Intel took the rabbit called “the Core microarchitecture” out of the hat, the battle changed from “who has the most users” to “let's keep some users on our side” for AMD. Their biggest policy was to reduce the prices, and everybody expected this move from their part, but no one thought up to what point they would go with this, and it seems they're going to make some big sacrifices.
Processors like the AMD Athlon 64 X2 4600+ dropped 38% in just one week from $200 to $124, and that's just one of the examples. More of these changes can be seen all around the market, and besides the obvious reason of keeping up with Intel processors, I believe that there is a secondary reason that has made AMD drop the prices. And that is to create room for their upcoming line of processors, which will arrive along side the R600 and other lines of products.
Their desire must be fueled by what they had to put up with up until now, they are somewhat in a rush of making the public not like, but love their new products, and thus accept and buy them. There is also the case of acceptance, of AMD's products by the public, that is an unknown factor which is approached through this initiative they are having with juggling the prices.
On the other hand, Intel isn't sitting around doing nothing, they will have their next generation processors based on the 45nm manufacturing process ready to do combat with AMD's offer, hoping that they will maintain the superiority of the market they have achieved with their current line of processors. Intel is also taking the step forward with chipsets for their processors, along side some interesting features such as DDR3 memory support and 1600MHz FSB support for the server segment, as a response to AMD's Barcelona processors.