bit pricey for what most will effectively get out of it, but it does make it a good deal more palatable.     

And that’s what I think we’ll have a few months into 2009.

Ed

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