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AMD price cuts in april

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Last response: in CPUs
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March 18, 2007 2:26:15 PM

All these price reductions are a two edged sword. Sure, its real nice for the person who is building a machine after and I like to save money as much as anybody else, but the reductions also have a effect to cause people to hold off on buying until then. That means lost sales and income for the companies. It has a third effect in making people who already bought a cpu at what they though of as a cheap price feel burned for not holding out a little longer or they have resentment toward the company for ripping them off.

From the company's standpoint, a price reduction means they make less income per unit produced. That's not good for the balance sheets or for total income reports. In the case of people who hold off until the sale, it means a further reduction in today's profits, causing an even larger profit loss. Then there's that third effect. If I bought a cpu last month and paid $600 for it and then see it being sold for $300, how do I feel about the company who ripped me off for $300?

Ok, price wars have their benefits for consumers. We all want extra money to spend elsewhere and I don't object to that. But at some point, unless I'm in desperate need of a computer now, I just turn hermit and don't buy anything, always waiting for the next price cut. People talk about FUD, but it becomes the companies themselves who feed the FUD and in the end everybody looses. Unless, of course, you managed to buy that new cpu just before the price war ends and the prices shoot back up to where they normally would be.
March 18, 2007 2:38:12 PM

That price for the x2 5200 and 5000 sounds nice, I paid 200 for my x2 4200, nows its 110 dolars, I had thought about putting it on ebay and replacing it with a 5000 until the x4 came out, but I feel like i would be cheating myself., cause now i could probably only get 85 bucks for it on ebay
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March 18, 2007 4:57:22 PM

Based on Johnny's link, I came up with
FX 74 - $900
FX 72 - $660
Athlon64 X2 6000 - $238
Athlon64 X2 5600 - $192
Athlon64 X2 5400 - EOL
Athlon64 X2 5200 - $169
Athlon64 X2 5000 - $156
Athlon64 X2 4800 - $129
Athlon64 X2 4600 - EOL
Athlon64 X2 4200 - EOL
Athlon64 X2 4000 - $100
Athlon64 X2 3800 - $72
Athlon64 X2 3600 - $69
March 18, 2007 4:57:34 PM

Could this so called "Price War" be the end of the duopoly as we knew it? It used to be that you could buy and AMD and Intel processor of about the same performance for about the same price. It seems to me like the Price/Performance uniformity is falling apart now. It seems to be falling apart more so for AMD than Intel though which really sucks for AMD considering the position they are in and the fact they have at least a 6mo wait before K10 for desktops come out.

I don't understand why AMD is having such a hard time pushing thier product right now, and from my view point it doesn't seem like they are. So why would they be doing the fire sale prices?

My only thought is that AMD is in a Market share at all cost battle. They must really want to get/stay entrenched with the OEMs to be positioned for when their capacity increases and they have Barelona released.

Intel's pricing seems to be more evolutionary with their products. As the low end P4s dry up, the C2Ds have to drop to the $100 price point as the new low end product.

AMD's pricing seems to be more "Price Warish" in that they are lowering the Price/Performance ratio against Intels products to create a greater demand for their product.

It does look like now is the time to buy AMD if you don't OC. Not even the Intel upgrade path is really justifying going Intel with me right now. I typically won't spend more than $170 on a CPU or MB anyway.

Flame on :wink:
March 18, 2007 6:07:36 PM

http://seekingalpha.com/article/24929
"So the 50% gross margin plus or minus a few is still our goal for 2007."

How are they going to manage to pull that off with continually tanking prices and Barcelona, in limited quantities, in late summer to come to the rescue?
March 18, 2007 6:10:02 PM

Quote:
If these estimates are correct, then AMD must enjoy losing money... wow.

Looking at their strategy, it appears they are working to move agressively to 65 nm, otherwise this does not make any sense at all.... they are still heading for losing Q2, this will just make it worse.


It has been reported that AMD will transit Fab 36 to 65nm fully around mid-2007. The price listed is possible, but with a very low margin. :?

And, more importantly, this price list will be competitive with Intel's price cut at 22nd April. :wink:
March 18, 2007 6:10:50 PM

Quote:
http://seekingalpha.com/article/24929
"So the 50% gross margin plus or minus a few is still our goal for 2007."

How are they going to manage to pull that off with continually tanking prices and Barcelona, in limited quantities, in late summer to come to the rescue?


With a low-margin GPU business, I don't even think AMD can sustain a 40% gross margin.... :?
March 18, 2007 6:14:56 PM

April Dual Core Prices, various sources
QX6700 - $999
FX 74 - $900
FX 72 - $660
Q6600 - $530
FX 70 - EOL
E6700 - $316
X2 6000 - $238
E6600 - $224
X2 5600 - $192
E6420 - $183
X2 5400 - EOL
X2 5200 - $169
E6320 - $163
X2 5000 - $156
E4400 - $133
X2 4800 - $129
E4300 - $113
X2 4600 - EOL
X2 4200 - EOL
X2 4000 - $100
X2 3800 - $72
X2 3600 - $69

Edit: I updated the Quad FX numbers (that even Baron doesn't seem to care for :p ) since it seems the indicated cuts are for the "real" prices of two CPUs combined. @qc, I expect more cuts, the way things are going, so I'll just say "April" instead of Q2 :D 
March 18, 2007 6:17:02 PM

Quote:
Q2 Dual Core Prices, various sources
QX6700 - $999
FX 74 - $800
FX 72 - $560
Q6600 - $530
FX 70 - EOL
E6700 - $316
X2 6000 - $238
E6600 - $224
X2 5600 - $192
E6420 - $183
X2 5400 - EOL
X2 5200 - $169
E6320 - $163
X2 5000 - $156
E4400 - $133
X2 4800 - $129
E4300 - $113
X2 4600 - EOL
X2 4200 - EOL
X2 4000 - $100
X2 3800 - $72
X2 3600 - $69


More to be added:
http://forumz.tomshardware.com/hardware/modules.php?nam...

E2140: $74
E2160: $84
:wink:
March 18, 2007 6:18:50 PM

Quote:
In fact, the Q1 gross margins may fall below 35%, if this happens watch their stock hit 11 or 12 the day after.


Yes, probably. :?
March 18, 2007 6:57:11 PM

i wonder, what is the price for these K8 processors once Barcelona and Agena is out on the market?i think i may get it for free, lol...
March 18, 2007 7:07:21 PM

That's amazing, but I want a price drop on the s939!
A 4800+ would be a cheap & huge upgrade of my 3000+.
March 18, 2007 8:31:14 PM

Quote:
That price for the x2 5200 and 5000 sounds nice, I paid 200 for my x2 4200, nows its 110 dolars, I had thought about putting it on ebay and replacing it with a 5000 until the x4 came out, but I feel like i would be cheating myself., cause now i could probably only get 85 bucks for it on ebay


Was gone a few hours and just got back and read through the others comments. Of couple of Jack's comments are telling. AMD figured on a 50% gpm and they aren't making it. Their margins may fall below 35%, so what happens then?

Back in the old days of gas wars between various gas companies, people (including me) enjoyed the price drops but it was murder on the station owners. Many people got mad at the station owners because they thought the owners were ripping them off in normal times. What they didn't realize was that both the gas companies were discounting the gas and the station owners were often selling at a loss. Many station owners went out of business.

This war between Intel and AMD seems nice to us consumers and I admit that if I was building a computer right now I'd happily buy a cheap cpu, getting the very top of the line for less money then what the bottom cpu cost a few months ago. But what about the future? If AMD made a business model based on 50% gpm and it only makes 35% how does it pay off the loans, or make further investment, R&D, etc? At some point, even Intel, big as it is, will start to hurt.

Now way can I say what's going to happen. I hope all ends well and things get back to normal with two companies competing for our money. If Agena or Kuma, or Barcelona come out at a good price break with good performance, I'll hop on the bandwagon and buy while the buying is good. If AMD stock drops to 11 or 12, I might even buy back in. But at the same time, it leaves me feeling a bit uneasy about the future with the companies and their products.
March 18, 2007 8:44:41 PM

Quote:
Myself, I would pay a little more for the CPU knowing that the extra money was going into future development to give me better products in the future to play with...

QOTD!
I agree too, within reason of course! ;) 
March 18, 2007 9:26:11 PM

Quote:
In fact, the Q1 gross margins may fall below 35%, if this happens watch their stock hit 11 or 12 the day after.


Yes, probably. :?

What is scary --- AMD's presentation to investors and underwriters (loans) showed their business model successful so long as they maintained 50% gross margins and 30% market share....

At the moment this does not appear to be achievable, they may be in real troubl... perhaps after Barcelona ramps and R600 gets a good foot hold margins will creep up, but GPU margins have never sustained 50% GPM, 40% is more like it, which means CPUs will to be over 50% to be capable.

Costs may also be a factor driving AMD to 65 nm on R600....

Jack Two words......Smoke screen.
March 18, 2007 9:41:12 PM

Jesus! Can they afford to do that? :?
Quote:
Two words......Smoke screen.
:lol: 
March 18, 2007 10:08:45 PM

Quote:
Jesus! Can they afford to do that? :?
Two words......Smoke screen.
:lol: 

All depends. What was it that P.T. Barnum said? You can fool some of the people all the time and all the people some of the time, or something to that effect. If AMD has been trying to fool people, it can get away with it for a time, even if it involved fooling all the people. But at some time, they have to produce a product, something other then pictures, promises, and marketing hype.

If what they're doing is what Tanker said, "Smoke screen", well, we can think back to the Enron scandle a few years ago. Personally, I don't think that is what's been happening. I sincerely hope not. Still, even if they're on the up and up, the question remains, can they afford to keep taking on water before getting into real trouble and sinking like the Titanic.
March 25, 2007 1:24:52 AM

One thing that no one seems to have picked up on in all of this is that AMD apparently have an excess stock of the current CPU's and they are going to try to clear their warehouses.

If you have excessive stock levels, it can cost more to keep it than to sell it off at a reduced price.

Are AMD just making space to start production of their new CPU's, maybe they just want to make sure they have no old stock left once the new product is available, I know I wouldn't buy the older CPU if the newer one is only a little more expensive, has much better performance and fits the same socket, as it is suggested.
March 25, 2007 1:58:18 AM

I think they are trying to keep their market share because they feel that the K10 will be a hit and it will give them increased sale at higher margins.

Maybe they don't want to have to compete with their own outdated CPU's when Agena hits the market? Intel had to with the Netburst processors and it cost them sales on more profitable technology.

I just find the whole thing strange because it is not in reaction to anything Intel has done. I would have figured AMD was gaining Market share and owning the low end with their pricing structure months ago.

Disturbance in the force I feel, meditate on this I will. hehehehe :?
March 25, 2007 4:37:29 AM

Quote:
I think they are trying to keep their market share because they feel that the K10 will be a hit and it will give them increased sale at higher margins.

Maybe they don't want to have to compete with their own outdated CPU's when Agena hits the market? Intel had to with the Netburst processors and it cost them sales on more profitable technology.

I just find the whole thing strange because it is not in reaction to anything Intel has done. I would have figured AMD was gaining Market share and owning the low end with their pricing structure months ago.

Disturbance in the force I feel, meditate on this I will. hehehehe :?


What I think is the other way round. Did you remember the price of AMD CPUs fell in December? The OEMs are dumping excess inventory now as well as the end of last quarter. To gain revenue, AMD must lower the price to get money out.
March 25, 2007 4:47:51 AM

Quote:
I think they are trying to keep their market share because they feel that the K10 will be a hit and it will give them increased sale at higher margins.

Maybe they don't want to have to compete with their own outdated CPU's when Agena hits the market? Intel had to with the Netburst processors and it cost them sales on more profitable technology.

I just find the whole thing strange because it is not in reaction to anything Intel has done. I would have figured AMD was gaining Market share and owning the low end with their pricing structure months ago.

Disturbance in the force I feel, meditate on this I will. hehehehe :?


What I think is the other way round. Did you remember the price of AMD CPUs fell in December? The OEMs are dumping excess inventory now as well as the end of last quarter. To gain revenue, AMD must lower the price to get money out.

Yeah, this is the gray market that causes this.... OEMs take surplus CPUs and sell them just above costs back into the channel. As such, AMD is competing with itself.

I would expect the inventory of AMD would gain a record high in this quarter. :?
March 25, 2007 4:57:31 AM

Quote:
Yeah, also --- Mercury Reseach had numbers out that Intel's product mix was roughly 50% dual core and 50% single core, where as AMD was 33% dual core.

As dual core becomes more a standard, it appears AMD may have an over abundance of single core inventory that they simply cannot sell....

Loose argument though as they seem willing to push the dual core prices even lower.

But they have single core A64's, at prices once occupied by Semprons only a few months back.


In fact AMD should now produce New Gen. Arch. CPUs and transit to NGA faster. 8)
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