Not only does AMD's 4P CPU has better price/performance ratio, it sits in the same mobo that customer has! For Xeon series 7300 you need new mobo. Also for Barcelona you need RDRAM and for Xeon 7300 series you need much more expensive FB-DIMM's.
All in all 4P Barcelona is far more superior product.
Regarding the "niche" market... if you call auto, space, oil, mining, financial… niche (aka not worthy) markets, then OK, but targeting these market is the smartest thing that AMD could have done. Those guys have money, and they buy a lot

And for the reference pricing of new Xeons, and new Opterons:
XEON
• X7350 @ 2.93GHz, 8MB L2 cache, 130W TDP at $2310
• E7340 @ 2.40GHz, 8MB L2 cache, 80W TDP at $1980
• E7330 @ 2.40GHz, 6MB L2 cache, 80W TDP at $1391
• E7320 @ 2.13GHz, 4MB L2 cache, 80W TDP at $1177
• E7310 @ 1.60GHz, 4MB L2 cache, 80W TDP at $856
OPTERON
• 8350 @ 2.0GHz, 95W TDP at $1004
• 8347 @ 1.9GHz, 95W TDP at $774
• 8346 HE @ 1.8 GHz, 68W TDP at $688
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