Intel takes away AMD bargaining chip with price cuts

Stan Beer
Friday, 28 July 2006 06:04

Your IT - Home IT

The release of Intel's new Core 2 dual-core range of processors combined with price cuts to older products has effectively pulled the rug out from under AMD, which has been fighting desperately to counter Intel's moves in the past week.

AMD has made three major announcements in the past week, including massive price cuts, in an attempt to keep Intel off balance as the market leader continues to receive positive reviews about the new Core 2 range.

However, with the announcement that Intel will cut prices on most of its older range, AMD has no alternative but to follow suit with its current processor range, which will lead to a margin squeezing pricing war.

For Intel, cutting prices on older Pentium products is no big deal. Now that it has a clear performance advantage with Core 2, Intel can afford to maintain its margins on the new range.

The problem for AMD is that its next generation of products are not due to mid-2007. Meanwhile, the smaller rival to Intel is trying to prevent leakage from its recently hard won market share by offering up price cuts and sticky taping processors together in packages such as 4x4.

When AMD announced that it had cracked 20% market share, the company's CEO Hector Ruiz publicly set a goal for the company to reach 30% market share by 2008. The release of Intel's new products makes that goal now seem a remote possibility and AMD may have to instead focus its efforts on keeping its head above the 20% mark.