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Technology Stocks : Intel Corporation (INTC)

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To: Dan3 who wrote (129806)	3/11/2001 6:02:00 PM
From: Dan3	Read Replies (1) of 186894

Current OEM pricing for P4 It's an interesting exercise to go to Gateway and configure 2 systems, one with a 1.2GHZ Athlon and the other with a 1.5GHZ P4. You'll have to custom configure the Athlon to add a larger hard drive and 19" monitor. gateway.com The Athlon system comes out to $2,239 and the P4 system comes out to $2,499. We know from pricewatch that AMD must be selling 1.2GHZ Athlons, in quantity, for around $175. Intel subsidizes Rambus, but that gets summed into the system price. Gateway uses 2 64 meg sticks of PC800 which costs them about $150. A 128 meg stick of PC133 costs them about $50. Gateway uses a relatively inexpensive motherboard for Athlons - they're probably paying no more than $100. A P4 motherboard is costing them between $150 and $200. The difference between the two system prices is $260. Gateway's other costs for the P4 are $150 to $200. Gateway is probably making more money on the Athlon system than the P4 system, so let's add an extra $50 to the Athlon's cost. Now the difference is $310. Subtract the $150 and the difference is $160. Add that to $175 and you get $335 as the price for P4 1.5GHZ parts. There is about a $350 price drop to move to the P4 1.4GHZ system (you must take into account video card, and drive differences). If Gateway is keeping half of that, then the 1.4GHZ parts cost them $160 - less than what they pay AMD for a 1.2GHZ Athlon. Any comments? Am I missing something here? Can Gateway afford to sell P4 systems at little or no profit just to keep Intel happy? Why would they want to do that?

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