It is a well-known fact that microprocessor suppliers frequently make price discounts for the biggest personal computer vendors in order to encourage their partners to use certain CPUs in future. For example, Dell is rumoured to be one of the privileged companies to receive processors from Intel at cheaper cost, also several notebook makers from Taiwan who used desktop Pentium 4 processors in their mobile computers this winter, now get Pentium 4-M CPUs with the price a little bit reduced for them.

I should note that official AMD prices on microprocessors that can be found on the web-site of this company are always higher than those found in retail channels. More importantly, AMD does not offer its partners any insurance for the case of price-reduction and also sometimes declines the costs without announcing it. The result of such policy is clear: those who had not managed to sell AMD products before the rival got them for cheaper price, have to sell them of with losses.

These days, AMD prepares another price reduction and several stores in the USA now sell Athlon XP 2200+ beginning from $150.

I have read over here that in the second quarter AMD started to negotiate with major PC-makers to deliver them Athlon-family processors with more attractive pricing in exchange for more orders. The move was aimed to increase AMD`s market share. Several system integrators agreed to buy more AMD CPUs for reduced price. Later these companies had faced that they were not able to get rid of those products before the Sunnyvale based processor maker starts to deliver cheaper units to the rivals. Even considering the “favourable” pricing model, the companies are not able to perform commodity circulation using their channels. In order not to loose their money, anonymous computer vendors have started to sell their stocks on the grey market. The chips are priced 10% below the appropriate price from AMD, and some resellers have already moved to these sources instead of official channels.

According to several analysts, grey-market sales accounted more than 80% of total AMD products sold by some agents. So, the market share of AMD remained on the same level, but the policy has caused a lot of confusion in present market conditions what is not good for AMD at all.