With perhaps a month to go before launch, the next big computer chip remains a bit of a mystery, and so every shift in strategy by longtime rivals Intel and Advanced Micro Devices is being teased for hints of the battle to come. AMD has yet to disclose the performance specifications for its new chip, code-named Barcelona, which may help explain why what might otherwise seem a routine price cut by Intel is spurring anxious buzz: Perhaps Intel is conceding it may soon no longer lay claim to the dual title of biggest and fastest.
Intel (INTC), said to be cutting prices as much as 50% for its premier Core 2 Duo line for high-end computers and servers, no doubt expects to find a newly reinvigorated rival nipping at its heels, if not outrunning it, as early as next month. But cutting prices is a move chipmakers make on a regular basis, and one that analysts say Intel’s customers have known about for months. “It always comes down to this: The one who has the best-performing chip in a given segment gets to charge the most,” says analyst Nathan Brookwood, head of Insight64, in Saratoga, Calif. “The one who doesn’t offers discounts.”
But if that’s the case, the cuts may indicate that Intel doesn’t expect to have the fastest chip once Barcelona launches and has planned to cut prices accordingly. “There was a period up until about a year ago that AMD had the performance lead, and so Intel had to slash prices on its Xeon chips just to sell a few,” Brookwood says. “AMD didn’t have to respond.”