Last week-end when I wrote to you, the summer heat had not percolated the channel, and most part of it was hunky dory.
In a span of just five days, two the chip war has intensified. AMD on Wednesday lured channel partners to move on to the upgraded version of Opteron by slashing the prices by as much as 35 percent.
The offer comes within a fortnight after Intel officially launched its Nehlam processor. Even as analysts and AMD said that Nehlam is mostly based on Opteron, AMD this time around is leaving no stone unturned, and is the first one to aggressively market the updated version of its Opteron processors.
We can expect some aggressive ‘corrected’ pricing on Nehlam very soon. I am now willing to look at the larger picture now that Intel is talking about shipping Nehlam.
Intel in January had announced some drastic cuts in its CPU prices for 1000-unit shipments. The company was offering 40 percent off for its top-of-the-line Q9650. Intel was somewhat forced to slash the prices of its Core 2 Quad chips as AMD’s recently released Phenom II processors managed to provide an impressive performance, while also offering an attractive pr ice tag. However, Intel’s price cuts haven’t remained obscure to AMD, which has also adjusted the price of its new Phenom II processors.
Since the price cuts at both ends are drastic, dramatic, and sudden, I am yet to fathom the reaction they have on the channel community at large. While the benefits may be immediate, I am wondering whether they are also long lasting, and if not, how it impacts the channel business.
It is not now uncommon that once Intel or AMD makes a new announcement, the other slashes product prices by a very heavy discount. But what are the serious repercussions of this? Once the bubble bursts, price corrections are bound to happen. While you as a reseller may be taken in by the immediate huge discounts, have you ever stopped to ponder on whether it will reflect on your credibility in the long run?
One can argue that these are business decisions, and that the community is passing on the benefits given to them by Intel and AMD, however, short-lived those might be. But the relationship that you have developed with your customer is not for a short term
Please write to me on what you feel about it. And so till the next weekend…