Columbus (OH) – 2006 brought earth-shattering changes in the processor market with a competition we haven’t seen in many years. Prices have eroded much faster than in the years before. If you have been following our price/performance charts, it is no secret to you the competition between AMD and Intel in the retail market is reaching new heights almost every week. Time to recap what happened in the past half year and check which manufacturer focused on which segment.
Now let us get this one straight first: Falling prices are to be expected, especially over a time frame of six months. So it’s a given that you are getting more performance for your dollar today than what you would have received in October 2006. However, it is not so clear, where these shakeups of these prices happened.
A quick look back
AMD had a fantastic 18-months or so run until the fourth quarter of 2006, capturing market shares from Intel left and right (we are looking at the dual-core desktop segment only), virtually unchallenged. The company owned superior processors and could elevate the price range of its higher-end mainstream X2 processors above $1000. With the arrival of Core 2 Duo and preceding price drops of the Pentium D 800/900 series, AMD was forced to lower its pricing and give up margins to keep the market shares it earned. That strategy took out the bottom from X2 pricing and AMD lost control over the mass market $500+ segment virtually overnight.
Leaving the very low volume AMD DSDC processors (FX-70 and higher) out of consideration for a moment, Intel currently owns the enthusiast segment above $600. The cut-throat competition between AMD and Intel happened way below that mark and this is where it gets interesting for buyers of etail or retail CPU upgrades. And it should remain an interesting market where consumers should see great deals as Intel preps the launch of some speed upgrades for its Core 2 Duo series and AMD will do everything it can to maintain its market share position until the arrival of the Agena quad-core and Kuma dual-core by the third quarter of this year.
Bang for the buck
We will not be singling out processors in this article, but rather split our list of processors into four categories: entry level, mainstream dual-core, upper mainstream, and enthusiast. The entry-level dual-cores are in the space below $200, the mainstream reaches from $200 to $399, the upper mainstream from $400 to $599 and the enthusiast segment represents everything above $600.
To analyze the development of each segment over the past six months, we averaged the processor performance number of processors in each segment to get a clearer view where AMD and Intel are putting their focus on right now and to put a number on the segment improvement in terms of performance increase within the past six months.
We use our performance index as an universal scale to determine the capability of a processor. The index is calculated from a handful of benchmark tests that give an accurate all-around depiction of the level of performance capability of a specific processor. The base processor Pentium 4 2.0 GHz is rated a performance index of 1.00.
Entry level: AMD dominates
Looking at entry level processors first, we can see that, for those who want to spend less than $200, you're not really going to be able to get a whole lot more now than you were six months ago. However, AMD does distinctly edge out Intel in this market.
The average level of performance offered by a sub-$200 AMD processor went up 5%, two percentage points more than Intel. This means that today, AMD's entry level products offer an average of 17% more performance than Intel does. A key reason for that is that Intel is still leveraging 90 nm Pentium D 800 and 65 nm Pentium D 900 processors in this segment to keep the pricing pressure on AMD, who has the superior architecture in this segment.
This observation is very closely tied to the trend we've been watching since the beginning of 2007, with a barrage of retail price drops for AMD processors in the lower end of the mainstream. This pushed a few higher priced processors down to the entry level price range.
For AMD, this is a very unfortunate situation as margins are breaking away – in a time where it would need them most. For the consumer who is looking for an entry-level system either for the kids, to run a basic server or a computer to do all the basic office work, this is great news: Keep your focus on an AMD processor on the low-end or computers that are priced in the sub-$700 range.
Mainstream: Intel takes control
The mainstream dual-core processors are a different story. Intel runs the gamut in this price range. Over the past six months, it has increased its $200 - $399 offerings to offer a handful of more powerful processors than it had in October. The average level of performance for Intel in this price range is 19% greater than it was six months ago.
AMD, while it had a marginal advantage in this segment six months ago, has fallen behind. On average, a $200 - $399 AMD processor now offers 6% less performance than the average Intel processor in this price range.
The reason for this development is the fact that Intel is apparently slowly but surely supplying more Core 2 Duo processors into this space and needs to free the higher-end mainstream for the new FSB1333 Core 2 Duo processors. As long as AMD will not have its Kuma dual-core CPUs available - and we hear that they won’t ship in volume until mid Q3 of this year – Intel’s position in this segment is likely to grow stronger. The average Intel processor in this category and PC systems around $1000 is likely to offer a better value than an AMD model in the next few months to come.
Upper mainstream: A tie, somewhat
Once again, another reversal of fortune occurs when we go up in the price scale. Though AMD's selection of upper level processors is limited, the firm’s processors are priced such that they give AMD an average price-versus-performance advantage in the $400 - $600 level. The average performance of such an AMD processor jumped 12% from what we saw back in October.
This is thanks in large part to the addition of the Athlon 64 X2 6000+ processor, a processor that fits in with the same level as Intel's Core 2 Duo processors and continues to retail below the wholesale tray price. However, we do have to mention that Intel’s apparent disadvantage in this segment could be somewhat misleading: There are only two Intel processors in this segment at this time – The E6700 with a class-leading performance index of 2.12 and the outdated, but high-priced Pentium D 840 with an index of 1.37, which drags Intel’s average number down. Leave the 840 out of consideration and Intel wins this segment with a 12% advantage.
But interestingly, Intel did not change at all in this price segment (and the 840 remains available.) Every processor that was priced between $400 and $600 in October remains in the same price level today, and none of the $600+ processors has yet to fall into this territory. This development showcases the strength of the Core architecture that has allowed Intel to keep the lead on the very high-end of the mainstream market for eight months without changing the clock speed on the high-end.
Nevertheless, put pricing into the general equation, and a high-end AMD X2 processor is likely to put a smile on your face, as they currently represent a great value for the money. If you have to upgrade now, AMD may be worth a look. But if it is absolute performance and if you can wait another few weeks, there will be some new processors that should bump the speed in the $400- $600 segment significantly.
Enthusiast: A no-brainer?
Since we have been flip-flopping throughout this article, let’s go all the way. Intel takes the upper hand in the high-priced processor arena. With the introduction of the QX6700, it boosted its average level of performance for a $600+ processor by 8% from October to now.
AMD also increased its high-level performance offerings by introducing the FX-74, FX-72, and FX-70 processors earlier this year.
What's interesting here, though, is that AMD was actually ahead in this ranking back in October. Intel's ability to edge out its competitor in the $600+ price level has caused the gap between the two to become extremely small. In fact, there's only a 0.005 point difference in the average performance index level between the two in the enthusiast price segment.
Specifically, we've seen AMD's FX-74 processor have a continuous price battle with Intel's EX6800, its most comparable processor in terms of performance. In some weeks, the FX-74 is priced lower, and some weeks the EX6800 is the better purchase.
For full disclosure, it should be noted that Intel's average performance level is dragged down a bit by the Extreme Edition processors, which offer fairly low performance but are priced over $1000 due to their scarce availability.
Individual Intel processors generally beat out AMD in the enthusiast category, with the exception of the EX6800. Unlike the other price levels, which have nicely become dominated by one of the companies, AMD and Intel are really battling it out in the high end. Given the recent price cuts because of this, enthusiast consumers should probably wait a couple weeks to see if these prices will drop down even more. We've seen very few price increases among these processors over the past six months. However, with the FSB1333 Core 2 Duos virtually knocking on our doors, it would not be too surprising if Intel launched a speed upgrade for the very high end of this segment in the not too distant future. We are hearing that Core 2 Duos are running at up to 4 GHz in Intel’s labs, so expect to see faster Conroe and Kentsfield processors to launch soon.
One more thing that we found especially interesting was how close Intel and AMD were matched in the mid-level categorizations six months ago. Looking at the October 6 numbers, the average level of performance offered in each of the non-extreme price ranges is nearly identical between the two companies.
Conclusion: A price battle that is far from over
There are always different ways to look at the processor segment and this article won’t give you any clear indication which processor is the best deal at this time. There may even be processor that do not follow the general recommendation in each of the four segments.
However, the fact that processors have spread out considerably shows that the past six months have been full of heated competition among AMD and Intel, as well as retailers. It's caused a struggle for both companies to find a market segment to call their own.
Of course it is AMD we are looking to right now and we have learned that the recent additions to AMD’s very high-end mainstream were absolutely necessary to provide the company some breathing room and push some processors into the market that are not sold at minimum margins. Clearly, the numbers are made in lower price ranges: And at least from this perspective, Intel has a very comfortable position in the $200-$399 segment.
It isn’t difficult to predict that AMD’s desktop division has a couple of rough months coming up. The new Kuma and Agena cores can’t arrive too soon.
Check back next week as we are currently updating the lineup in our processor charts and return to a detailed price/performance ranking next week.