<But I keep coming back to what I believe is the key element of the story - the Xeon pricing structure. If I understand the market reports, the Xeon sells at $950, $1,850 and $3,950 for 512K, 1M and 2M cache versions. Unless I'm missing something, that means Intel is selling SRAM at about $2,000 per MB and is throwing in the processor for free.>
The thing is that each product is targeted towards different market segments. For servers, L2 cache is vital. Not many IT departments will complain about Xeons selling for $2,000 or $4,000 if the entire server costs over $40,000 anyway. But for workstations, a large L2 cache isn't as vital. That's why a Xeon with the minimum L2 cache sells for much less, because they're meant to go into workstations that don't cost more than $10,000. The larger cache versions are meant to go into $40,000 quad-processor servers.
So if AMD sells the server version of the K7 for 25% less than Xeon, they're only going to cut $4,000 off the cost of the entire server. And what happens if, for instance, the unproven server chipset that supports the K7 fails? The damage done could cost the company substantially more than just $4,000.
In the retail market, customers are very price-sensitive. But in the server and workstation market, customers are much more price-insensitive. IT departments care much more about RAS (reliability, availability, and serviceability) than a mere 10% discount.
Tenchusatsu |
