Intel reduced the price of its Pentium 4, Pentium III and Celeron 1GHz chipsets last week, turning the screws on major rival AMD while making way for its latest P4 2.2GHz technology.
The channel greeted the news with enthusiasm last week as distributors prepared for a significant uptake in sales to follow the scheduled price drop. Intel schedules several price reductions throughout the life cycle of its products and its recent decrease saw prices come down as much as 10-12 per cent.
Intel's area sales manager of distribution, Philip Cronin, said the move is indicative of Intel's strategy reducing the price across its performance, mainstream and entry-level chipsets when a new technology is introduced.
"It's in line with our strategy of moving our newer products into the mainstream as soon as possible," said Cronin. "When we get some new technology coming in at performance-level two, products at performance-level 2 (the P4 1.8GHz and 2.0GHz) move down to performance level, and what was at performance level (P4 1.6GHz an P4 1.7GHz) moves down to mainstream level, and what was mainstream then becomes entry level (P4 1.5GHz).
Cronin said the decision to reduce prices is also a bid to increase the chipmaker's presence in the CPU market.
"We are 600MHz ahead on performance for what effectively is $100 more, so the price/performance factor is now well in our favour and we intend to rapidly grow that gap.
"What we are trying to achieve this year is the acceleration of the gap between Intel and AMD," he said.
John Robinson, AMD country manager of Australia/NZ, was unfazed by Intel's announcement. He said AMD has been actively winning market share from Intel and that Intel's decision is, in part, a result of AMD's success.
"We have continued to ramp up market share. We will grow faster than the market will, and that means we will grow market share over our main rival," he said.
Meanwhile Jack Zhong, CEO of Intel distributor Todaytech, said the channel experiences a dramatic rise in sales after a price reduction.
"Most definitely, every time Intel reverses its price the channel enjoys the discount," he said.