Our processor price/performance series continues, with our first installment in 2007. We have tweaked some charts and made adjustments based on reader feedback, as we look at how processor pricing is already making its mark for the new year. Most strikingly this week is the nearly universal large price jumps in the line of AMD processors, after a cascade of price falls at the end of 2006.

Even though we did not publish official analysis articles for the first two weeks of the year, we have still been monitoring processor pricing, giving us now 16 weeks of comprehensive data for several of Intel and AMD processors. That data may get very interesting over the next few weeks when we look at the bigger picture. If you have been following this series, then it may not have come as a complete surprise to you that AMD announced that pricing pressures in the processor market dented the firm's earnings in the fourth quarter.

One of the most significant trends we mentioned in our 2006 summary article was the huge price drop for AMD processors. Some had been falling in price by $10/week or more for over six weeks straight. On the other side, Intel was able to play the Core 2 Duo card, maintaining its processor pricing on the upper end of the mainstream market, while leveraging the outgoing Pentium D 800/900 series as tool to drive down pricing on the lower end. AMD has been caught in the middle but dragged down by Intel's pressure. We will learn more about the impact of this scenario next week, when AMD reports its Q4 results on January 23.

Of course, it's almost common sense to predict that AMD would not be able to sustain that trend and would not continue to accept any price for its products just for the sake of higher unit shipments. And we may be seeing change already. This week, almost all of AMD's processors jumped way back up in price to around where they were in the beginning of November.

Click image to enlarge. Source: Pricegrabber.com / Toms Hardware Guide

For those who are unfamiliar with our processor price/performance updates, the above table shows the current average e-tail price of several of AMD's and Intel's most recent processors. The relative performance index is computed by looking at six benchmarks that give a representative quantification of the processor's level of performance.

We looked at the following benchmarks: AVG Antivirus for maintenance, Quake IV for gaming, Clone DVD for application performance, Lame MP3 for audio encoding, Windows Media Encoder for video encoding, and PCMark 2005 (CPU) for general performance. We took the benchmark values for each of these and translated them to an equal scale, based on the performance of a baseline processor, in this case the Pentium 4 520, and took the average of the six tests to get the performance index. For example, the Pentium D 950 can be expected to deliver about 1.45 times the performance of the Pentium 4 520.

Our data is missing the Core 2 Duo E6300, because Tom's Hardware Guide has not yet posted official benchmark data for that processor. Last week, Toms Hardware ran an article onverclocking techniques for this processor, but system specifications and benchmark runs did not line up exactly with the test procedures of all other processor, which is why we decided to leave this CPU out of this edition. However, as soon as we believe to have access to reliable and comparable data, we will add the E6300 to this list.

Now, looking at the data, it is very obvious that AMD prices are now on an upswing. The massive price decreases in the previous weeks can be partially attributed to the holiday shopping season, with, from what we hear, the e-tail industry recording record sales and tight supply across the board. However, the prices sort of just stayed in limbo for the first part of 2007. The prices did begin to creep up a little bit on both January 5 and 12, but this week they catapulted back to pre-holiday prices, causing a sense of uncertainty about where the new settling point is.

Most notable is the Athlon 64 X2 4400+, which by far had the most prolific history of price drops, with eight continuous weeks of price decreases. This week, it came back with a big swing, marking a 22% jump of $48 from $220 to $268, the second largest week-to-week price jump we've seen for the processor.

Also of note is the top-level processor, the FX-74, which increased $99, or 9%, week-to-week, from $1112 to $1211 for the pair. The FX-74 launched at pretty reasonable e-tail prices and even continued to dip more before Christmas. Now, however, it is placing itself more in the range that would exclude general consumers. The same thing is happening with the other Quad FX processors, the FX-72 and 70.

On the Intel side, the biggest thing that happened so far this year was the price decrease of the QX6700 to below $1000, which is the current tray price for computer manufacturers who buy a thousand or more chips at a time. This has sparked price decreases for other Core 2 processors, most of which are currently at lower prices than they were at the end of 2006.

Another interesting trend we are watching concerns the Extreme Editions. They're not mainstream products by any means, but what's interesting is the price parity forming between them. The more powerful EE 965 is becoming less expensive than the 955, which offers a lower performance level. This is messing up the overall correlation for Intel a little bit, after it was beginning to show an increasing trend.

Read on the next page: AMD's pricing volatility