Intel Corp.'s Plan to Sell More Expensive Chips

Intel Corp.'s Plan to Sell More Expensive Chips

Recently, various tech websites spotted a change that microprocessor giant Intel (NASDAQ: INTC) is making to the branding of its value-priced Pentium processor lineup.

For years now, Intel has had two distinct lines of Pentium processors — ones based on cut-down versions of its high-performance Core processors and others based on its lower-cost Atom architecture .

An Intel desktop processor.

Image source: Intel.

Those who took the time to look up the different model numbers accompanying the basic Pentium brand name could determine whether an Intel Pentium chip was based on the Core or Atom architectures, but for the average consumer, the distinction was not clear.

To that end, Intel seems to have made a change in its branding to make it easy for customers to distinguish between the two types of Pentium processor.

Silver and Gold

The Atom-based Pentium processors will now be branded as Pentium Silver, while the Core-based Pentium processors will be branded as Pentium Gold.

This isn’t the first time that Intel has used precious metals to distinguish between members of its product lines. Intel’s latest Xeon processors for data centers now come in Bronze, Silver, Gold, and Platinum flavors .

This is a pretty sensible way for Intel to distinguish between the Atom-based and Core-based Pentium processors, as gold is known to be substantially more valuable than silver.

The impact to Intel’s businesses

Intel’s goal is to sell as many chips as it can for as much as it can. The change in branding of the Pentium processors won’t really affect the number of chips that Intel sells, but it could help enrich Intel’s product mix, ultimately increasing its revenue.

The idea is simple. Today, as far as the average customer is concerned, a Pentium is a Pentium. So, if that customer sees two systems — one with a Pentium N4200 and the other with a Pentium 4415Y — then it’s probably not clear which computer has the more capable chip.

In this case, the customer may just go with whichever’s cheapest.

However, if a customer sees two systems, one with a Pentium Silver and the other with a Pentium Gold, then that customer may opt for the Pentium Gold because it’s clearly better.

In that case, Intel wins because it sells a more expensive chip and Intel’s partners win because they ultimately sold a more expensive system.

Every little bit helps

At the end of the day, this change in the low-end part of Intel’s product stack isn’t going to make much of a difference to the company’s personal computer chip business. Intel’s Pentium and Celeron product lines (Celeron is an even lower-end brand than Pentium) have become decreasingly important to the company’s personal computer chip business as its mix of Core processors has increased.

On Intel’s most recent earnings call, CEO Brian Krzanich said that the company’s mix of Core processors is “continuing to climb.”

Nevertheless, every dollar counts, and to the extent that Intel can use this new branding scheme to drive customers to buy higher-priced Pentium Gold-based systems instead of Pentium Silver-based systems, the better it’ll be for Intel and its partners.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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