Yep - that's pretty much it. There's also a third and fourth reason for running a cashback scheme (though your second point is still by far the most important).. 3) People like offers. Setting a new lower RRP doesn't scream "this is a special offer" to those who aren't in the know. They'll just see the price for what it is. People like to feel like they're "winning" somehow when they make a transaction. Buying something at the RRP doesn't feel like winning even if the price is cheap to start with. 4) Reducing RRPs in the long term leads to devaluation of the brand. Remember Cyrix CPUs? Yes, they were a load of rubbish, but they were £20. For those who were budget conscious that's a great deal - but it also meant that Cyrix were seen as the "cheaper option" which, like many brands-you've-never-really-heard of get tagged with the "it's cheap so it must be crap" label (and many of them are, of course). Thus, it's better for AMD to be seen to be giving money away (which sounds great) rather than to concede "we're the cheap option, you won't pay much, but don't expect too much either.