Perhaps It’s Just Business After All…

Recent stories about impending Intel price cuts, recent ‘stealth’ price cuts by AMD and the delays of Palomino being the result of behind the scenes problems have done their part to help the spread of rumors and increase the stress of technology buffs as well as investors. Sometimes, however, things really are what they are claimed to be. No ulterior motives, nothing sinister, no conspiracies to hide the truth. Some plausible and logical reasons may actually exist when one takes the time to actually research. Assuming of course, that everyone is telling the truth…!

As for the stealth AMD price cuts, it appears that possibly this was actually a price war between AMD distributors, and was not a price cut from AMD. The speculation is that a few distributors with excess inventory were trying to get rid of some product prior to the next official AMD price drop, which will occur shortly. Since manufacturers typically do not provide any kind of price protection, those who keep inventory (such as distributors) need to pay close attention to their stock and take appropriate measures to keep from losing money on the ‘older’ and higher cost parts.

The publicized Intel price drops appear to have been scheduled in several months ago, rather than a panic move due to slow sales. Apparently the normal price drop in the middle of this month (a few percentage points off most PIII and P4 parts) will be followed by a larger P4 price drop in conjunction with the intro of the 1.7GHz part. This is actually fairly standard practice for a new speed grade introduction, as it takes the top pricing spot and the slower parts get pushed down the scale. What has caused the controversy is the alleged size of these price reductions – as much as 51%. Once again, rather than a panic move, the information crossing my desk is that Intel has been planning an aggressive April ramp of the P4 since late last year, and they are now preparing to execute that plan.

On a related note, an editorial on Overclockers.com stirred up a bit of controversy when the author suggested that AMD is not being forthright in the reasons given for delaying the desktop Palomino. After an exchange of emails that resulted only in a discussion of possibilities with no hard evidence, I decided to talk directly with AMD product marketing. Though I got no hard evidence here either, the firm stance of AMD is that they have stayed with the TBird on the desktop because it is scaling much better than anticipated. This has allowed them to focus their resources on the mobile market, and the Tbird will not fit here.

Repeated questions (which could probably be called nagging questions) about possible production problems, roadmap changes and infrastructure issues were all denied, though questions about any cost savings or resource considerations were not answered directly. The impression I was left with is that AMD may simply feel that they cannot focus on too many product launches at once, and decided that the mobile part would provide a better return on investment for the resources they have available. Anyone who has been involved in a product launch knows that there is a lot more involved than simply making the parts, and there is a huge amount of effort involved from many different departments.

One of the dangers that companies face when publishing a public ‘roadmap’ is that people tend to cast it in stone, even though it is imperative that management make adjustments to plans as the competitive environment changes. Investors don’t like surprises, and with more people investing their hard earned cash, particularly in the bumpy technology sector, any unexpected moves are likely to be met with suspicion and fear. Recent stories and associated controversy may simply be a reflection of this. Of course, as with all things, time will tell.


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