3.8 and Prices

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Intel will introduce a 3.8GHz Prescott November 15. This in-and-of-itself is of practically no interest to those reading this.

What is of potential interest to those reading this is the impact of this new processor on the pricing of both Intel and AMD CPUs.

Intel generally has price points for its various mainstream CPUs, the last couple years, it’s been usually $637-$417-$278-$218-$178-$163 (sometimes they sneak a $193 in there). When a new processor get introduced, older processors normally move down the pricing food chain.

Unfortunately for bargain hunters, this is unlikely to happen this time around. You see, the top $637 price slot is vacant, and has been for a couple months. The top-priced mainstream Intel processor is the 3.6GHz, which has been sitting in the $417 price slot for a few months. Leaving the $637 slot vacant for a while isn’t terribly unusual for Intel to do; it usually happens when a new top-end processor gets delayed a bit.

So, under normal circumstances, we shouldn’t see a price cut.

However . . .

The 3.8GHz will be the last “regular” mainstream processor coming from Intel. Next year, there will be Prescotts with 2Mb cache.

XBit Labs said a while back that these processors will take their place in the food chain a notch ahead of “regular” Prescotts.

What’s important to note here is that these processors won’t cause price reductions for “regular” Prescotts. One must then ask, “If these won’t trigger that, what will?” The next series of processors Intel will release will be dual-core, perhaps a little less than a year from now.

Does Intel think it can hold their CPU prices steady for a year?

And if they do, what will AMD do with its prices?

One ought to recall a few years back when Intel was stuck at 1GHz with the PIII. It stuck to its prices, AMD put out much faster processors, but it was AMD Thunderbird prices that ended up crashing and burning.

Can Intel repeat the feat? Will CPU prices in 2005 stay fairly steady, with AMD trying to undercut Intel by just a bit? Or will Intel not be able to maintain price stability for its products?

And if the last is the case, then what happens?

Ed

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