Resellers' Take On Intel's Price Cuts

Intel has issued a broad list of price cuts on its microprocessors, slashing by 35 percent the list price of its high-end 3.6-GHz Pentium 4 with Hyperthreading from $637 to $417. The Celeron desktop processor line received smaller cuts, such as the reduction of a 2.8-GHz part from $117 to $103.

Intel makes such cuts periodically, but this latest round is being closely eyed by resellers because it's the first such list of reductions to be released since Intel announced in July that it would end its channel rebates on all boxed processors effective Aug. 22.

In making the change, Intel explained that it would cut prices on its processors to enable VARs who were members of its authorized distributor program to "account for the net price of boxed Intel products at the time of purchase rather than waiting for a rebate payment from Intel."

"The price moves today coincide with the Aug. 22 removal of our rebate program in an attempt to end back-end rebates on products and replace them with up-front discounts," Steve Dallman, Intel's director of North American distribution and channel marketing, tells VARBusiness in an e-mail interview.

Along with reductions to many of the Pentium 4 and Celeron processors, Intel pared back prices on most of its 64-bit Itanium 2-server CPUs. For example, the 1.4-GHz Itanium 2 was cut from $2,247 to $1,980.Prices, however, weren't reduced on Intel's Xeon commodity-server CPUs nor on its $999 "extreme edition" version of the Pentium 4. And, with the exception of several mobile Pentium 4 devices, prices on most mobile processors weren't touched.

Intel's Dallman says the company's mobile processor products "may experience their own price and compensation changes later this year."