As we all know, Intel has turned things around with it's Core 2 Duo. However, AMD still has a pricing edge for the time being. Demand for these Core 2 Duo's has far outran supply (it's still a little early) consistently, creating a shortage. Intel's projected quantity supplied is about 500,000 Core 2 Duo's by the official release date, August 7th. Even this seemingly large supply will not be enough to meet demand. This means that most e-tailers have their prices inflated over the MSRP of these CPU's. The law of supply will take hold in this case; suppliers will work to increase the supply. Intel's motivation to boost supply is motivated not by profit-seeking (because the e-tailers are inflating the price, not Intel), but by the need to lower prices to the MSRP in order to solidify competitiveness. Most blogs suspect this equilibrium date to be in mid-August (the official release date of these Core 2 Duo's is August 7th). Interestingly, Intel's efficient production allows the MSRP of these processors to be much lower than the current crop of Pentium D's and Extreme Editions, despite the vast performance improvement. If Intel doesn't drop the prices of the old architecture, the surplus of these NetBurst chips will be even more pronounced. In a month or two, I'm expecting large clearance sales just to clear out this inventory.

I think that we've all been surprised (and a little bit amused) by the role reversal of AMD and Intel over the past couple of years. AMD for years couldn't outperform Intel's CPU's, so they played the "bargain basement" game. That is, they created an inferior good. The Athlon series of CPU's couldn't outperform their Intel counterparts, but they got the job done and were a much cheaper substitute for Intel CPU's. Now, both companies are producing normal goods. AMD has had the performance crown since the Athlon 64's came out. However, Intel's Core 2 Duo, shipping at half of the price of an Athlon 64 FX-62, will probably give AMD a run for their money. We'll see.

In the computer industry, categories of products are inelastic. Take processors for example. If all makers of CPU's raised their prices together, demand would not fall accordingly because essentially, one needs a CPU to make a computer. Since everyone has raised their price, one has no choice but to pay that higher price. Individual makes of a product are elastic. This is because there are almost always substitutes for a product. If Intel's latest flagship Pentium 4 is $1200, and AMD's latest Athlon FX is $800, the law of demand will take over and the demand for the P4 is going to drop.

Does anyone actually have the AEGIA Physx card yet? I don't think that the demand will be there untill a major game title takes on full support. G.R.A.W supported it, but all that you got for the investment in the card was more shrapnel when a grenade goes off. It's kind of a paradox: the software companies don't want to make the card a requirement, as consumers might not buy the game because they don't want to have to make the investment in the card. At the same time, AEGIA knows that it needs a game title in order to start the market rolling. I have a feeling that it will take several more months for the card to be embraced wholly by power users.