Intel cuts prices by nearly 40 percent

S GOPIKRISHNA

The ongoing price war between chip-major Intel and archrival AMD has become a
more fierce battle now with Intel slashing price by nearly 40 percent. Recently,
Intel announced another round of price cut in its processor family, but this
time by nearly 40 percent. However, the price change would come into effect in
the market only by August 1 since distributors are looking at diluting their
stocks and playing with the present supply versus demand situation.

This is a historic moment for both Intel and the market, as for the first
time in the history, Intel processors are going to be sold at a very low price,
much below the AMD quote. In the last one month, Intel has dropped the processor
prices sharply, across the product segments, triggering off the price war
between Intel and AMD. In fact, AMD also tried to do its bit in the fast moving
Athlon 3000, 3200 and 3500 skews, cutting the prices between Rs 500 to Rs 2,000.
Intel is however getting more aggressive to beat out the competition.

According to market sources, the price war between Intel and AMD is part of
their global strategies to take on each other. And, it is understood that Intel
is facing competition from AMD and its growing popularity across the globe. “AMD
is surely growing across the world and there is no doubt about it. At the same
time, it is true that Intel is afraid of competition, which is very explicit
behind such moves. But, Intel has the muscle power to wage a (price) war and
turn the battle in its favor,” said a leading reseller from upcountry market
in Tamil Nadu, who is also a key dealer for Intel.

Intel's price cut in the fast moving skews has raised many doubts and spun
off stories among the channels. According to resellers, Intel will completely
phase out Celeron and bring in entry-level P4 to Celeron place, while Dual-Core
will be positioned in P4 rank. “We are expecting good-configuration PCs to be
sold below Rs 10,000 and mid-range P4 machines at Rs 14,000. This is something
which industry totally unexpected and it will surely spur the PC growth in the
country,” opined a leading reseller from Chennai.

“Celeron processors are already not available with the distributors and
whatever is available in the market, it is only through parallel import,” said
another reseller from Chennai.

There is also news that Intel is going to appoint 'Distribution Associates'
(similar to sub-distributors) under the national distribution partners. Supreme
Computers, Vajawat and RM Computers are the likely names for distribution
associate in Chennai.

“Intel presently dumped some goods with these probable Distribution
Associates and they are selling at a good price, which even the national
distributors could not offer in business. So, people (other resellers) are
buying products only as and when they require and overall, the product movement
is very slow now,” confirmed another leading sub-distributor in the market.

Key channel partners, who are close with Intel, have confirmed that Intel is
going to appoint Distribution Associates in business. “The very announcement
of Intel's major price cut by July 23 has sent shivers down the spine of AMD
and its resellers. And, AMD sales has already dipped over the last month,”
said a reseller from Coimbatore market.

When contacted Ashok Nair, National Sales Manager, Intel, for his comments on
the price war and appointment of Distribution Associate, he said, “Introducing
a new channel layer in the distribution structure was in proposal for long and
we have not finalized or announced it yet.” But, Nair, refused to comment on
the price cut issue.

Similarly, AMD sources are also refusing to divulge any information on the
price cut and future developments. But, it is understood, from reliable sources,
that AMD is also bracing up for the war. And, after Intel's major price cut
announcement by July 23, AMD will release their new list of prices.