Last month, the chipmaker announced significant savings across the Pentium D 900 lineup, with price cuts ranging from 17 percent to sensational: The high-end Pentium D 950's retail price was cut in half, to just over $325, while the Pentium D 940 dropped 42 percent to about $250. These are serious cuts to Intel's newest and best desktop processor line, and a real challenge to AMD. Intel's Celeron D also saw similar price drops, but in reality, 30 percent off an $80 Celeron is not as sexy as 50 percent off a $600 flagship chip.

That Intel is intent on waging a price war with AMD goes without saying, but in addition to the motivation of bringing new customers into the Intel camp, the company's transition from 90- to 65-nanometer process architecture is likely a contributing factor. All other things being equal, a smaller die size translates into more chips per silicon wafer and hence lower production costs. The faster Intel can ramp up and achieve high yields in 65nm production, the more it can trim prices.

Meanwhile, one side effect of the 900-series price cuts is the immediate obsolescence of the entire Pentium D 800 line. These 90-nanometer-process chips deliver lower performance with higher power and cooling requirements, and with a 3.4GHz Pentium D 950 priced lower than a 3.2GHz Pentium D 840, the only 800-series processor that makes sense is the entry-level ($130) Pentium D 805.

There are also rumors that Intel will drop the other shoe with a round of price cuts on its popular Core Duo mobile CPUs, putting additional pressure on AMD and its Turion 64 line. Double-digit percentage cuts on the sizzling-hot (in sales, not temperature) Core Duo would be very bad news for AMD, as Core Duo notebooks are the new sensation that's sweeping the nation. Even after AMD ships its anticipated dual-core Turion 64 parts, it'll have to compete against Core Duos that undercut Turion prices.

The World Turned Upside Down

The Athlon 64 X2 has given Intel a migraine since the day it went on sale, exacerbating some of the match-up issues the Pentium 4 was already having against the Athlon 64. The first Pentium D had a maximum clock speed of only 3.2GHz, and caused trouble in terms of relative performance, power consumption, heat production, and platform compatibility. The Pentium D 900 series hiked peak clock speed to 3.4GHz, with the smaller 65nm core also closing the gap in terms of heat and power consumption, but it was still AMD's ballgame.

Now, with Pentium D 900 retail prices plunging, it's AMD processors that seem mismatched. For instance, the 3.4GHz Pentium D 950 was until recently priced slightly higher than the powerful Athlon 64 X2 4800+, but is now slugging it out with the lower-end Athlon 64 X2 3800+. This is a huge reversal of fortune, especially when you consider that the Pentium D 950 is now the highest-priced model in Intel's dual-core line while the Athlon 64 X2 3800+ is the lowest in AMD's.

At this moment, AMD doesn't have an Athlon 64 X2 model to compete on price against the Pentium D 920, 930, or 940, and it's pretty amazing that all three of those parts are priced in the $200-to-$250 range. Even though the Athlon 64 X2 is the superior design, it's hard to argue with the 900 series' bang for the buck -- which has buyers taking a second look at Intel's dual-core offerings, as well as eyeing low-cost Intel 945 motherboards. It also helps that DDR-2 memory prices have dropped significantly: Many shoppers are pleasantly surprised to find that in some cases DDR-2 is actually less expensive than DDR. The "reasons to buy AMD" list hasn't gotten any shorter, but the "reasons not to buy Intel" list has suddenly shrunk.

Of course, there's a potential negative to everything -- in this case, the possibility of bad blood when buyers of brand-new Pentium D 950 desktops find their systems incompatible with the new Conroe. Most enthusiasts are used to Intel's musical-platforms act by now, but staging a fire sale on pre-Conroe processors does carry a risk. However, the risk is just as great for AMD, which is about to make Socket 939 obsolete in favor of the new AM2 platform.

Your Move, AMD