Intel cut prices on desktop and server chips over the weekend.

The desktop price cuts come as Intel gets ready to ship the first of its next-generation 'Nehalem' processors, which will sport a new microarchitecture and offer significant performance enhancements thanks to a new chip interconnection scheme that replaces the now-outdated front side bus architecture of the Xeon server and Core desktop and laptop processors.

Intel is expected to launch the first desktop Nehalem chips under the Core i7 brand some time in November. The server versions of the Nehalem processors are not expected until early 2009, although Intel has said nothing publicly about Nehalem server chip schedules.

The price cuts announced on October 19 are more about competitive pressure from AMD's quad-core chips than desktop, laptop, or server buyers deciding to wait for the launch of a product line that will make current Core and Xeons chips obsolete. Intel obviously can't afford for a lot of customers to wait. Neither can its OEM customers that build and sell desktops, laptops, and servers.

On servers, two Xeons for single-socket servers had price cuts. The quad-core X3210 - which runs at 2.13GHz and has 8MB of L2 cache - had a five per cent price cut to $188. The faster 2.4GHz X3220 had a five per cent cut too, also to $188. Those prices are for 1000-unit quantities, as always. The fact that no other Xeons or Itaniums had price cuts says pretty strongly that Intel is pleased with its competitive positioning on server chips.

Desktop chips got some tweaking too, but again, this was on a relatively small number of chips. Intel cut the price of the quad-core Q8200 - which runs at 2.33GHz and which has 4MB of cache - by 14 per cent to $193, and the price of a Q6600, also a quad-core, fell by five per cent to $183. The Q8200 has a 1.3GHz front side bus, compared to the 1067MHz FSB in the Q6600.

The E7300 Core 2 Duo chip had its price cut by 15 per cent to $113. This dual-core chip runs at 2.66GHz and has 3MB of cache. The E2220 dual-core Pentium chip, which runs at 2.4GHz and has only 1MB of cache, now costs $74, down 12 per cent. The slower E2200, which runs at 2.2GHz, costs 14 per cent less at $64. Those are all per-unit costs if you buy 1000-chip trays from Intel. ®