In response to a down economy and a slowing PC industry, Intel has slashed the prices of its processors. The chipmaker cut the price of its Core 2 Quad chips by up to 40 percent and continued the theme with less-dramatic price cuts across its line.
Specifically, Intel’s mobile Celeron chips and single-processor Xeon chips also saw price cuts. The decision to slash prices puts Intel’s processors closer to par with rival AMD’s products, but may put strain on the company to meet its price-performance goals.
“Price cuts like this are a natural response to what’s happening in the greater economy,” said Charles King, principal analyst at Pund-IT. “When consumers stop consuming, the shock ripples all the way down the supply chain.”
Reviewing Gartner’s Predictions
In the fourth quarter of 2008, the worldwide PC industry suffered its worst growth rate since 2002 as worldwide shipments totaled 78.1 million units, a 1.1 percent increase from the fourth quarter of 2007, according to preliminary results Gartner published on Jan. 15. For the year, worldwide PC shipments totaled 302.2 million units, a 10.9 percent increase from 2007.
“The United States experienced steeper-than-expected shipment declines due to the recession. The Europe, Middle East and Africa (EMEA) region was also affected by the economic slowdown across key countries,” said Mika Kitagawa, principal analyst for Gartner’s Client Computing Markets group. “Asia/Pacific recorded the worst shipment growth since Gartner started its PC statistics research. Latin America met expectations, but its growth was much lower than in the past.”
Good News for Consumers
King said component makers like Intel, AMD and Seagate face a quandary when the demand for end products decline. If they do nothing, he said, they end up with a lot of products sitting idle on their shelves. If they cut prices, they potentially cut profits.
“The other complexity here is that…