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Why did AMD and Intel start this most recent price war? They did a good job of wounding themselves in the process

In early 2006 when Intel announced its new architecture there was wide expectation that prices would stay constant at launch – Intel was expected to drop pricing only on the Pentium 4 architecture to clear out excess “sell-proof” inventory. In the meantime AMD already won a number of design wins throughout the industry, and it also had plans to finally tip the scales within Dell who (at the time) was a 100% Intel operation. Other than potentially losing the performance crown in the high end sliver, things were looking quite good for AMD.

So, imagine if you will the scenario where AMD and Intel both have equally compelling “good enough” products for the mainstream, and Intel is winning the performance game – this, in a nutshell, is where we sit today.

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"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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