Chip Price Cuts, Winter 2007

Is AMD Finally Getting More Competitive, Or Is This Desperation?

Introduction

Since the early summer of 2006, the processor market has been the story of Intel's Core 2 Duo. Built on a 65 nm process, with a large cache, running cool, and easy to overclock, this has been THE chip to have in your box.

AMD has been plodding along, but doing financially ok because of one buyer that seems to buy their chips no matter what these days. After year after year of Dell not wanting to even consider an AMD product, now they can't seem to get enough of them. In the meantime, AMD continues to make their own dual processor chips, the X2 line. While it's a decent chip, before the most recent price cut, their prices were simply not in line with the performance offered. AMD's X2 is transitioning from 90 nm to 65 nm technology, but that means that most of the line is still on the larger and less power efficient technology.

AMD recently cut their chip prices to get them more in line with the comparable performance available from Intel. In my view, this has been long overdo, and hopefully will get them back in the game for the time being. I'm going to focus on two areas of the market: the low end, and the middle ground. At this point, AMD really doesn't have much to compete at the high end of the market as most are thoroughly unimpressed with the QuadFX project, but alas, I digress...

The Low End

In the low end, cutting the price of the Athlon X2 3800+ is a great move. For a little more than a hundred bucks, we can get a budget dual core processor in our econobox. I'm talking specifically about the Athlon X2 3600+ for $105, or the 3800+ for $109 (those are the prices from NewEgg today). For the bottom end of the market, there is no reason to not own a dual core processor, and a nice one at that. To get anything cheaper, would mean to shift to the warmer running Pentium D chips (the Pentium D 820 sells for $105), which aren't as fast, or an outdated single core processor. Remembering that the Pentium D chip cores don't directly communicate, and the entry level Athlon X2 does, makes the AMD chip the clear winner at this end of the market. For the chip maker AMD, that built their reputation and devout followers on offering equivalent performance for less, this is clearly where they want to be.

AMD may own this segment for quite some time, as for the next generation of Celeron processors, which are rumored to be designated the E2xxx series, it is anticipated that they will be single core chips.

Middle Ground

Moving up to the middle ground becomes more complex. Seriously, the chip comparisons get very complicated. Here, we have the entry level Intel Core 2 Duo chips priced at $175 for the least expensive Core 2 Duo, the E4300. Moving up gets us to $187 for the E6300, $222 for the E6400, and on up to $314 for the E6600. Notice that the price increases significantly from the E6400 to the E6600. More than just a clock speed increase, from 2.13 GHz, to 2.4 GHz, the cache also doubles from 2 megs to 4 megs to account for the price. This puts the performance of the E6600 at the top of the middle end, and bordering on the high end. Also notice that there is no "E6500" processor in Intel's line up, nor a chip that sells in the mid to upper $200 range.

In the latest round of price cuts, AMD is attempting to fill that small gap in Intel's current line up. AMD has positioned the Athlon X2 5000+ to sell for $215, which puts it right below the Core 2 Duo E6400. Moving up the AMD line, the 5200+ is priced at $239. Unfortunately, the 5200+ only doubles the cache, which adds very little performance in the benchmarks so far. Whether these two Athlon X2's seriously approximate the Intel E6400 has been a matter of serious debate, but they certainly come close on many applications, and exceed it on a few.

Moving up the AMD line takes us to the Athlon X2 5400+ for $279, and on to the 5600+ for $325 which is exceeding the E6600's price tag, but not the performance. I think AMD has priced the 5400+ right, but the 5600+ probably won't get too many takers even at that price. Realistically, it should be priced at &299, and I'm still not sure how it would sell. Also, we need to remember that while a $20 difference may be crucial to sales when the chip is selling at the $100 mark, when we're up in $300 territory, it becomes a lot less crucial to the performance crowd that routinely drop hundreds of dollars on a graphics card as often as they change their socks.

While this may all seem neat and tidy, it's not even this simple. Add in overclocking, and the pendulum swings strongly in favor of the Core 2 Duo line. Those chips across the line, but especially the e6300 and E4300 are phenomenal overclockers. And as much as the Intel products love to overclock, the AMD chips don't. I don't overclock anything personally, but when a sub-$200 chip can be coaxed into a performance that rivals the fastest processors on the market, it has a certain appeal, even if only for something to have as a possibility down the road. The Athlon X2's don't have anywhere near that potential in most people's hands.

Let's also not forget that the chips don't work in isolation. In general, the AM2 boards for the Athlon X2's are generally less expensive than an equivalent board would be for the Core 2 Duo chip. For the especially price sensitive, this can be an important consideration. However, the Athlon X2's need the more expensive RAM, DDR2-6400, as opposed to the DDR2-5300 which can even out partially the price of the more expensive board.

Also, while this is the current landscape now, this is a very dynamic segment of the computer market. Specifically, Intel is rumored to be planning some price cuts of their own. The expected date is April 22nd. The E6600 will go down to $222, which will take all of the Athlon X2's, except the 6000+, out of the competition unless they go seriously down again, which I doubt AMD will be able to do and still make some money. Also, in June, Intel is expected to release a E6320 chip (and a E6420) which will double the cache of the current E6300 to match the higher priced chips.

Conclusion

I did all of this research, but it is not simply an academic exercise for me. With my current desktop down for the count, I am going through this to build a new desktop machine. While I don't want to have to wait ten weeks, I think the best thing for me is to wait for the next round of price cuts. While the Athlon X2 5200+ is enticing, and almost as fast as the E6600, it's worth the wait for me to get "the real deal."

I'd welcome your comments to fine tune this analysis; I've seen many other users struggling with the same issue on several forums.

--Jonas