Our processor price/performance series continues, with our first installment in 2007. We have tweaked some charts and made adjustments based on reader feedback, as we look at how processor pricing is already making its mark for the new year. Most strikingly this week is the nearly universal large price jumps in the line of AMD processors, after a cascade of price falls at the end of 2006.
Even though we did not publish official analysis articles for the first two weeks of the year, we have still been monitoring processor pricing, giving us now 16 weeks of comprehensive data for several of Intel and AMD processors. That data may get very interesting over the next few weeks when we look at the bigger picture. If you have been following this series, then it may not have come as a complete surprise to you that AMD announced that pricing pressures in the processor market dented the firm's earnings in the fourth quarter.
One of the most significant trends we mentioned in our 2006 summary article was the huge price drop for AMD processors. Some had been falling in price by $10/week or more for over six weeks straight. On the other side, Intel was able to play the Core 2 Duo card, maintaining its processor pricing on the upper end of the mainstream market, while leveraging the outgoing Pentium D 800/900 series as tool to drive down pricing on the lower end. AMD has been caught in the middle but dragged down by Intel's pressure. We will learn more about the impact of this scenario next week, when AMD reports its Q4 results on January 23.
Of course, it's almost common sense to predict that AMD would not be able to sustain that trend and would not continue to accept any price for its products just for the sake of higher unit shipments. And we may be seeing change already. This week, almost all of AMD's processors jumped way back up in price to around where they were in the beginning of November.
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For those who are unfamiliar with our processor price/performance updates, the above table shows the current average e-tail price of several of AMD's and Intel's most recent processors. The relative performance index is computed by looking at six benchmarks that give a representative quantification of the processor's level of performance.
We looked at the following benchmarks: AVG Antivirus for maintenance, Quake IV for gaming, Clone DVD for application performance, Lame MP3 for audio encoding, Windows Media Encoder for video encoding, and PCMark 2005 (CPU) for general performance. We took the benchmark values for each of these and translated them to an equal scale, based on the performance of a baseline processor, in this case the Pentium 4 520, and took the average of the six tests to get the performance index. For example, the Pentium D 950 can be expected to deliver about 1.45 times the performance of the Pentium 4 520.
Our data is missing the Core 2 Duo E6300, because Tom's Hardware Guide has not yet posted official benchmark data for that processor. Last week, Toms Hardware ran an article onverclocking techniques for this processor, but system specifications and benchmark runs did not line up exactly with the test procedures of all other processor, which is why we decided to leave this CPU out of this edition. However, as soon as we believe to have access to reliable and comparable data, we will add the E6300 to this list.
Now, looking at the data, it is very obvious that AMD prices are now on an upswing. The massive price decreases in the previous weeks can be partially attributed to the holiday shopping season, with, from what we hear, the e-tail industry recording record sales and tight supply across the board. However, the prices sort of just stayed in limbo for the first part of 2007. The prices did begin to creep up a little bit on both January 5 and 12, but this week they catapulted back to pre-holiday prices, causing a sense of uncertainty about where the new settling point is.
Most notable is the Athlon 64 X2 4400+, which by far had the most prolific history of price drops, with eight continuous weeks of price decreases. This week, it came back with a big swing, marking a 22% jump of $48 from $220 to $268, the second largest week-to-week price jump we've seen for the processor.
Also of note is the top-level processor, the FX-74, which increased $99, or 9%, week-to-week, from $1112 to $1211 for the pair. The FX-74 launched at pretty reasonable e-tail prices and even continued to dip more before Christmas. Now, however, it is placing itself more in the range that would exclude general consumers. The same thing is happening with the other Quad FX processors, the FX-72 and 70.
On the Intel side, the biggest thing that happened so far this year was the price decrease of the QX6700 to below $1000, which is the current tray price for computer manufacturers who buy a thousand or more chips at a time. This has sparked price decreases for other Core 2 processors, most of which are currently at lower prices than they were at the end of 2006.
Another interesting trend we are watching concerns the Extreme Editions. They're not mainstream products by any means, but what's interesting is the price parity forming between them. The more powerful EE 965 is becoming less expensive than the 955, which offers a lower performance level. This is messing up the overall correlation for Intel a little bit, after it was beginning to show an increasing trend.
Read on the next page: AMD's pricing volatility
Analysis January 19, 2007
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AMD's price/performance correlation this week rings in at 0.959, which is a bit of a fall from where we saw the company last year. AMD ended 2006 with a correlation of around 0.98, so obviously there was not much room to improve, but the current relatively unstable pricing has caused it to slip to where it was right before the holiday shopping season, most obviously because of the FX-60, which has always been the most overpriced of these AMD processors and increased in price even more this week.
One reason for the price increases on the AMD side could be attributed to the introduction of lower power 65 nm versions; however at this time, our e-tail pricing source, pricegrabber.com, does not allow us to keep 90 nm and 65 nm apart. But we do know that 65 nm processors are still rather rare, which indicates that these new processors may have very limited impact at the overall market right now.
Intel's correlation currently stands at 0.626, on the low end of what we've seen over the past 16 weeks, but it is marginally better than where it left off in December. We can also see that, triggered by the sweeping price jumps this week, the intersection of the two lines fell back a bit this week, lowering AMD's average level of price/performance superiority in mid range of processors, strictly in terms of these numbers.
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When we break up Intel's data to look specifically at the Pentium and Core 2 line of processors, we can more clearly see the effect of the sub-$1000 QX6700 price on the rest of the products. Most of the other Core 2 products, which were previously priced a bit under the curve, fit better to the trendline, while the EX6800 still needs to come down in price by about $150 to fit in with the rest of the model. The Core 2 correlation stands at 0.955 this week. This number has not really changed much at all since we started this weekly feature.
With regard to the Pentium processors, the correlation also went largely unchanged. The counter-intuitive pricing of the Extreme Editions does not really affect the correlation because it is priced so far above the other Pentium processors that they don't individually affect the big picture by a significant margin.
The biggest thing to watch in the coming week and beyond is what happens with AMD's prices. We really have no indication of what is going to happen after such a big set of price changes this time. It would offset the positive trend we began seeing at the end of 2006 if the prices continued to rise. However, if they all fall again, it confirms a pattern of significant price volatility.
For now, we recommend holding off on any major AMD purchases until the prices have settled.