Intel is using heavy discounts on Xeon CPUs to stop AMD from eating its server lunch

nanoguy

Posts: 986   +14
Staff member
In brief: Intel still commands a respectable 90 percent share of the server CPU market. However, the company isn't resting on its laurels. AMD has been making inroads into the server space with its Epyc processors, so Intel is now selling Xeon processors at a discount to challenge the former company's ability to juggle high production costs and supply chain bottlenecks.

Intel is truly feeling the heat coming from AMD as of late. The latter company has seen incredible gains in x86 processor market share over the past few years, and recently reached as high as 22.5 percent -- the highest it's had since 2007. It did this by changing focus away from value-oriented desktop processors and more towards cranking out as many gaming and enthusiast-level CPUs as it could.

Intel responded quickly by offering discounts on 11th and 10th gen Core processors, but AMD still dominates Amazon's best-selling charts to this day. Things are starting to look better for AMD on the notebook processor market, but supply constraints are keeping Team Red from making faster gains. This is an area where Intel still feels comfortable.

On the other hand, server CPUs were a major contributor to AMD's market share gains last quarter. The company says its latest Epyc processors launched in March offer double the performance of their Intel counterparts, and this translated into AMD supplying almost two-thirds of the CPU cores in the world's top 500 supercomputers in June.

While Intel holds almost 90 percent of the server market share, the company still has reasons to worry. After all, server processors are a sticky business that has both a high barrier of entry and high switching costs. According to DigiTimes, Intel is scrambling to prevent AMD from gaining more server CPU market share by offering discounts on its Xeon and Xeon Scalable processors.

Intel is doing this for two reasons. The first is that AMD depends on TSMC to manufacture its Epyc CPUs, whereas Intel relies on its own fabs to make Xeon CPUs. Some vendors have reported that AMD has solved its supply issues for the most part, but still has to deal with TSMC's increase in contract pricing moving forward.

The second reason is that unlike AMD, Intel's business is more diversified. This allows the latter to take a financial hit in the short run, especially knowing that hyperscale clients will tend to stick with AMD if they decide to go that route, as the costs of switching back to Intel down the line would be too high.

Either way, AMD is eating Intel's lunch and the latter is obviously worried about it -- enough to push its Xeon processors at a discount while it prepares the release of its next-generation Sapphire Rapids CPUs. These will be based on Intel's Enhanced SuperFin process -- also known as Intel 7 after the recent rebrand -- and are expected to be faster that AMD's Epyc 3 CPUs. As for when they'll become available, Intel is planning to begin small production runs early next year and ramp up to volume manufacturing in the second quarter.

Permalink to story.

 

Foobario

Posts: 17   +19
Intel has been giving discounts on Xeon for months. Just take a look at their YOY ASP drops in their quarterly reports.

If this is another drop in selling price over the discounts they have already been giving it seems investors are in for a big surprise in gross margins when they report Q3 results.

Sounds like Intel is trying to get some of the customers waiting in line for EPYC. That is a very long line. TCO should negate the impact of this desperation move by Intel.
 

NeoMorpheus

Posts: 883   +1,678
One, it sucks for AMD that our government is so corrupt that nobody will do anything to stop intel ilegal tactics.

Two, I bet you cold, hard cash that dell is getting extra discounts, for the reason stated above.

Three, I could be wrong, but this can be considered dumping, which is illegal.

Fourth, I can only imagine the amount of money that both nvidia and intel are giving to everyone that is as dirty as they are to kill AMD.

We already experienced high prices and 4 core hell when intel had no competition and crazy gpu prices, when nvidia knew that the rtx20 line was not going to have any competition.

But....lets keep giving them money.
 

ypsylon

Posts: 401   +334
I would argue that those are not discounts at all.

They bring the prices more to the ground level because amount of pure net profit on Intel Xeon-SKUs before AMD came up with EPYC-Zen is/was just obscene to the point you can buy few EPYCs for same amount of money. That alone shows what kind of greedy monopolistic monster Intel really is (or should I use 'was' right now?). Of course AMD is same kind of monster, just perhaps version Light for now. Do you seriously believe that if someday AMD will swallow 75% of server market they'll still keep low prices? Keep dreaming.

Comparing Intel with Ngreedia is kind of miss, because Intel has vastly inferior product stack vs AMD and they charge obscene $ for it. NVidia has vastly superior product stack and they don't have any serious obstacles which would force them to reconsider.


 

HardReset

Posts: 1,265   +926
One, it sucks for AMD that our government is so corrupt that nobody will do anything to stop intel ilegal tactics.

Two, I bet you cold, hard cash that dell is getting extra discounts, for the reason stated above.

Three, I could be wrong, but this can be considered dumping, which is illegal.

Fourth, I can only imagine the amount of money that both nvidia and intel are giving to everyone that is as dirty as they are to kill AMD.

We already experienced high prices and 4 core hell when intel had no competition and crazy gpu prices, when nvidia knew that the rtx20 line was not going to have any competition.

But....lets keep giving them money.
And same companies that first buy Intel with discounts later complain about Intel prices when Intel has acquired monopoly...

Like I have said many times, server buyers aren't so wise people.
They bring the prices more to the ground level because amount of pure net profit on Intel Xeon-SKUs before AMD came up with EPYC-Zen is/was just obscene to the point you can buy few EPYCs for same amount of money. That alone shows what kind of greedy monopolistic monster Intel really is (or should I use 'was' right now?). Of course AMD is same kind of monster, just perhaps version Light for now. Do you seriously believe that if someday AMD will swallow 75% of server market they'll still keep low prices? Keep dreaming.
Umm yes?

Intel is greedy = fact

AMD would be greedy, IF... = pure speculation
 

The Tech Gen

Posts: 13   +15
Didn't Intel receive millions in government subsidies and stimulus only a few months ago? The fact that Intel can afford to price out the competition all the while they buy up the supply at TSMC for their GPUs, seek acquisitions, invest 95 billion in europe, spent 10 billion in stock buy backs, 3.5 billion in New Mexico, 20 billion in Arizona. And this is all happening as they lose market share.

In other words Intel is using the US Government to try and take out a U.S. competitor. How is that not messed up.
 

Nobina

Posts: 3,351   +3,440
Of course AMD is same kind of monster, just perhaps version Light for now. Do you seriously believe that if someday AMD will swallow 75% of server market they'll still keep low prices? Keep dreaming.
It's likely that if AMD had most of the market share they would abuse it but we can't say for sure since it's not happened. They have better products than Intel but it's not like it's night and day, Intel is still breathing down their neck and it takes one passable CPU lineup from Intel to reverse all of AMD domination just like that. Intel still over 70% market, they advertise everywhere, people know and trust Intel like they know and trust Nvidia.

The reality as I see it is if AMD can't have identical products to Nvidia and Intel, they MUST be better and by some margin or people will just go with better known brand.
 

Irata

Posts: 1,751   +2,924
This shows that AMD was smart in essentially making a server CPU and use the cores for desktop.

Had AMD created Ryzen as a desktop / gaming CPU from the start, Intel could have easily used their high Xeon profits to subsidize Desktop chips and stopped Ryzen early on.

By attacking server and hedt first, AMD eliminated that option.
 

HardReset

Posts: 1,265   +926
Actually, that is a subjective assessment.
In this context, no. We have seen countless times that Intel will keep prices high when they have 90%+ market share on server CPU's. What AMD would do on same situation is purely speculation because that situation has not existed yet.
It's likely that if AMD had most of the market share they would abuse it but we can't say for sure since it's not happened.
Just like I tried to say.
 

Theinsanegamer

Posts: 2,729   +4,270
Intel is greedy = fact

AMD would be greedy, IF... = pure speculation
Hmmmm....well the moment AMD got ahead in the desktop market they jacked up the price of their six core from $159 to $300 and discontinued all the cheaper models. They tried to screw customers out of being able to upgrade so they'd be forced to buy more motherboards with AMD made chipsets. The last time they got significant market share, they began selling the FX-62 for over $1000, when it was 10% faster then their $550 parts.

Once rDNA2 began to catch nvidia, what did we see? AMD offering a 20% faster parts for a 25% higher MSRP. The EXACT same thing nvidia did with turing and caught major flak over.

AMD is just as greedy as intel and nvidia. Stop giving them a free pass. We have not seen that behaviour from EPYC, yet. But since it is made by the same company, there is 0 reason to believe otherwise until AMD does otherwise. Companies do not get the benefit of the doubt anymore.
 

wiyosaya

Posts: 6,575   +4,968
AMD would be greedy, IF... = pure speculation
With the prices AMD slapped on their latest Threadripper offerings, I do not see the speculative nature of the assessment.

The simple fact is that AMD really has no competition from Intel in this area of the market, and typically (as well as historically), that means that the company with the CPU that has no competition can sell it for as much as they want.
AMD is just as greedy as intel and nvidia. Stop giving them a free pass. We have not seen that behaviour from EPYC, yet. But since it is made by the same company, there is 0 reason to believe otherwise until AMD does otherwise. Companies do not get the benefit of the doubt anymore.
Certainly, AMD has resorted to the same type of pricing practices that sIntel has foisted on its customers for many, many years.

Perhaps AMD has kept EPYC part pricing low because it is trying to take a bite out of sIntel's enterprise market; however, I see it as a good thing that they are cutting sIntel down to size in that market segment. But, once AMD catches up, it would not surprise me in the least if AMD were to inflate their prices to sIntel levels.
 

Watzupken

Posts: 342   +320
At this point, I don't think Intel has anymore ace up their sleeve other than to cut prices of their chips. The reality is that they have always enjoyed a significant margin for top end chips sold to corporates/ data centers. So it is about time they revise their prices to compete. However I still won't recommend companies to stick solely to Intel because when Intel gets their way, they will be stuck with paying a high price for Intel chips again. I rather they diversify and go with AMD chips since AMD seems to be offering a lot more than what Intel tend to offer.
 

HardReset

Posts: 1,265   +926
Hmmmm....well the moment AMD got ahead in the desktop market they jacked up the price of their six core from $159 to $300 and discontinued all the cheaper models. They tried to screw customers out of being able to upgrade so they'd be forced to buy more motherboards with AMD made chipsets. The last time they got significant market share, they began selling the FX-62 for over $1000, when it was 10% faster then their $550 parts.
AMD's new six cores were much faster and ran much cooler than previous models. Price increase was more than justified. What cheaper models were discontinued? Motherboard issue was more about BIOS limitations. Yeah, it sucked, but AM4 support policy is still miles ahead Intel.

Once rDNA2 began to catch nvidia, what did we see? AMD offering a 20% faster parts for a 25% higher MSRP. The EXACT same thing nvidia did with turing and caught major flak over.
Expecting much faster parts to have same price than previous ones on todays chip shortage situation? Really?

AMD is just as greedy as intel and nvidia. Stop giving them a free pass. We have not seen that behaviour from EPYC, yet. But since it is made by the same company, there is 0 reason to believe otherwise until AMD does otherwise. Companies do not get the benefit of the doubt anymore.
AMD is "greedy as Intel" because AMD raises prices when it offers Much better products. Problem is, Intel did same even it didn't offer much better products but just few percent faster.

With the prices AMD slapped on their latest Threadripper offerings, I do not see the speculative nature of the assessment.
Compare those Threadrippers against equivalent Intel offerings (core count) and you'll notice they are quite cheap actually. Still pure speculation as proper example is still missing.
The simple fact is that AMD really has no competition from Intel in this area of the market, and typically (as well as historically), that means that the company with the CPU that has no competition can sell it for as much as they want.
So it would be better if AMD wouldn't offer 64 core Threadrippers at all? Compare those TR prices against Epyc prices and figure out something...

Greedy and charity are different things.
Certainly, AMD has resorted to the same type of pricing practices that sIntel has foisted on its customers for many, many years.

Perhaps AMD has kept EPYC part pricing low because it is trying to take a bite out of sIntel's enterprise market; however, I see it as a good thing that they are cutting sIntel down to size in that market segment. But, once AMD catches up, it would not surprise me in the least if AMD were to inflate their prices to sIntel levels.
Give an example of those. Before you even start, I remind you that AMD's Ryzen 1800X offered around same performance Intel asked 1000 dollars. Both were 8 core models.at same time Intel asked over 300 dollars for "top notch" quad core.
 

jonhason martin

Posts: 8   +1
Intel responded quickly, offering discounts for the 11th and 10th generation Core processors, but AMD still dominates Amazon’s best-selling list. AMD’s situation in the notebook processor market has begun to improve, but supply constraints have prevented the Red Team from gaining faster revenue. This is an area where Intel still feels comfortable.
 

Sausagemeat

Posts: 872   +710
This article doesnt tell us the whole story. The only reason Intel chips were so expensive in the first place was because theyre own supply was unable to match their enterprise solutions demand and Intel wanted to make sure if they sold any chips that they still made the markup they would have selling it as part of a solution.

Clearly since then Intel have managed to fix its supply issues, hence why we have tonnes of budget CPUs and cheap Xeons.

Also AMD and Intel dont really compete as much as people think. AMD just sells chips. Intel makes most of its money providing full on solutions with their own silicon and these arrangements are like subscription models, a company will pay for a solution for x amount of years and may never know how many chips they get. You may buy a competing solution to what Intel sells from somewhere like HP and they may be using AMD silicon or they might be using Intels own silicon aswell.

Intel do know the value of market share in this industry. And it wouldnt surprise me if they are plan to ensure that AMD does not get a foothold by undercutting them. But I think theres probably far more going on than just that.
 

NeoMorpheus

Posts: 883   +1,678
AMD is just as greedy as intel and nvidia.
Considering how much money they have lost during the years, specially thanks to dirty and illegal practices from Intel and Nvidia, I will give them a break on this, since they need money to invest in R&D and compete with those two beyond dirty companies.


Stop giving them a free pass.
Not for the moment, because the other option is they finally die and we will be royally f**ked by Intel and Nvidia.
But since it is made by the same company, there is 0 reason to believe otherwise until AMD does otherwise.
When that time does come, then we support whoever is the underdog.

Companies do not get the benefit of the doubt anymore.
I would say, for whatever their reasons, AMD has so far proven to be pro-consumer and support open standards.

Yes, that can change if they become big or bigger than either Intel or Nvidia and as I said, we simply jump to whoever is the underdog.

Right now, the enemy of my enemy is our friend and hope.
 
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msroadkill612

Posts: 94   +29
Gosh - Intel have been giving Xeon discounts so long & so deep now - even hack journalists are writing about it?

The modestly savvy know intel are in deep poo & there us no cavalry coming within a meaningful time frame.

The old but true adage is that cpu prices are such a small component of TCO as to be ~irrelevant.

The big switch in this most conservative of markets is not price based except in TCO - factors like perf/space/heat/power....

Less noted is an intel own goal - they made the customer marriage abusive to breaking point when an alternative appeared. amd listened, responded & kept promises.

amd offer a plausible roadmap for a life together - intel - phony blue skies

intel had problems - but they didnt man up to them - they expensively weasled to save face regardless of the cost to others. they face a bitter legacy of their own making.

discounts are a bit pathetic
 
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Avro Arrow

Posts: 1,804   +2,155
TechSpot Elite
It makes no difference if Intel slashes Xeon prices because performance per watt is king in the server space. Xeon can't even come close to matching the performance and efficiency of EPYC. This means that a Xeon would be more expensive to use than an EPYC even if Intel gave it away for free.

Too little, too late.
 

wiyosaya

Posts: 6,575   +4,968
Compare those Threadrippers against equivalent Intel offerings (core count) and you'll notice they are quite cheap actually.
So you've bought one because they are so cheap? That is still speculation.
Still pure speculation as proper example is still missing.
And your subjective observations are still speculation.
So it would be better if AMD wouldn't offer 64 core Threadrippers at all?
Hmm. Did I say that? If so, where??? Or are you still speculating at what I've said.
Compare those TR prices against Epyc prices and figure out something...
EPYC and Threadripper are two different classes of processors with differing specs, such as PCI-e lanes. Perhaps you should figure out something yourself?
Greedy and charity are different things.
Charity. :facepalm: 🤣 More speculation?
Give an example of those.
https://www.cpu-world.com/CPUs/K8/AMD-Athlon 64 FX-62 - ADAFX62IAA6CS (ADAFX62CSBOX).html In case you cannot find it, look for the "price at introduction" field in page. Of course, that only lasted until sIntel came out with Core 2 and topped AMD in price.
Before you even start, I remind you that AMD's Ryzen 1800X offered around same performance Intel asked 1000 dollars. Both were 8 core models.at same time Intel asked over 300 dollars for "top notch" quad core.
I think that you should study CPU pricing history. The practice of continually pushing prices higher and higher between sIntel/AMD slugs is, as I see it, actually enabling each other to continually price CPUs at introduction well beyond the competition and it is doing nothing to keep CPU prices affordable. sIntel pushing their previous gen parts to $2K without any corresponding performance increase above the next lower binned parts made that $2K part not worth it in any sense of the word unless you wanted to count bragging rights as part of performance.

If you don't like my opinion on the price wars, I cannot help that. These price wars do nothing to keep enthusiast CPU prices within reach of many enthusiasts. The only enthusiasts that can afford those prices are those with deep pockets who purchase for bragging rights only. As I see it, they are the market run wild.

If sIntel manages to come out with a new line of CPUs that top AMD by a wide margin, watch the prices skyrocket again.

By far, I am not against competition in the marketplace - AMD finally put a leash around sIntel's neck that stopped them from fleecing their customers and releasing piddling performance increases from generation to generation. Poor sIntel will have to innovate again to regain that lead, otherwise, AMD will take it all away from them.

I remember people P&Ming about the fact that the first generation of Ryzen's were still not good for gaming. Personally, I think AMD did the right thing because they were targeting the enterprise market - which is where the money is. The gaming market is a niche market, IMO, in comparison to the enterprise market.

And now that AMD is finally producing CPUs that perform well in games compared with sIntel, there's this whole cheering section chanting "Yeah AMD. Keep raising CPU prices - even though we cannot afford them. We'll glady march to our banks and borrow the money so we can buy them."

Good luck!
 

wiyosaya

Posts: 6,575   +4,968
Intel responded quickly, offering discounts for the 11th and 10th generation Core processors, but AMD still dominates Amazon’s best-selling list. AMD’s situation in the notebook processor market has begun to improve, but supply constraints have prevented the Red Team from gaining faster revenue. This is an area where Intel still feels comfortable.
And feeling comfortable was their Achilles Heel in the past. However, I think its obvious that Intel is not feeling all that comfortable, otherwise, they would not be making such desperate moves as this Xeon "discount".

IMO, this move just goes to show that really, nothing has changed at Intel.

Intel thought that fake demos showing the CPUs outperforming AMD (with a hidden cooling unit under the desk) would fool everyone. Intel saying "AMD chips are held together with glue" also thought that that would fool everyone. Now this "Xeon discount" - Intel likely thinks that this will fool everyone, too. My bet is that that market is smarter than that.
 

Avro Arrow

Posts: 1,804   +2,155
TechSpot Elite
I think it's a smart move on Intel's part. From what I hear, they aren't going anywhere just on the performance of their hardware.
It does appear to be a smart move on the surface but there's an elephant in the room that Intel cannot get around. That elephant is the fact that Xeon is SO inferior to EPYC in terms of performance-per-watt that I don't think that they'd even be worth buying if they were free.

Data Centres and Servers are constantly running and the cost of the electricity used easily exceeds the cost of the chip's purchase price over the lifespan of the CPU unless it's in a supercomputer that gets replaced every few years. Typical server farms keep their CPUs in operation far longer because they don't have unlimited government budgets to do whatever they want. Also, taking the cost of the labour involved and the hardware needed (new motherboards for example) causes private server farms to keep using their CPUs up to a decade after the server goes online. There are still servers out there using Opterons and those things are ancient. Just imagine the amount of juice that has passed through those processors.

It's like when a country buys a fighter jet, sure, all of the ignorant laypeople and "fake experts" drone on endlessly about the cost of purchase. Real aviation experts (like me) know damn well that the cost of operation is many times that of the unit purchase price and is far more relevant to the decision-making process. In that way, this situation is no different. Intel is hoping that there are enough clueless noobs among their customer base to fall for their tactic. Fifteen years ago, there were enough noobs among their customer base but noobs don't remain noobs over fifteen years.
 

Avro Arrow

Posts: 1,804   +2,155
TechSpot Elite
I would argue that those are not discounts at all.

They bring the prices more to the ground level because amount of pure net profit on Intel Xeon-SKUs before AMD came up with EPYC-Zen is/was just obscene to the point you can buy few EPYCs for same amount of money.
You make a excellent point.
That alone shows what kind of greedy monopolistic monster Intel really is (or should I use 'was' right now?).
I believe that "is" and "was" are both applicable. Intel hasn't changed. They're still monopolistic but AMD's market presence has stopped them from acting that way.
Of course AMD is same kind of monster, just perhaps version Light for now. Do you seriously believe that if someday AMD will swallow 75% of server market they'll still keep low prices? Keep dreaming.
I don't think that AMD will EVER be that kind of monster. Not because they don't want to, but because Intel is so huge, crooked and diversified that they'll never go away completely.
Comparing Intel with Ngreedia is kind of miss, because Intel has vastly inferior product stack vs AMD and they charge obscene $ for it. NVidia has vastly superior product stack and they don't have any serious obstacles which would force them to reconsider.
Right there you lost me. You must have some strange definition of "vastly" because nVidia's products are not "vastly" superior to ATi's. As a matter of fact, according to Steve Walton (who is a tech god), the best video card to buy today has an ATi GPU on it and is the Radeon RX 6600 XT, well, as long as you don't get the Biostar version (but AMD has nothing to do with that).
 
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Avro Arrow

Posts: 1,804   +2,155
TechSpot Elite
And same companies that first buy Intel with discounts later complain about Intel prices when Intel has acquired monopoly...
Those are clueless executives doing that.
Like I have said many times, server buyers aren't so wise people.
They're not as smart as the engineers but they're definitely wiser than the average consumer looking to buy a brand-in-a-box PC. They have performance per watt drilled into their heads along with long-term cost analyses. They'll know that the Xeons still aren't worth it.