Intel may cut prices in response to AMD’s Ryzen 1700, 1700X, and 1800X launch

Intel-Chipset

Earlier this week, Intel quietly began cutting the prices on some of its Core i5 and i7 processors. This happened in the run-up to Ryzen’s launch, and was likely a move to preempt unattractive price comparisons that would otherwise be front and center when Ryzen 7 hit shelves.

Micro Center has adjusted its prices dramatically downward, with the Core i7-7700K falling to $300 from $380, the Core i5-7600K to $200 from $270, and the Core i5-6600K to $179, from $270, HotHardware reports. Even Broadwell-E chips get on the action, with the Core i7-6850K dropping to $550 (down from $700) and the i7-6800K itself now priced at $360, from $500.

It isn’t clear yet if these price cuts are locked in for all Intel’s product lines or if they reflect a temporary Micro Center promotion. As of this writing, none of the list prices for Intel processors have been updated. The Core i7-6850K is still listed with a 1KU price of $617-$628, and Amazon prices don’t seem to reflect this price cut. It’s possible that the Micro Center deals are a test market for Intel to gauge how consumers respond to price cuts with Ryzen now officially available.

Meanwhile, on Amazon, AMD has managed to seize multiple spots on Amazon’s top-selling microprocessor list. First, here’s a screenshot of October 11’s best-selling CPUs, courtesy of Wayback Machine.

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Bestselling CPUs #1 – #12 at Amazon, circa October 2016

Now, compare that with a screenshot from Amazon on Thursday evening:

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Best-selling CPUs #1 – #12 for March 2, 2017.

While I only screenshotted the first 12 spots to keep the images from being even longer, I tallied up the prices and products in spots #1- #15, then averaged their selling prices. This is a simple arithmetic average that doesn’t attempt to estimate total revenue or profit for either company, since we lack sales figures and manufacturing cost estimates. Still, there’s an interesting pattern at work here.

On October 11, 2016, Intel held twelve of the top fifteen CPU slots. The average price of these 12 cores was $264, with prices ranging from a low of $118 up to $439. There was less correlation between CPU cost and placement on the list than you might think; the top seller cost $325, while a $118 Core i3-6100 was in third place.

AMD had the remaining three slots held down by the FX-6300, the FX-8350, and the FX-8320. Average selling price on these chips was just $129, with a range from $100 to $138. It’s not hard to see how poorly this works out for AMD — its lower prices aren’t getting the company much sales volume, and it its earnings per CPU sale are significantly smaller than Intel’s.

Fast forward to today, and Intel holds nine of the top 15 slots, not 12. Not only has AMD gained more spots in the Top 15, the CPUs in those slots sell for far more money than the old FX lineup did (if you’re AMD, this is a very good thing). Today, Intel’s average CPU price is $230, down 13% from October. AMD’s average price, meanwhile, has risen to $282 — 2.19x higher than what it was last fall.

We would need per-chip sales figures to even try to estimate the relative revenue contribution of each SKU, but even this basic data points to a much healthier mix for AMD and Ryzen. The big question is, how long will AMD CPUs hold on to those best-selling spots?

How much would these price cuts matter?

Assuming Micro Center’s prices become the new normal, how much would they change the competitive situation between AMD and Intel? The answer, I think, depends on which CPU family you compare. If you’re looking at multi-threaded applications and embarrassingly parallel workloads, the Ryzen 7 1700 will still make hash of the Core i7-7700K, despite the latter’s significant clock advantage. High IPC and greater speed count for a lot, but unlike the old FX family, Ryzen’s single-threaded performance is high enough to truly slug it out with Kaby Lake. If, on the other hand, you primarily care about single-threaded performance and gaming, the 7700K is easily the better choice. The Core i5 price cuts look like a preemptive move to cut Ryzen 5 off before it can wreak havoc in Intel’s lower-priced Core i3 / i5 division.

As for Broadwell-E, a $360 Core i7-6800K could tempt customers who want some multi-threaded performance but also desire good single-threaded scaling. A 6850K at $550 is a much tougher sell. The 6800K would be $40 cheaper than Ryzen 1700X, while the 6850K would come in $50 more expensive.

All of this is speculation, of course, until Intel formally announces a move. If AMD keeps holding multiple spots on the top-selling CPU lists, it’s going to see that trend reflected in Q1 revenue, even though we’ve only got 30 days left in the quarter.

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