The gap AMD must make up

This chart represents the fact that Intel has held a price-performance advantage in dual-core processors leading up to today. The dark blue line represents Intel's current pricing data; the dotted blue line represents the trend line, or the exponential curve that best fits the plot points for all processors in that category. UPDATE: On the advice of a reader, we changed the chart above from logarithmic to exponential trend lines, which we agree is a better fit. AMD's pricing data is clearly separated, with Intel's blue trend line touching the $1,000 mark well past the 4.00 performance index point.

For AMD's price cuts to be completely competitive, they must approach Intel's dark blue trend line. The red trend line shows where they actually end up. They're not quite matching up, but that's only by virtue of the not-so-steep projected cut in the FX-62's price. In 1000-unit quantities (or what's known in the industry as the "tray price"), the FX-62 price would be cut, according to the table (whose authenticity AMD has not officially confirmed), to $799. That's not nearly enough to bring it in line with the $425 it would need to claim the price/performance advantage.

But just on the other end of the scale, AMD may be carving a sweet spot for itself with its $224 price for the 4600+, which helps bring the curve back down the right direction. So far, AMD's highest performing processor whose cuts appear to fall below the Intel price/performance curve - way below - is the Athlon X2 5000+, the new Socket AM2 chip which could end up selling for $282. Our price/performance model showed it could sell for as high as $355 - a 48.5% cut - and still find itself on the Intel curve.

Today's quarterly earnings call shows AMD must make a competitive move soon. It doesn't have secondary sources of income to fall back on, like Intel - it is mainly a CPU company. Cuts as steep as we're projecting will take their toll on company revenues in the near-term, and will not be good news for investors. But they could restore AMD's competitive advantage in the long-term before Intel effectively carves its dual-core niche in the market where AMD had plans to figure prominently.

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