AMD cuts processor prices

Advanced Micro Devices (AMD) has cut the price of some of its processors in the hope of stimulating demand for its alternatives...

Advanced Micro Devices (AMD) has cut the price of some of its processors in the hope of stimulating demand for its alternatives to Intel's Pentium processors.

The flagship Athlon XP 2200+ now sells for $230 (£147), and the XP 2100+ is now priced at $180 (£115).

AMD's fastest mobile chip, the Mobile Athlon XP 1800+, remained at $335 (£214), but the Mobile Athlon 1700+ price was cut to $210 (£134).

The fastest Athlon MP chip for workstations and servers, the MP 2100+, is now priced at $224 (£143). Duron processors received the largest cuts, with the 1.3GHz Duron for desktops falling to $64 (£41), and the mobile 1.3GHz Duron cut to $120 (£77). All prices are in 1,000-unit quantities.

Companies typically cut processor prices before new chips are released, so that the older technology falls into line underneath the newest processor.

"When it comes to the cost-performance-value war, AMD is winning," said Bert McComas, founder and principal analyst at Inquest Market Research. "Intel has been gaining momentum in the processor wars over the past six months, and AMD needs to reduce prices just to keep everybody warm."

The second half of the year is significant for chip makers and the PC vendors they sell to, with back-to-school and holiday purchases driving sales.

AMD's second-quarter financial results were worse than expected, with the chip maker posting a net loss of $184.9m (£118.2m) on sales of $600m (£384m), down sharply from last year's second-quarter results.

"AMD has proven willing to suffer in order to hold market share. They must keep the confidence of the market and users" and will post losses in order to maintain research and development spending, McComas said.

Hewlett-Packard (HP) is the only PC manufacturer among market research firm IDC's top five vendors to feature desktops and notebooks with AMD processors.

Several smaller vendors, such as ABS Computer Technologies and Falcon Northwest Computer Systems, use AMD processors, but the volume from such PCs pales next to Intel's major customers: Dell Computer, IBM, NEC, Fujitsu Siemens Computers and other systems from HP, all ranked within IDC's top five by sales.

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