Intel slashes 486 tags in wide repositioning

Electronic News, Oct 4, 1993 by Richard McCausland

SANTA CLARA, CALIF. -- Intel last week implemented aggressive double-digit price cuts on much of its 486SX and 486DX2 microprocessor lines, effectively repositioning the low-end and intermediate portions of the x86 family.

Price of a mainstream 33MHz 486SX in ceramic package dropped a whopping 29 percent to $133, from Q3 pricing of $188, in quantities of 1,000. A similar part in plastic fell an equally hefty 26 percent, to $121 from $163. A 50MHz 486DX2 in ceramic declined 21 percent, to $311 from $395. Power-management versions of these parts were sharply discounted as well. Price of an SL Enhanced 33MHz 486SX plummeted from 22 to 29 percent depending on package; 40 and 50MHz DX2s dropped 21 percent to $311 in 1,000-piece quantities.

"The industry has been moving from the 486SX-25 to the 486SX-33 as the workhorse at the entry level," said Anand Chanrasekher, Intel marketing manager for the 486 line. Similarly, "(486)DX volumes have been migrating to the DX2," to the point that the DX2 is emerging as the "mainstream workhorse engine, and it will replace the 486DX eventually" as the x86 mid-range centerpiece. The Pentium continues to top off the high-end.

MPU rivals generally agreed with Mr. Chanrasekher's assessment. "Intel wants to keep the overall price structure about the same" by dropping the price of a 486DX2-50 to the range formerly occupied by the 486DX-33, said Glen Burchers, Cyrix director of MPU products marketing. "The street price is going to be close to $280-$290, and that's exactly the price people were paying for a DX-33 45 days ago. You have a higher performance level for the same price." Cyrix only last month jumped into the 486DX fray with models incorporating independently developed microcode (EN, Sept. 13). In quantities of 1,000, the 33MHz Cx486DX is $289 each; the 40MHz model is $289; and the 50MHz model is $349. Clock-doubled DX2 models are $289 for the 20/40MHz version and $349 for the 25/50MHz version. A 3.3V Cx486DX/V33 is $289. Mr. Burchers noted "Our pricing already anticipated these price moves."

Intel's latest price cuts mark "the beginning of the obsolescence of the (486)SX-25" as Intel repositions the faster 33MHz part "so that some time in 1994 it will become the low-end of the product line," predicted Subodh Toprani, director of marketing, Personal Computer Products division, for Advanced Micro Devices. He attributed the sharp Intel 486DX2-50 reduction to "the benefits of having competition in the marketplace." Earlier (EN, April 26) AMD brought to market a 40MHz Am486DX which, Mr. Toprani said, "from a performance perspective sits nicely between the DX-33 and the DX2-50," bringing price pressure on Intel. "The products we compete in, we match. We are not making such dramatic price moves; they are. But we are responding."

He predicted "in Q4 you will see the DX2-50 take the lion's share of the unit volume" among x86 MPUs and Intel DX2-50 and the AMD DX-40 "combined will probably outship the DX-33 this quarter because both of them offer a better price-performance value."

Rick Bergman, personal computer systems product marketing manager for Texas Instruments, described Intel's Q4 tag reductions as "a normal evolution in Intel's pricing moves" as it looks to replace lower-speed products and position the 486SX-33 as its entry-level workhorse. Of Intel's 486SX prices generally, he observed "They actually seem a little high" when compared to the going street rate. TI, he noted, has a 40MHz 486DLC processor equivalent to the 486SX-33 but listing for about $79 in plastic--versus $121 for Intel. "We're now moving more toward a mode where supply is meeting demand, so you'll see more competition in certain portions of the market."

Intel's price cuts encompassed the entire x86 product line. Besides mainstream 486SXs and 486DX2s, other parts prominently affected included the 40MHz SL Enhanced 486DX2, falling 21 percent from $395 to $311. Intel has said its focus for the mobile computer market will be the 3.3-volt, 208-pin 486DX2 in a small quad flat pack (EN, June 21)--signalling a possible price war ahead as MPU vendors scramble to win design-ins among the emerging crop of sub-notebooks, palmtops and Personal Digital Assistants. However, Intel's Mr. Chanrasekher, referring to the SL Enhanced 486DX2-40, commented, "It's part of the DX2 family, and the DX2 is entering the mainstream, and so that (price reduction) shouldn't come as a surprise."

Other tag reductions were more modest. Prices of Intel's highly integrated, energy-efficient 386SLs and 486SLs slid no more than 9 percent from Q3 levels. Prices of 60MHz and 66MHz Pentiums, in quantities of 1,000, decreased 3 percent to $818 and $898, respectively.

MPU rivals in general viewed the price reductions favorably. "Customers are always looking for the next value statement in PCs," said AMD's Mr. Toprani. Customers will now be getting more performance at less cost. "It's a better value, so it could lead to better unit volumes."