Intel cuts CPU prices
Summary
In January 1998 Intel cut its processor prices by about a third. Afterwards a Pentium II at 233 MHz cost 268 dollars, and the 333 MHz version was available in larger quantities for 722 dollars. Intel wanted to switch its entire production to the Pentium II within the same year.
Ideas
- Price cuts accelerate the switch to a new processor generation.
- The fastest version stays expensive, while entry-level models become cheap.
- A manufacturer steers the market by ending production of older models.
Insights
- With processors, the manufacturer decides through price and production when a generation becomes obsolete.
- The price range between entry level and top model shows where the manufacturer makes its money.
Facts
- After the cut, the Pentium II 233 cost 268 dollars.
References
Critique
- The report gives no reasons, such as competitive pressure from AMD and Cyrix, that would explain the price cut.
Recommendations
- Buy hardware one level below the top, where price and performance fit together best.
- In procurement, take announced production changes into account to keep spare parts available.
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