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Technology Stocks : Intel Corporation (INTC)
INTC 36.66+1.3%3:59 PM EST
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To: wanna_bmw who wrote (141145)8/9/2001 10:36:39 AM
From: dale_laroy  Read Replies (3) of 186894
 
>I believe that the price cuts are justified, as long as Intel can keep a price spread between the various speed grades. As far as I know, the price cuts you mention coincide with the release of a 2.0GHz speed grade in the same $500 price range that the current 1.8GHz Pentium 4 is at now. This is nothing different than what Intel has always done, except that it might seem drastic due to Pentium 4 never having been in high volume before.<

The reason this seems drastic is that the 2.0 GHz at $562 will be about 4.3 times the cost of the 1.5 GHz at $130. This is almost unprecedented in recent times. AMD has found that mainstream buyers are no longer willing to pay 4.3 times as much for a 33% increase in speed grade. Indeed, at Sam's Club they are charging just an $8 premium for the 1.3 GHz Athlon versus the 1.2 GHz Athlon. As Intel closes the speed grade gap from 70% higher for the 1.7 GHz P4 versus the 1.0 GHz PIII, to 33% for the 2.0 GHz P4 versus the 1.5 GHz P4, while increasing the price gap (compare the cost of the 1.0 GHz PIII versus the 1.7 GHz P4 to the anticipated cost of the 1.5 GHz P4 versus the 2.0 GHz P4), potential customers will find it harder to justify buying the higher speed grade processor. Intel may move boat loads of 1.5 GHz P4 processors at $130, but at $562 the number of 2.0 GHz P4 processors Intel manages to move will look like the prime time minutes at the bottom of Jamie Curtis' bucket in her long distance adds.
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