Intel cuts Pentium prices
Mon May 27, 3:17 PM ET
Michael Kanellos CNET News.com
Intel slashed the price of Pentium 4 processors for desktops and notebooks over the weekend by up to 53 percent, an annual spring ritual designed to stimulate demand for its premier PC chip.
The Santa Clara, Calif.-based chipmaker cut the price of the desktop version of the chip from 12 percent to 43 percent, according to a price list issued by the company. The 2.4GHz version of the chip dropped from $562 to $400, a 29 percent drop, while the 2.26GHz and 2.2GHz versions of the chip fell from $423 to $241, a 43 percent drop. Other Pentium 4s were cut from 12 percent to 32 percent.
Notebook chips dropped even more. Pentium 4 notebook chips have not sold as well as expected, according to analysts, especially in the corporate market. The chip is primarily usedin the thicker "desktop replacement" notebooks rather than the "thin and light" versions more popular with corporate America. Both price cuts have been expected.
The 1.8GHz mobile Pentium 4 fell 48 percent, from $637 to $348, while the 1.7GHz version dropped from $508 to $241, a 53 percent decline. The 1.6GHz version was discounted 51 percent, from $401 to $198. The company also marginally cut prices on Pentium III mobile chips.
The price cuts will lead to cheaper PCs. Earlier this year, some PC makers raised prices and changed configurations of some consumer models because of rising prices on flat-panel LCD monitors and memory. That emerging trend has largely reversed itself. Although flat-panel monitors remain in tight supply, memory prices have been dropping. Many PC makers have also been increasing the size of their in-store rebates to encourage sales.
AMD, Intel's rival in processors, will likely cut prices to match Intel's cut. AMD typically announces price cuts a day or so after Intel. The Sunnyvale, Calif.-based company is also expected to soon release "Thoroughbred," a faster version of its Athlon chip made on the 130-nanometer manufacturing process, for desktops. The company is currently shipping the chip to PC makers, a spokesman confirmed, and will release the chip to the public shortly.
In the past, the company has introduced new chips at Computex, a large computer show in Taipei, where many contract manufacturers and motherboard makers debut new products. The show begins the first week of June. A notebook version of the chip came out in April.
The massive spring price cuts for Intel and AMD are something of an annual fixture. LastMarch, Intel executives promised that the Pentium 4, then only found in high-end consumer PCs, would displace the Pentium III in desktops by the end of the year, a rapid turnover accomplished generally by price cuts. Prices were cut by up to 60 percent in Apriland May. By the end of 2001, the Pentium 4 had displaced the Pentium III on desktops.
The price cuts also had a negative effect on AMD's balance sheet. In the first quarter of 2001, AMD turned a profit and saw its market share increase from 17 percent to 21 percent.
Since then, AMD has posted successive losses due to price cuts and declines in the flash memory business, while its market share has settled down 18.2 percent. After the price war began, AMD plunged into the red. The company, however, has managed to make greater inroads into the notebook and server market. |
