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Intel CPU pricing increases and limited availability for our clients.
skip down to highlighted parts.
We read with great interest some of the posts questioning
processor price increases and product shortages. There was the usual talk of retailers
being idiots as well as people posting where others should look to get the best price.
Well, we were going to post our opinion, but could not due to a .dll problem under
Windows 98.
First, pricing pressures occur about this time each year. People go on vacation.
Manufacturers slow down production. Many people prefer to stay out of the heat and
remain indoors - talking about the heat.
Now here is the real insider information.
We posted it the other day, but didn't make a
big deal of it. According to several informed Intel representatives, there will be a
shortage of most boxed Intel processors for the next 8 weeks - due to a manufacturing
problem.
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VG,and all what is your wild guess for InTC stock price around Oct?
do you think it will be up from here or down from here? considering intel is trading at forward PE of 28 or so right now.
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We were not given any details on the problem. We suspect that Intel is using
this time to emphasize the entry level Celery product. After all, it will be available while
the Pentium II will not be available.
This year, Intel has consistently announced monthly price drops for certain processors.
Therefore, many people waited to buy until after these announced prices occur. Those
waiting included brokers, first and third-tier distributors, and resellers. During the first
week after the recent price drop, many people decided they had waited long enough and
wanted their product immediately. Unfortunately, not everyone who decided to buy then
could get the processors at the same time from the limited supply, and prices remained
high or inched up a bit higher. Eventually, prices drop when the demand settles down.
To make matters worse for end users, both the technical and popular press publishes
quantity 1000 prices to OEMs and resellers for processors. Many users expect to
purchase at that price from retail stores.
In the long run, prices for processors will continue to drop. For the short term, we
suspect certain vendors will be forced to raise prices, or will not offer the product. Intel,
though, is also forcing the issue by making sure that product is not around. As an
Authorized Intel Processor Dealer (IPD), we are to have priority over non-authroized
dealers whenever their is a product allocation problem. However, Intel hasn't announced
a decision to have its Authorized Distributors sell processors only to IPDs.
Our take on the whole topic of pricing and availability is - if your only consideration is
price - then sit tight and buy low. After all, Intel's upper management has been clear
that an Intel processor is an Intel processor. Tray, boxed, imported boxed, open-boxed
or any other marketing term descibes the same Intel processors. It just doesn't matter
to Intel. This means that for many users, the only distinguishing feature is price,
warranty, and convenience - and not the source of the product.
That's a strong pill for some of us to swallow. But like it or not, check out the pricing
services and buy your processor at the lowest possible price. If it turns out to be
remarked, then we suggest that you post in the usenet group that this has been
confirmed by Intel. If your experiences are good, then let others know it too. We also
suggest that you only purchase the boxed processors. During this time period - this will
be your safest purchase.
Second, we agree that it takes a certain level of humility for retailers to admit that they
don't have all the answers. Most retailers on the Internet are very bright and have
learned the hard way to admit freely that they have select experiences in a few areas
and that they are not experts in all areas. Contrary to the image some promote, the
superstore concept for computer sales does not work on the Internet. Niche players
provide the best service, because they can focus on particular product lines.
Superstores are filled with salespeople - and bless their hearts - they may embellish on
the facts of a PC component. The reliance in a superstore is on anecdotes rather than
facts. It's going to take the press a bit of time, but eventually you will read that the best
places to purchase if you want follow-up services are from computer boutiques.
We will continue to offer both boxed and tray versions of the Intel
Pentium II processors. We will only purchase through Authorized channels and
channels which we know are legitimate. We will do our best to keep prices as low as
possible. Two years ago we were forced to raise prices on 200 MHz Pentium Pro
processors from September 96 to December 96. Yesterday, brokers were raising the
prices of the Pentium II processors. Today, we increased prices on 300 MHz Pentium II
processors. An alternative to the boxed 300 MHz processor is the OEM Tray 333 MHz
processor.
We will continue to take processor pricing very seriously. We will continue to use our
same pricing formula, so we cannot match pricing quotes you may receive from other
companies. If we say there will be a delay - then please understand. Our interest is to
make sure that our clients remain informed, and to help dispel FUD in the market place.
Our job is to make sure our clients are happy, and we hope this lengthy explanation will
calm rather than increase concerns about processor pricing. |
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