AMD made an incredibly smart business decision by selling the chips for what they sold them for.
The Reason:
Intel has a little something called NAME BRAND ASSOCIATION
get a clue
AMD buy undercutting the price of so-called "low-end" chips, i.e., the duron 600, 650, and 700 to a level that Intel simply could not compete with gave them an edge in the Techie junk food, always upgrading their systems buyers. PLUS they were able to market that chip to many of the major computer manufacturers once they saw how fast those chips were selling. There was simply no reason to buy and intel celeron 2 chip once people realized that the AMD chips were performing (and overclocking) so well. On the other hand, the intel chips and their respective chipsets, while slower, were more stable.
Now AMD has a customer base and even more important, AMD has built an association with thier chips as (mostly) stable and extremely fast. The Intel name brand association will take years (or now maybe, several long months) to erode. People, the average consumer that is, believes that intel is the fastest chip around. And if they dont believe that, they at least feel like having that little "Intel inside" sticker made their computer superior in some way.
Kudos to AMD for taking such a bold move by reducing their prices by such a large margin. Any person with half a brain could figure out that just making a better chip would do nothing to threaten intels market share. Heck, making a faster better chip for 10 years in a row probably wouldnt have done anything either. Remeber the dancing silver Pentium people? What a marketing sham. People went running to the computer store after they saw that though. Shoot intel couldve been selling rotten cheese to people after they saw those commercials, and they would have bought it without even thinking about it. But since their clever marketing was combined with superior technology, they basically swamped the market.
THAT is why AMD K6-2s and K6-3s are pretty much non-exsistant except for those who built their own systems.
If I were you, and I owned AMD stock I would be cheering for those prices to keep going down. The lower they go, the more reason people have to dump that p3 550 and upgrade to a Duron 600 oc'd to 850. I will be the first one to say that I am that customer.
When I found out how cheap and overclockable those durons were, I dumped my P2450 and RAN down to the computer store to build up my new duron system. I am sure that I am among the thousands of people that did that. I would have never even considerd going to an Athlon or a pentium 3 700. shoot those P3 700 chips were about 250 dollars at the time.
AMD will have me buying their next set of chips for sure. I am now a loyal user. not because their technology is superior, and especially not because of their marketing (is there even a marketing department at AMD?) but simply because now that I am an AMD owner I am looking for reasons to believe that they ARE better.
That is how business is done. That is how big business get toppled. If AMD had not lowered those prices to that level, the hysteria over those chips would have never happened.