AMD & Intel Pricing - The Truth

[Midnight Rambler]

This has nothing to do with performance comparisons.

Rather, why is it that all the review and hype sites incorrectly report cost comparisons for CPU's ? More often than not, we see "gray market" prices listed for AMD CPU's vs. retail prices for the respective Intel CPU's.

Case in point: The 1800+ Athlon XP costs $252 in volume, $4 less than volume amounts of the rival Intel chip (P4 1.8). These are the prices quoted by each company.

Yet sites publish bogus information like this: (Info is from The Inquirer, and further propagated by x-bit labs)

"According to the info from The Inquirer, Intel informed its partners about the upcoming price reduction in the desktop CPU field planned for October 28. As a result, Pentium 4 2GHz will appear 29% cheaper, Pentium 4 1.9GHz ? 27% cheaper and Pentium 4 1.8GHz ? 12% cheaper. In the end, the eldest Pentium 4 model will cost around $475, and Pentium 4 1.8GHz - $289."

In effect they are saying that after a 12% price cut on Oct. 28 a P4 1.8 will cost $289, when the truth is right now it sells for considerably less than that before any price cut. If you cut 12% off the current P4 1.8 price ($256) it will come in somewhere around $225 after the Oct. 28 price cuts.


The point in all this is that IMO we should be comparing CPU's in terms of performance for the dollar, not in MHz or some other contrived scale that either company would have us to buy in to. But unfortunately we can't make legit comparisons until people start using the true prices, which are the volume prices set by each company, not the gray market prices or the retail prices.

 

[Wingznut]

What exactly is a "gray market price"? I've heard the term, but I'm not sure I really understand how it works.

 

[Odoacer]

We already use a dollar-to-performance system here at anandtech, why do you think so many people buy AMD? And remeber that the AXP1800+ is AMD's answer to the P4 2 GHz. They are both the best each company has to offer. And the fact that the 1800 can outperform the 2 GHz while still costing almost 300 dollars less is what makes amd the price/performance leader. Comparing prices with a 1.8 P4 and an AXP1800+ is not valid, it should be the 1800 and the 2 ghz.

 

[Adul]

<< We already use a dollar-to-performance system here at anandtech, why do you think so many people buy AMD? And remeber that the AXP1800+ is AMD's answer to the P4 2 GHz. They are both the best each company has to offer. And the fact that the 1800 can outperform the 2 GHz while still costing almost 300 dollars less is what makes amd the price/performance leader. Comparing prices with a 1.8 P4 and an AXP1800+ is not valid, it should be the 1800 and the 2 ghz. >>



While it should be, it isnt because AMD want to look good against a 1.8

 

[RaynorWolfcastle]

Pez,
let's say Dell gets first shot at the 2.0 GHz P4s, after buying x thousands they realize that they will only be able to sell x-2000 2.0 GHz CPUs in their system. At this point, rather than keep the inventory on their shelf they sell it to Joe Blow Computers for something slightly above their price. Joe Blow Computers now has 2000 2.0 GHz P4 @ slightly above Dell's cost. If he were to order the CPUs directly from Intel they would charge him MSRP because he is a small outfit and only needs 2000 2.0 GHz P4s instead of tens of thousands like Dell.

This way Joe Blow Computers has saved money by buying from Dell, or buying from the grey market, i.e. not regular distribution channels. BTW the numbers are fictional I have no ideas what volumes are typical for this sort of thing.

-Ice

 

[Midnight Rambler]

<< And the fact that the 1800 can outperform the 2 GHz while still costing almost 300 dollars less is what makes amd the price/performance leader. Comparing prices with a 1.8 P4 and an AXP1800+ is not valid, it should be the 1800 and the 2 ghz. >>

You just reinforced the point I was trying to make. The 1800 is not $300 less than a P4 2.0. Rather, only when you compare the cost of a gray market CPU against a retail market CPU

Wingz: Ice fairly described the gray market for you. As such, you can see why a manufacturer selling directly in to it can greatly complicate things. An easy way to usually tell if you're buying a gray market CPU is whether or not the seller is an "authorized" seller for the particular manufacturer involved. Warranties are also a dead giveaway. 15 day, 30 day, 90 day ... those are all bogus and are really only provided by the seller, not the manufacturer. An authorized OEM will carry one year from the manufacturer. Retail of course, is three.

As for the issue of volume pricing, which is what the manufacturers quote, the prices are normally based on 10K units.