AMD drops desktop processor prices by 47%, not by 51%
While AMD has told journalists over the past year that it does not believe that it will have to react in any way to the launch of Intel's Core 2 Duo processor, the company today informed vendors about a rather dramatic price reduction in anticipation of Intel's new processor later this week. Confirming rumors that spread through the Internet in the past week, AMD cut the tray prices of most of its desktop processors, which the company believes will ensure that Athlon and Sempron processors will remain the best value on the market when Core 2 Duo debuts.
While most Sempron processors and all regular single-core Athlons are now priced well below the critical $100 mark - the Sempron 2800 model sells for $52 - the focus of the price reductions are clearly the socket AM2 products which already determine AMD's desktop product portfolio. A look into the new price list reveals that Intel's Core 2 Duo processor has forced AMD to give up its previous solid standing in the upper-end mainstream market and open up a huge price gap between the high-end FX-62 processor - now priced at $860 - and the Athlon 64 X2 5000+ model, which currently is AMD's fastest mainstream processor and now sells for $312.
Compared to the rumored price drops of the past week, the 7/24/2006 price list, AMD may have made last minute changes and applied a more conservative price reduction model. While the decrease is substantial across the board, the reductions may not be enough to enable AMD to claim an overall price-performance leadership. According to findings published by TG Daily last week and according to a price list we received from Israel today, especially the 4200+, 4600+ and FX-62 models do not achieve this goal. For example, the 4200+ model would have to be priced below $213, but is indicated to sell for $225. The gap widens with the 4600+ version (below $241 required, actual price $290) and may raise eyebrows with the FX-62, which now sells for $860, but would need a price tag below $425 to achieve a price-performance leadership position over Intel's Core 2 Duo processor.
While we have to wait for an official U.S. price list some AMD processors appear to represent a great value, especially the X2 3800+ and X2 5000+ models. It is obvious that AMD will face a dramatic drop in average processor pricing at least over the next two quarters and it remains to be seen, if the new price points will result in enough additional sales to make up for the reductions.