Intel says big margins in P4

According to roadmaps we saw last week, La Intella has devided its desktop strategy into three segments, for the consumer market, for the channel (distributors and dealers), and for the corporate strategy.

Some of this can be implied from other stories we've recently written, but one slide on the roadmap we said was pretty clear about how Intel is thinking.

In the consumer market, the first priority is for Intel to displace the Pentium III, and to "accelerate the Intel Celeron processor into a leadership position" - doing so by positioning it both at higher clock speeds and on price.

The firm will offer its channel partners two Pentium 4 processor price points below $180, which is pretty aggressive, we reckon. At the corporate level, Intel will also move the market to Pentium 4s, it hopes, while re-assuring those firms that have committed to PIIIs that it will continue to supply them.

Here's the margin stuff. We're a little bit puzzled by this because the minimum margin Intel thinks its customers will make out of the P4 is 19 per cent, while the maximum is 24 per cent. A lot of firms would kill for margins half this, so we're not entirely sure how this miracle will unfold.

Two price points are provided, one the minimum, and one the sell up point.

The Consumer minimum is a Pentium 4 1.5GHz processor, with 128MB of memory, a 20-30GB hard drive, active speakers, 32MB graphics, CD-RW, a modem, and Windows ME/XP. The target system price for this configuration is $879 with a gross margin of 19 per cent.

The sellup configuration is a Pentium 4 1.7GHz machine with 256MB of memory, a hard drive greater than 40GB, high end speakers, 32MB graphics, a CD-RW and a DVD drive, Modem/Lan, and Windows ME/XP. The target system price is $1,099, delivering a gross margin of 18 per cent.

On the Corporate level, the minimum configuration recommended by La is 1.6GHz, 128MB of memory, a 10-20GB HDD, no speakers, lowe end graphics, a CD-ROM, Lan and Windows 2000, giving a target price of $829 with a gross margin of 24 per cent. Twenty four percent! Faint.

The sellup corporate configuration is a 1.8GHz Pentium 4, with 256MB memory, a 20GB hard drive, active speakers, 32MB of graphics, a CD-RW, Lan and Windows 2000. The target price is $1,159 and the target gross margin 21 per cent.

We'd be interested in hearing from our reseller readers how these recommended prices and margins will pan out in the real world. And it's going to be pretty easy to see what AMD will have to compete with, given these configurations. µ