Intel may be preparing to slash the price of the P4 for the second time this year, but whether this will mean cheaper PCs isn't as clear cut as one might think. Speculation about a price reduction has been prompted by the increasing prominence of AMD in the microprocessor market, but a price cut by Intel does not necessarily mean the end of the rise of AMD.

Lehman Brothers analyst Dan Niles reckons that Intel is "planning to drop a price bomb on AMD", and this could be a reduction in the price of a P4 chip by as much as 54 percent. According to Niles, Intel's market share had dropped to 79 per cent in the second quarter of 2001, mostly due to AMD.

Andy Brown, a senior analyst from research firm IDC, agrees that Intel is going to make "some serious price cuts", but didn't think that they would be as much as 54 per cent.

Though the global PC market is in decline, this hasn't meant that prices have dropped. Figures produced by IDC suggest that the price of desktop PCs in Western Europe has risen since April this year, and are also more expensive than they were this time last year.

IDC's Brown says it is inevitable that AMD will respond by making price cuts of its own, a move that should affect the price of PCs, "but not that dramatically".

Intel is still the major player in the microprocessor market, although AMD has been gradually increasing its share of this market in recent times. In April, PC Advisor reported that Intel had reduced the price of the P4 by £200, at the same time as granting licenses to manufacturers to allow them to make Pentium 4 chipsets.

Neither Intel nor AMD were prepared to comment on any future pricing plans.

IDC is a company in IDG group, as is PC Advisor.