November 20, 2008

Slow demand for CPUs means open-market savings

Converge CPU Update
In October, the spot market braced for the traditional pre-holiday rush on CPUs, but this has not yet materialized. Instead, we have seen slowing demand as a strong US dollar and lower consumer spending has tempered demand in the CPU market.

The positive news for OEMs is that pricing has softened considerably, especially on Xeons and TJ Montevina models, with a reduction of 10% or more on several models (T5800, T3200 and E8400, for example).

October also saw a planned price drop as mainstream desktops were discounted—including the Q8200, E7400, E2220, E2200 and X3220 models. Meanwhile, pockets of aggressively priced mobile CPUs, such as the T9500, can be found with pricing at $100+ cost savings per piece.

Xeons fill the gap
Intel server chips have returned to the forefront, as older parts such as the X5140 are providing good value. Meanwhile, Intel has launched up to 20 new models between September and November, thus considerably extending its current range of chips offered.

End-of-life models in demand
Half of the demand currently tracked for mobile CPUs in October was centered on older, trailing-edge technology. Desktop models such as the E2160, E4500, E4600 and E7200, and the mobiles T7250, T8100, T7200, T5550 and T2370 have all enjoyed resurgence in demand.

Looking ahead
In November, Intel launched the new range of i7 desktop CPUs codenamed Bloomfield. There are three models and the pricing runs from less than $300 to almost $1,000 for these Quad cores. These CPUs are targeted toward “gamers” and should attract strong interest in the first several weeks on the market.

We also expect holiday market demand to increase, as current signs are encouraging with rising day-to-day requirements being filled by Converge. OEMs should be actively searching for open-market savings as a slow start has left weaker pricing than usual for early buyers to take advantage of aggressive price points to fill demand.

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