Why doesn't Intel go do something crazy like.. oh.. I don't know.. drop prices?

Intel registered a 14% drop in profits and just over an 8% drop in desktop sales,and has rising costs too:

http://www.slashgear.com/intel-q3-profits-fall-14-with-pc-demand-on-the-drop-16252253/

It seems data centres helped offset the drops in other areas. The drops seem very similar to the level AMD has seen this quarter too.

Intel even themselves predicted the drops ages ago:

http://newsroom.intel.com/community/intel_newsroom/blog/2012/09/07/intel-lowers-third-quarter-revenue-outlook

Revenue was predicted at $13.2 to $13.5 billion instead of the expected $13.8 to $14.8 billion.

For the first time in a decade the desktop and laptop markets have contracted.

aidanjt
Why doesn't Intel go do something crazy like.. oh.. I don't know.. drop prices?

That might increase sales but 90%+ of CPUs are sold built into a device and most of the device cost is not from the CPU so a 10%-20% cut from Intel might not show in any worthwhile fashion to end consumers and stimulate demand. It probably won't increase profit and it also sets a lower pricing precedent for the future making launching future products at higher prices look more expensive by comparison.

Intel are still making billions in profit, don't forget that.

Yeah, the simple answer is that Intel have no incentive to drop prices.

kingpotnoodle
That might increase sales but 90%+ of CPUs are sold built into a device and most of the device cost is not from the CPU so a 10%-20% cut from Intel might not show in any worthwhile fashion to end consumers and stimulate demand. It probably won't increase profit and it also sets a lower pricing precedent for the future making launching future products at higher prices look more expensive by comparison.

Intel makes more than just CPUs in the PC space. But on that track, the CPUs are expensive enough that they do heavily influence machine prices and could bring them back into impulse buy territory with price cuts. The golden days of getting away with ridiculous PC component prices are just long long gone. All those clueless suckers who bought obscenely over the top PCs are finding they're getting by with tablets 4 times cheaper. In that kind of environment, you adopt or die.

kingpotnoodle
Intel are still making billions in profit, don't forget that.

Sure, but if they want to keep making billions they're going to have to stop segmenting like a lunatic and start competing for consumer dollars.

Intel are competing.

Remember the last thing Intel want to do is wipe AMD off the map.

Willzzz
Intel are competing.

Remember the last thing Intel want to do is wipe AMD off the map.

Hardy. But that's not their competition. Not serious competition, anyway. It's mobile which is eating their PC market share, not AMD.

Rosepoint could just as well do for Intel same as Centrino did back in the days: http://hexus.net/tech/news/cpu/45221-10-years-making-intel-cto-showcases-digital-radio-chip/
If Intel hastened their time-to-market with mobile solutions, they would be hiring when everyone else is laying off.

howdee
Rosepoint could just as well do for Intel same as Centrino did back in the days: http://hexus.net/tech/news/cpu/45221-10-years-making-intel-cto-showcases-digital-radio-chip/
If Intel hastened their time-to-market with mobile solutions, they would be hiring when everyone else is laying off.

The problem is that both Samsung and Apple are designing their own custom SOCs for phones and tablets and Samsung has its own fabs too(they are at 28NM level currently). Looking at the amount of profits each company is making they can easily afford the best talent. Instead of having to buy SOCs from Intel they can cut out the middleman themselves.

They cannot blame Microsoft for Windows 8 not requiring better hardware than Windows 7 did. If Intel want to make more sales, they better give at least a 30-40% performance jump every year, instead of the measly 5-10% we've been getting in the past couple of generations.

Anandtech have some more information on this:

http://www.anandtech.com/show/6378/intel-q312-earnings-3-billion-profit-on-weakening-market-intel-to-idle-some-fab-capacity

It seems Intel has too much 22NM capacity ATM and is letting more than 50% of their fabs go idle.

aidanjt
Why doesn't Intel go do something crazy like.. oh.. I don't know.. drop prices?

That would be blasphemous! There's no way they could eat into their enormous profit margins!

In all seriousness, the majority of the cost of a laptop is the Intel CPU. I'm not a fan of overpaying for those cheeky bastards because they're a monopoly.