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To: dale_laroy who wrote (57378)	10/5/2001 5:09:34 PM
From: Elmer	Respond to of 275872

What you have to realize is that, if Intel is to sell more P4 processors than PIII processors, the only way to do that is to sell them cheaper than PIII Not really. One way is to make the P3 unavailable. Intel did that when they stopped taking new orders for P3 desktop designs. EP

To: dale_laroy who wrote (57378)	10/5/2001 5:24:25 PM
From: wanna_bmw	Read Replies (1) \| Respond to of 275872

Dale, Re: "if Intel is to sell more P4 processors than PIII processors, the only way to do that is to sell them cheaper than PIII" You are missing something, I think. What you have to realize is that the price of the CPU has to be within the margins to sell PCs based on the total cost of the system, and which market segment it fits inside. Before this quarter, Pentium 4 systems cost >$1500, which was unacceptable by today's standards. A couple years ago, $1200-$1500 was the mainstream price point, and the performance PC cost upward of $2000. Today, consumers gravitate towards the $900-$1200 price range, with performance PCs costing upwards of $1500. Right now, 1.8GHz Pentium 4 systems can almost make it inside mainstream pricing, and that's with RDRAM. Dell is offering one at $1249 after rebate. dell.com We see these chips sell for at least $230 on Pricewatch, but I would be willing to bet that Willamette ASP is closer to $180. I assume you are speaking in the long term, but Northwood is set to launch at the $500 range. This is clearly higher than Willamette ASP. In the short term after launch, I can see ASPs dropping to Willamette levels, but still staying a fair amount above. Even though Northwood is set to build more volumes, it isn't going to replace Willamette for several quarters. In the longer term, though, when the markets make another transition towards low end, prices may drop even further. In that case, I'd agree with you that the long term trend is going lower. However, if you are meaning to say that Northwood will immediately have lower ASPs, then I emphatically disagree. wanna_bmw