Sunnyvale (CA) – AMD’s new Phenom X3 8000 series of processors are finally ready for launch: Two new processors carry the massive burden to protect the margins of the higher-end quad-core processors, whose average retail prices have been melting away – while Intel has no problem charging substantially higher prices for its last generation dual-core and quad-core products. But the million dollar question is: Will you prefer a tri-core Phenom over a dual-core Core 2 Duo? (If you would like to skip the tri-core anyway, AMD also has new quad-cores with higher clock speeds for you).
AMD had a great run up until the third quarter of 2006, when Intel rolled out its Core 2 Duo processors and it pretty much everything from new products to business decisions has been working in Intel’s favor since then. The quad-core Opteron, Barcelona, as well its desktop version Phenom certainly have been disappointments so far, trailing Intel’s offering by what seems to be a distance that is increasing every day. Phenom by itself isn’t capable these days to compete with Intel, so AMD has to work with what’s in its toolbox.
When we heard about the company’s idea to disable one core of its quad-core Phenoms (or use those X4 Phenoms with a defective core) and sell those processors as tri-cores, we felt that decision could actually a brilliant move. The Gigahertz race is history and consumers who are looking for the best possible performance for their money have been trained to look for as many processor cores as possible. In that view, a tri-core may look much more attractive on a product label in Best Buy than a dual-core.
AMD today launched its tri-core processors as Phenom X3 8000 series. Initially, there are two models, a 2.1 GHz 8400 version and a 2.3 GHz 8600 model. Both CPUs fit in the 95 watt power envelope of the quad-core Phenom X4 9000 series, but you may have guessed that – since one core isn’t available, there is also 25% less L2 cache: The 8000 series has only 1.5 MB, instead of 2 MB in the 9000 series. Of course, the CPU game has become a platform game, so it’s not surprising that AMD is promoting these new chips alongside its 780G “hybrid graphics” chipset. And if you have read our launch report about the 780G, then you already know that these platforms are targeting the mainstream (=dual-core) market. According to AMD, a tri-core Phenom will be about 30% faster than an AMD dual-core processor at the same frequency – in “highly threaded applications”.
At the end of the day, performance may not be the sole decisive factor that decides over the success of the 8000 series. AMD will have to get much smarter in controlling demand and supply of its processors to improve the margins of its products. Last week, we took a close look at average retail pricing of quad-core processors in the retail market and showed that Phenom X4 processors already are the cheapest quad-core CPUs on the market and are currently selling far below Intel’s Core 2 Quad Q6600, their main competitor and a chip that has been on the market for more than a year. Today, the Q6600 is selling for an average of $279, according to Pricegrabber.com, while the Phenom X4 9500 sells for $207 and the 9600 version for $254.
To be successful, AMD would have to squeeze its X3 versions between the X4 Phenoms and Intel’s current mass-market dual-core processors – the Core 2 Duo models E6550, E6750 and E6850. And there’s not much room: These CPUs currently sell for prices of $175 (E6550), $191 (E6750) and $290 (E6850). AMD’s own dual-core processors retail below Intel’s chips: The high-end X2 6400+ model is listed by Pricegrabber.com with an average retail price of $188.
While AMD has not released official prices of the 8000 series yet, we have every reason to believe that the tri-cores will sell for substantially less than $200 when they hit retail, pushing AMD’s own dual-cores into the entry-level segment. If AMD’s strategy in fact works, Intel could also see some pricing pressure in the mainstream segment – which looks to us like a new processor price war. We will get back to that further down in this article.
X3 processors, by the way, have been shipping for some time now. Back in February, we received information that Dell actually was already prepared for launch of these ne processors in Optiplex “Enhanced” workstations.
In a second product announcement, AMD said it is expanding its Phenom X4 model, with new “50 series” versions that aim to attract enthusiast users. There are four new models, the 2.2 GHz 9550, the 2.3 GHz 9650, the 2.4 GHz 9750 as well as the 2.5 GHz 9850 Black Edition. With the exception of the new flagship model, these quad-cores are rated at a 95 watt TDP (The Black Edition is rated at 125 watts). Compared to the regular Phenoms, which have a Hypertransport speed of 3600 MHz, the Black Edition supports 4000 MHz. (On the lower end of the spectrum, added the Phenom X4 9100e, a quad-core desktop processor that runs at a TDP of only 65 watts.)
Compared to the tri-core processors, AMD promises a 20% performance gain at the same clock speed and in “highly threaded applications”. As other X4 versions, these new processors are also being promoted as part of the “Spider” platform, which includes the 790FX chipset, which supports up to four graphics processors.
So, what about pricing?
Our initial thought was, well, perhaps these processors are fast enough and convincing enough to push AMD back into the $250 segment that has been dominated by Intel for so long? Perhaps there is even a chance to touch the $500-$600 range, which is currently occupied by only one processor – the Core 2 Quad Q6700? No, AMD will not try to attack Intel in this segment: Instead, the green team opted for aggressive pricing that practically puts a fast quad-core into reach for everyone who wants to spend about $1000 for a desktop PC.
In fact all new 50-series processors are priced right between the current 9500 and 9600 models, which have tray-prices of $209 and $251. AMD charges $209 for the 9550, $215 for the $9650, $215 for the 9750 and $235 for the 9850 – which means that AMD’s flagship quad-core processor is priced 14% below Intel’s cheapest quad-core processor, the $266 Q6600, at least according to official price lists.
So, are those new tri-cores and those new quad-cores the brilliant move we anticipated it to be? We have mixed feelings about this strategy – it’s great for the consumer, but we are wondering what the impact on AMD’s business will be. There is no question that AMD is playing a risky game that aims at Intel’s market shares. But what about those margins? AMD has been suffering in this department for at least six quarters and this strategy certainly doesn’t help to bring profits back up. However, these prices are obviously fantastic news for the consumer: If you are looking for a cheap PC this summer, you will have the choice of dual-core and tri-core systems and we can’t wait to find out whether AMD will be able to make a convincing case for its tri-cores – to the point that Intel will be forced to cut its dual-core prices.