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It looks like Intel (NSDQ:INTC) is upping the ante. Over the past 6-7 years, Intel has kept its dual core chips locked down in a bid to encourage its performance-oriented consumers to purchase more premium chips. This also prevented the Chipzilla’s low-end CPUs to match, or even surpass, its own high-end CPUs in terms of single threaded raw performance. But all that seems to be changing for good.  A recent report by Wccftech reveals that Intel is planning to unveil an unlocked Kaby Lake i3 7350k SKU in the first half of 2017.  How will this renewed product direction impact AMD, and Intel’s competitiveness in the low-end CPU segment?

What Is Overclocking And Why It Matters Here

Well, the CPU inside your desktop or laptop comes with a set of factory settings that direct it to run at a certain speed. These settings tend to add stability of your system. But in most cases, that is not the maximum speed at which your CPU can perform. You can increase the CPU speed manually by tinkering with BIOS settings, thereby directing it to operate at much higher clock speeds. This is called overclocking.

I may have oversimplified things a bit but that’s essentially how overclocking works. It allows a low-end budget chip to perform at par with higher-priced and higher-spec chips in terms of single core performance, for brief periods of time, given that additional cooling is provided to the CPU to prevent any physical damage.

Like this one, the are thousands of comparison benchmarks available in the public domain that highlight the benefits of overclocking. A mere dual core chip from Intel, which is overclocked, is outperforming an Octa-core FX chip from AMD (NSDQ:AMD) by a significant margin. So, if two CPUs can deliver the same levels of performance under specific work loads, for a brief duration, why would any want to pay extra?

Intel realized that this could be a problem and it decided to lock down its dual core variants from 2009 onwards. This was primarily done to encourage potential consumers to pay more for their chips, create a distinction between low and high-end SKU and to boost its ASPs. So Intel's decision to reportedly release an unlocked dual core Kaby Lake SKU is a big deal. It marks a shift in the Chipzilla’s product strategy and contradicts its previous justification of locking down its low-end offerings in the first place, from all three standpoints - investment, technological and operational. So how will this impact Intel?

Internal advantages

Firstly, the upcoming i3 7350k chip is reportedly going to be launched sporting a price tag of $180. This is quite high going by Intel’s prevailing prices of desktop-grade dual core chips, costing about 50% more than its entry-level i3 counterpart, but slightly lower than entry-level quad core SKUs. The leaked table attached below indicates that pricing of the upcoming 7350k has been kept right in the middle of locked i3 and i5.

(Click on image to enlarge)

So this could encourage entry level buyers, looking for occasional overclocking, to spend $15-$20 extra and get the unlocked variant instead. I believe this would boost Intel’s ASPs going forward. The concern of buyers dipping down, and buying unlocked i3 instead of locked i5s, is mostly unwarranted, as the need for faster computing capabilities has been on the rise lately, thanks to growing popularity of higher resolution content.

Moreover, I believe it would boost the appeal factor for Kaby Lake chips. Users having i3-powered systems might feel the need to upgrade their systems to the latest unlocked i3 7350k. The upgrade cost should be low since we’re talking about entry level parts here. So the economics of upgrading existing systems shouldn’t be a major deterrent.

Please do note that we don’t have any concrete dataset to know exactly how many i3 owners fall into this category, so this is purely speculation on my part. But if my theory is correct, and stands the test of time, then a significant base of i3 owners flocking to upgrade their systems with the latest Kaby Lake could very well push Intel’s unit sales higher. Higher ASPs at increased volume, what’s not to love, right?

Is this also a hedge against AMD?

We also have to take into account that AMD is expected to release its Zen CPUs – both consumer and server grade – in the first half of 2017. Management of the once-beleaguered chipmaker claims that its latest iteration of CPUs would give a tough fight to Intel offerings. So expanding the line of unlocked CPUs, starting with the i3 7350k, would be a great way to reduce the appeal of AMD's upcoming Zen line-up.

Further, AMD offers unlocked CPUs throughout its range, which is why buyers on a tight budget, looking to have overclocking capabilities, tend to go for AMD over Intel. I believe that the i3 7350k, and perhaps similar subsequent launches, would go a long way in bringing some of the potential buyers of unlocked CPUs into Intel’s ecosystem, which otherwise would have gone to AMD, due to the lack of overclocking capabilities within their respective budgets.

And lastly, I linked you to a benchmark comparison above in the article, showing an entry level i3 chip outperforming an Octa-core AMD CPU by a significant margin. If that was the case with a locked i3, which can be overclocked only slightly, imagine what an unlocked i3 could do. I suspect that adding overclocking capabilities to dual core i3s would raise the bar for AMD, and make it tougher to match Intel in terms of raw performance, at least in the budget segment.

Putting it all together

Adding unlocked i3 SKUs to its line-up might look like a very small move on Intel’s part, but it’s a very significant one. It marks a shift in the Chipzilla’s product strategy to counter AMD, boost its own ASPs, and expand its targeted clientele amid a sluggish PC industry. If the experiment succeeds, we may very well see more much SKUs. But if it fails, Intel doesn’t stand to lose much, as its just one SKU we’re talking about. Hence, I’m led to believe that this low-risk and high-reward move is a good step forward by Intel. Evaluating tech stocks? Check out Amigobulls' top technology stock picks, which have beaten the NASDAQ by over 110%.