Intel is Serving Major Xeon Discounts to Combat AMD EPYC

For the past few years, Intel has not been known for giving large discounts unless you are big enough to buy direct. Intel may have a massive amount of Xeon revenue, but unless you are one of the large hyper-scalers, or a major OEM, or are building a large cluster, discounts on CPUs have been relatively small. We have been hearing through a number of customers that Intel is finally engaging in significant discounts to hold AMD EPYC at bay.

From what we have been hearing from a number of customers, discounts are happening at quantity levels *well* below 1000 CPUs. Discounts or incentives are reaching well into the double-digit percentages. For some customers, if they are evaluating an AMD EPYC purchase versus a competitive Intel Xeon part, Intel is more or less matching the price.

This is not happening on frequency optimized SKUs as much since the licensing savings can be hundreds of thousands of dollars per machine. Intel knows that AMD EPYC is targeting this segment as heavily in this generation so the discounts are happening more often in the mainstream higher core count parts.

At VMworld this year, we heard this from a number of our readers and vendors at the show. The behavior shift has been dramatic in that it was a topic of a number of discussions.

A key trigger seems to be an organization’s willingness to adopt AMD EPYC. Our advice, if you are buying even as few as 50-100 servers, is to get an AMD EPYC system quote from your reseller. Doing so seems to be the trigger for Intel’s discount approvals.

Impacts of the Intel Xeon Discounts

File this one under a “no duh” bit. One of the most common forms of dealing with a new market entrant is competing on price. What this also means is that if you are buying, even 50-100 servers for a virtualization cluster, you may also want to price out AMD EPYC servers. AMD EPYC has such aggressive pricing that Intel may decide to discount accordingly to get a deal even in the low hundreds of server ranges.

Taking a step back, this makes sense. There is likely a low single-digit percentage of swing purchases (e.g. ones that will consider Xeon and EPYC) in this generation. If Intel needs to discount on say 1-2% of Xeon sales, but it can put more pressure on AMD EPYC, then this is textbook competitive pricing strategy.

The other major impact is that as you read future reviews, do not take AMD EPYC versus Intel Xeon Scalable pricing at face value. Intel already has discounts for its largest customers. It also can afford to take a mid-list price/ mid-discount or high list price/ high discount competitive pricing and discounting strategy. Unlike what we saw a year ago, Intel Xeon RCP is not as firm.

For buyers, Intel was not as willing to discount in Q1 2018. As systems like the AMD EPYC Powered Dell EMC PowerEdge Servers Are Here and our Dell EMC PowerEdge R7415 Review, AMD has only been available from most Top 5 vendors over the past few months. At the same time, it may pay to shop Intel versus AMD as we are hearing EPYC pricing may help customers at risk of switching get better pricing from Intel even if they do not buy EPYC.

Price is not the only factor when determining a server purchase. Indeed, servers with a lot of RAM, many drives, or a number of accelerators will see CPU pricing be relatively small in the overall TCO picture. We highlighted this as part of our DeepLearning10 and DeepLearning11 builds. At the same time, this market behavior is both classic and significant. It shows that Intel is feeling the AMD EPYC threat. For customers, leaning into this competitive environment and getting a competitive quote may be a small step to save tens of thousands (or more) on your next server cluster purchase.