Big PC buyers stand to benefit from substantial price cuts announced late last month by chip rivals Intel and Advanced Micro Devices (AMD).
AMD led the way with a cut of almost 50 per cent in the price of its 1.4GHz Athlon processor and a week later Intel responded with a similar cut in its Pentium 4 (P4) pricing.
International Data Corp PC market analyst Darian Bird says end users stand to gain, but he doesn't expect an immediate rush by businesses to the P4.
"A price war in the CPU market will certainly benefit end-users," Bird says. "Getting a P4 at a similar price today as you'd have paid for a Pentium III is good for buyers."
Bird believes P4 sales thus far will have been disappointing for Intel but he says the chip market leader has made itself more competitive with AMD in the past six months.
"With the high profile of the P4 and continual price cuts, we expect that the processor will enter the mainstream late this year or early in 2002," Bird says.
AMD Australia and New Zealand head John Robinson doesn't see it that way. According to Robinson, Intel's 2GHz P4, which was launched last week, seriously lags AMD's offerings in price-performance terms.
"For what the 2GHz P4 does performance-wise, you can buy an AMD chip for a quarter the price," he claims.
Robinson says a 1.4GHz Athlon at its new price of US$130 (in 1,000-chip lots) is more than a match for the 2GHz P4, which costs about US$560.
But Intel New Zealand channel manager Colin Purkis says AMD's claim is based on benchmarks that measure the P4 against old applications and usage patterns.
Comparisons based on "modern benchmarks with modern applications" – handling internet, content, for example– would show the P4 in a different light, he says.
With 1.5GHz and 1.6GHz P4 now cheaper than a 1GHz PIII, Purkis is confident P4 sales will surge.