Prices are falling at AMD: Athlon and Duron reduced

Several of Advanced Micro Devices Inc.'s (AMD's) processors are now cheaper after the company posted price cuts Friday, in the hope of stimulating demand for its alternatives to Intel Corp.'s Pentium processors.

The flagship Athlon XP 2200+ now sells for US$230, and the XP 2100+ is now priced at $180. AMD's fastest mobile chip, the Mobile Athlon XP 1800+, remained at $335, but the Mobile Athlon 1700+ price was dropped to $210. The fastest Athlon MP chip for workstations and servers, the MP 2100+, is now priced at $224. Duron processors received the largest cuts, with the 1.3GHz Duron for desktops falling to $64, and the mobile 1.3GHz Duron cut to $120. 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 in Gilbert, Arizona. "Intel has been gaining momentum in the processor wars over the last six months, and AMD needs to reduce prices just to keep everybody warm."

The second half of the year is a big one 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 Sunnyvale, California, chip maker posting a net loss of $184.9 million on sales of $600 million, 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 Co. (HP) is the only PC manufacturer among market research firm IDC's top five vendors to feature desktops and notebooks with AMD processors. (IDC is a division of International Data Group Inc., parent company of IDG News Service.) Several smaller vendors, such as ABS Computer Technologies Inc. and Falcon Northwest Computer Systems Inc., use AMD processors, but the volume from such PCs pales next to Intel's major customers: Dell Computer Corp., IBM Corp., NEC Corp., Fujitsu Siemens Computers (Holding) BV, and other systems from HP, all ranked within IDC's top five by sales.

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