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Bruised but not broken, AMD fires off another volley of price cuts across Core 2 Duo's bow

With only a month until the most anticipated AMD product launch in five years, the company is pulling out all the stops to get competitive before the Back to School buying season.

The AMD-Intel price war, now almost into its second year, was cited as one of the contributing factors to the $611 million dollar loss AMD posted in the fiscal first quarter of 2007.  Following that loss came a 400 employee headcount reduction and a $2.2 billion cash-for-stock deal.

Almost immediately after posting its Q1 loss, Mercury research declared that Intel managed to recapture all of AMD's marketshare gains from 2006 in the first three months of 2007.  JP Morgan directly attributed the Intel traction due to aggressive pricing.

Effective Monday, July 9, 2007, AMD will enforce the following pricing among its channel:

AMD Athlon 64 X2 Pricing
Model


Current
Pricing
July 9
Pricing
6000+

$229
$169
5600+


$179
$149
5200+


$169
$129
4800+


$129
$109
4400+


$115
$89
4200+


$102
$79
4000+


$99
$69

With these new prices cuts, AMD will also significantly trim its retail CPU portfolio.  All single-core Athlon and Sempron models currently in the channel will officially reach end-of-life status (EOL).  The ultra-low cost Athlon 64 3500+, Athlon 64 3200+, Sempron 3500+ and Sempron 3200+ will continue to exist in high growth markets: Brazil, Russia, India and China.

In addition, the Athlon 64 X2 3800+ and 3600+, currently priced at $79 and $69 respectively, will also reach EOL status.

AMD roadmaps confirmed that other low-cost single-core processor families like Lima have already been phased out, just three months after launch. The company is still slated to introduce its 65nm Sparta family, based on the K8 architecture, in September 2007. 

The company's next-generation architecture, occasionally dubbed K10, will officially launch the last week of August for server platforms, and sometime late in the holiday season for desktops.  AMD has not issued pricing notifications on these processors yet.

AMD fired the first volley at the Intel price war when the company dramatically slashed processor prices -- just days before the Intel Core 2 Duo launch.  Since then, both companies reduced pricing of last year's products to less than 33% of last year's street price.

Memos released to DailyTech from AMD distributors confirm that the July 9 AMD price cuts are directly aimed at pre-empting the July 22 Intel price cuts.  These upcoming Intel price cuts will cut current Intel quad-core almost in half.


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can they?
By poohbear on 7/8/2007 4:07:20 AM , Rating: 3
can they afford to continue doing this? for how long? im a bit worried about these guys, price cut after price cut can't be good for the company, albeit its great for us customers.:p




RE: can they?
By aurareturn on 7/8/2007 4:21:21 AM , Rating: 2
Don't worry about them. AMD won't fall unless a third competitor such as IBM enter the market.

I do want more balance between AMD and Intel though. Intel is just too big and has too much money and will probably out muscle AMD until AMD is bought.


RE: can they?
By Kuroyama on 7/8/2007 9:41:42 AM , Rating: 2
quote:
AMD won't fall

And why would you say that? No company can lose money forever, and the little bit of info out so far about Barcelona aren't sounding so great.


RE: can they?
By ksherman on 7/8/2007 9:59:46 AM , Rating: 2
Maybe they are lowering expectations over Barcelona. It is a typical political strategy, to make something sound worse than it is, so when it is actually released, they will exceed the rumors... Just a thought.


RE: can they?
By defter on 7/8/2007 11:41:37 AM , Rating: 3
What are you talking about? They officially announced that Barcelona servers will be available in Septemper at max 2GHz clockspeed.


RE: can they?
By Dactyl on 7/8/2007 3:15:05 PM , Rating: 2
It's not just clockspeed, the question is how good Barcelona is clock-for-clock with K8, Core 2 65nm (Conroe) and Core 2 45nm (Penryn).

Penryn is expected to be a little faster than Conroe at the same clock speeds because of some relatively minor tweaks.

AMD is boasting that Barcelona is 20% faster at integer and 50% faster at floating point than a Quad-Core 65nm Intel processor, but so far AMD has shown no proof for that claim. I hope AMD is telling the truth, but like I said, they haven't shown any proof.

When DT tested Barcelona, they found it was no better than K8, and actually a little slower clock-for-clock than 65nm Intel Quad Cores.
http://www.dailytech.com/Quick+and+Dirty+AMD+K10+C...


RE: can they?
By TheOtherBubka on 7/9/2007 10:36:34 PM , Rating: 2
What if this was AMD's strategy. Ever notice how all processors produced by AMD above 2.5 GHz are all made on the 90 nm process node? Speculation is/was there is something wrong with 65 nm. But AMD announced all 65 nm products will be less than 65 W max TDP (compare to typical 89 W or more for 90 nm node for most normal binning). Since AMD is expecting Barcelona to go up to 2.6 GHz, what happens if AMD is really focusing on winning the performance per watt ratio not just performance and really focusing 65 nm production on lower powers compared to Q2D/C2D? Problem is, C2D has really good thermals and I doubt if making a 65 W light bulb a 50 W light bulb is a big deal to consumers. As for the corporate sector, it's more important under TCO when you have a few thousand or more to worry about.

Since upper speed grade X2's and FX's are today's equivalents of old P4s, maybe the days of 200 W power supplies will be back after all.


RE: can they?
By TheOtherBubka on 7/9/2007 10:51:10 PM , Rating: 2
The 200 W power supply comment was neglecting the 'enthusiast market' as anyone on these forums is aware of the power requirements of upper level graphics cards. Think of the power supply requirements with AMD/ATI's recent graphics cards. Not as great as performance as expected, but lower power than expected too. Think 45 W BE series too. Keep shrinking the power requirements until computers can be the sleek items they were envisioned years ago.

Computers are becoming more commodity items. And as a commodity, the developed consumer market is expecting them to look less like today's rectangular box and more like the small form factors at a reasonable cost. As for growing markets (India, China, Africa, etc.), power constraints are an issue once you can afford them.


RE: can they?
By TheOtherBubka on 7/9/2007 11:01:01 PM , Rating: 2
Then again...maybe AMD's 65 nm process really isn't up to snuff. I just remembered AMD had a 2.0 GHz 90 nm 35 W Athlon X2. For the 65 nm process equivalents BE-2300 and 2350/1.9 and 2.1 GHz respectively, the TDP is listed as 45 W. More power for equivalent clock speeds on a smaller process? That's not the direction it is supposed to go.

Oh well..it's time to wait and see what happens over the next 8-12 months now...


RE: can they?
By bryanW1995 on 7/8/2007 4:27:16 PM , Rating: 5
yeah, that's a great idea. Scare everybody into buying a c2d or c2q, then saying "gotcha"! Of course, it is entirely possible that they really are planning to do that...


RE: can they?
By spluurfg on 7/10/2007 8:20:13 AM , Rating: 2
If you can name an example of when this has happened for a commercial product...

AMD is a publicly held company... they are required, by law, to report transparently.


RE: can they?
By TomZ on 7/10/2007 8:26:39 AM , Rating: 2
Wrong, they don't have to report the details of their marketing strategy publicly. Financial details: yes. Most of everything else: no. Their marketing strategy would be a trade secret just like their engineering trade secrets.


RE: can they?
By PrinceGaz on 7/8/2007 4:33:29 PM , Rating: 2
IBM wouldn't enter the market as a third competitor. They've already got a nice working relationship with AMD which benefits them both.

If anything, should AMD become no longer viable selling their chips at the prices they are, I think IBM would be the first in the queue to buy them out. They'd be well placed as an IBM/AMD combo would be quite capable of mounting a serious long term challenge to Intel in the PC market. Never ever underestimate the resources IBM have available, both financial and technical.


RE: can they?
By TrogdorJW on 7/8/2007 7:21:40 PM , Rating: 2
My brother speculated the same thing to me about three years back. He said the dramatically increasing costs of building new fabs would likely push AMD out of the market, and IBM would take over. He may be right sooner rather than later....


RE: can they?
By Haltech on 7/9/2007 4:47:38 PM , Rating: 2
not to mention that IBM only has less then 1 percent of the market share in non server processors.


RE: can they?
By masher2 (blog) on 7/9/2007 10:37:26 AM , Rating: 2
> "AMD won't fall unless a third competitor such as IBM enter the market."

Exactly. If AMD appears to be in serious danger, Intel will certainly prop them up with a few price increases of their own. It's to Intel's advantage to maintain at least one small, easily outmaneuvered competitor in the market; it lets them avoid a large degree of antitrust heat which would otherwise surface.


RE: can they?
By JWalk on 7/9/2007 11:35:46 PM , Rating: 2
Bingo!


RE: can they?
By MartinT on 7/8/2007 8:07:59 AM , Rating: 3
If you look at their financial results, AMD couln't even afford the prices they were getting in Q2, or Q1, or even Q4 of last year.

They desperately need new, faster products, or else they'll bleed dry in a less than a year. (not considering any additional investments they might be able to acquire)


RE: can they?
By Durrr on 7/8/2007 1:42:21 PM , Rating: 2
Intel won't let them go under. Just like Microsoft wouldn't let Apple go under. I'd imagine there would be a nice lawsuit from the DoJ if AMD stopped making x86 CPUs.


RE: can they?
By retrospooty on 7/8/2007 11:09:25 AM , Rating: 2
"can they afford to continue doing this? for how long? im a bit worried about these guys"

Dont worry, they can survive a long long time, and even if AMD goes under as a company, there is bankruptcy protection, and if that still isn't enough the CPU division (and others as well) will live on, being bought out by a company with deep pockets. No matter what happens to AMD, the CPU division will live on. Remember, the whole "athlon" thing, starting with the K7 started at another company that AMD bought, I think it was called Nexgen, or something like that... It was not even designed at AMD, they just bought it, becasue thier own CPU tech (K6 and lower) sucked rocks.


RE: can they?
By iNGEN on 7/8/2007 11:47:11 AM , Rating: 2
I postulate AMD is trying to return themselves to their roots as "the budget alternative" to Intel while trying to alienate as few of their current customers as possible.


RE: can they?
By MartinT on 7/8/2007 12:01:05 PM , Rating: 2
quote:
K7 started at another company that AMD bought, I think it was called Nexgen, or something like that... It was not even designed at AMD, they just bought it, becasue thier own CPU tech (K6 and lower) sucked rocks.

K6 was the Nexgen design AMD bought when they realized that they couldn't muster a decent chip themselves, K7 was designed in-house, under heavy influence from guys that had their heritage in DEC's line of Alpha CPUs.


RE: can they?
By retrospooty on 7/8/2007 12:14:14 PM , Rating: 4
Thanks, I vaguely remembered something like that... I thought the bus design was mainly from the DEC folks and the K7 CPU itself, and later the K8 design (was also in the pipeline at Nexgen when bought by AMD)... but anyhow, my point remains the same. The CPU division will live on, even if AMD dies, and AMD is nowhere near death, in spite of losing alot of money.


RE: can they?
By Smurfer2 on 7/8/2007 12:16:21 PM , Rating: 2
I dunno how long they can keep doing this. They have lost money the last several quarters. The bright side is they have a better price/performance for 2 to 3 weeks. Um, so, hmm...


RE: can they?
By Amiga500 on 7/9/2007 4:54:33 AM , Rating: 2
It is possible that they are seeing better than ever production efficiencies and virtually no wastage, so they can afford to drop the price... a bit.

Its almost certain that they are still hemorrhaging money though.


RE: can they?
By TomZ on 7/10/2007 8:29:50 AM , Rating: 2
No, probably not the reason for the price cut. Prices are a function of "what the market will bear" - they are not a function of production cost.

Therefore, increased production efficiencies would lead to increased profit margin, whereas prices would be lowered in response to market pressures.


"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007














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