AMD Takes The High (Price) Road 2.0

Taking The High Road

About five months ago, we put out projections on what CPUs would cost the rest of the year.

While most of it still applies, we need to revise it a bit to take into account how AMD has rated its new chips.

AMD’s policy continues to be price equality with Intel at any given speed equivalent. However, until the end of the year, Intel CPUs will have speed grades at 200MHz intervals. Some of the new AMD chips (i.e., the 3700+ and 3500+) don’t have exact Intel equivalents, and a few are rated at higher speeds than anything Intel has out yet (or will shortly).

In those case, from the initial pricing, it looks like AMD will add a bit less than half the difference in price between Intel speed grades, or top the top Intel price up about $80 from the mainstream Intel max of $637.

Since we’ve known for quite some time what Intel’s pricing roadmap is planned to be, and since Intel’s pricing follow a pretty set pattern, we can easily project AMD’s socket 939 prices for most of the year.

All dates are approximations. August 1 is the date x86-64 capable Prescotts are supposed to be out. August 22 is the estimated date for the release of the Prescott 3.8 and a price cut. November
1 signifies the date an Intel 4.0GHz processor is supposed to come out.

Want to see what socket 754 looks like?

Now let’s see what Intel has in stock for the year.

Ed

Prescott Pricing

In contrast, let’s look at the pricing of the three lower-end Prescotts (the 2.8 and 3.0 are likely to become the most popular O/Cing processors).

Since the last time we wrote this, Intel has added some new elements to the picture. Prescotts with x86-64 are supposed to be introduced August 1. Let’s see how much they’ll cost:

Let’s compare the CPU prices of a 3.2GHz x86-64 enabled Prescott, a socket 939 Athlon 64 3500+, and a socket 754 Athlon 2800+ (which will be the cheapest CPUs in their prospective lines):

We remain extremely dubious that Prescott will ever be any good as an overclocking chip, but for the much bigger OEM market, these Prescotts with x86-64 are going to look awfully good compared with what AMD will be offering.

However, not even we think AMD is that crazy. We fully expect to see a 3300+ come out around the time the 64-bit enabled Prescotts are released, and we may see a 3100+ for the fourth quarter or very early next year.

Assuming this happens, the price comparison looks more like this:

This would be rather better. However, if it’s good at the end of the summer, wouldn’t reasonable prices for a 3300+ or 3100+ be even better at the beginning to get sales before these Prescotts come out?

If a 3100+ does materialize towards the end of the year, it probably will cost about $170.

A Dark Horse

There’s rumors about Prescotts with 2Mb of cache and a 1066MHz bus, but we suspect this will just be an extension of the Extreme Edition series, and certainly won’t be priced affordably.

How Likely Is This To Happen?

There are two ways these prices will drop more than indicated.

Intel Launches A Price War It’s possible Intel might decide to accelerate their pricing cycles to help socket T Prescott sales if they sag, but all that would probably mean is that the prices you see for September and November would come a couple months earlier. Besides, Intel doesn’t seem exactly loaded for bear at the moment. Unless they can ramp up Prescott by considerably more than expected, they’ll probably leave well enough alone.

AMD’s Parity Pricing Collapses These prices tend to support the contention that AMD isn’t going to be making a whole lot of these things any time soon. The prices are just too high to expect big sales from them, and AMD apparently expects just that.

The purported AMD production figures for socket 939 show nominal (50K) sales for the rest of this quarter, about 250K for 3Q, and a little over 500K for the Christmas quarter. These projections along with AMD’s pricing/positioning of socket 754 would seem to indicate a continued high pricing strategy with one “downgrade” to spike sales a bit.

Socket 754 figures are expected to be substantially higher than that, but the bizarre thing about them is that they’re supposed to get close to a million per quarter for two quarter, then suddenly shriven up to just 250K in the first quarter of 2005 while socket 939 is supposed to more than double.

Something tells me things aren’t going to work out that way.

The statistic that probably will mean something is that AMD doesn’t plan to even try to make Hammer its regular processor until a year from now. They don’t expect to make more than 1.2-1.4 million processors for the next three quarter, which is only about a quarter of Dresden’s capacity, and it remains to be seen if they can sell even that.

What are the odds of a price collapse for Hammers this year? It really depends on how well socket A sales and pricing hold up. If they go down the tubes, AMD will probably have to change plans.

At this point, though, I wouldn’t count on it for this year. If you’re looking for a cheap Hammer, I think 2005 is the earliest you can semi-expect to get one.

Ed

It’s Your Money

You have the numbers. You make the call.

We expect there will be a bit of a blip towards socket 754 as those who need something now settle for socket 754, but we expect most AMD fans to sit on the sidelines.

Other than that, I think it’s going to be pretty quiet in this neck of the woods for a while.

Maybe It’s Just Me But . . .

. . . don’t you think all of this is rather disrespectful to all those AMD fans who have stayed faithful throughout the years? This “give us a LOT of money or else pay us just twice as much as you’re used to and settle for something we’re going to pull the plug on three months from now?”

It’s not a personal dis; I never thought AMD (or any other company) was my friend, but I feel badly for those who sincerely have.

It has to come as a shock to such people when you have people like Dirk Meyer denying that $800 CPUs were expensive, that’s certainly a new tune for those who felt that they backed the underdog and thought there might be some reciprocal loyalty.

I suppose it’s a feeling like a wife who worked to put her husband through medical school must feel when she’s forty and now hubby wants to leave her for some young, hot babe.

Then you see a forum post like this one (scroll down to zsubnot):

bitch, bitch, bitch. you don’t like what amd gives you, dont buy it. honestly, we dont care. we are getting plenty of sales without you.

unlike those of you who dont live in reality, AMD is in the business of making money. we dont care about marketshare. we dont have the production capacity for it. we want higher ASPs. Honestly, I dont think i’d shed a tear for those who wanted a high end part for under 300. thats just too damn bad. you want a good cpu for under 200, the low end AMD64s have been out for a while now. . . .

Anyway, I just cant stand whinners, I dont mean to bother the rest of you. I will go back to work awaiting my profit sharing check now…

Now I don’t know for sure if this person is actually an AMD employee (though it seems that way), but the comments ought to be an eye-opener for some of you. The disdain, the “we don’t need you anymore,” the raised finger attitude. An end to innocence for some, I suppose.

Some of the other comments in the thread are worth taking a look at, too. You have to wonder how out-of-touch some of those commenting are with the average AMD fan.

Just as an aside, there’s one reference in that thread to me, but what I find interesting is that people who attack my views never seem able to state them correctly. I’ve never said AMD ought to lower the prices of their processors; I have said they ought to provide lower-rated processors at what are mainstream prices even for Intel. I’ve never said AMD should have $50 or $100 processors; I’ve said something more like $150-175. I wonder why that is.

The irony is this is awfully big talk for a company that isn’t selling anywhere near its supposed production capacity and refuses to even say how many they’ve actually sold. This doctor is burning his bridges with his wife before landing the hot babe.

What happens if AMD can’t land the babe, or in this case, enough of them?

If they can’t, and have to come back to the old reliables, to slightly paraphrase an old saying, “Hell hath no fury like a geek scorned.” 🙂

Ed