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Technology Stocks : Intel Corporation (INTC)
INTC 41.41+2.2%Dec 5 9:30 AM EST
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To: JBoyd who wrote (62396)8/12/1998 11:37:00 PM
From: Jim McMannis  Read Replies (2) of 186894
 
Intel brought out the Celeron for a couple reasons.
1. The Pentium II costs too much to manufacture to sell into the Sub-$1000 market. My best guess is that a cacheless Celeron on .25 would cost $45 + or - 5 to make where as a Pentium II would cost about $75 + or minus 5. Hard to compete selling Pentium II chips for $80.
Still at 131mm2 and 165mm2 die size respectively for the Celeron and Mendocino these chips cannot be produced for anywhere near the cost of a PentiumMMX...but Intel decided it was better to keep Slot one rather than prolong Socket 7.

2. Intel could have gone back to the Pentium MMX but in typical Intel style, to keep the competition at bay, they wanted to abandon socket 7 and capitalize on the proprietary slot one and it's set of chipsets.
It's been a double edged sword so far because of the emergence of the sub $1000 market being somewhat incompatible with the high cost Pentium II. Slot ones speed advantages come at a price. On the other hand, nearly as powerful chips like the K6 and K6-2 (68mm2 and 79mm2 die) can sell for less and fits well into this fast expanding segment of the market.
Prior to the Pentium II, Intel had three major advantages over the competition. Superior process technology/yield, small die size and higher speed grades (usually). They had to give one up to get to the slot 1 design, the die size AND because of the cartridge design there are greater packaging costs plus the cost of the 512k cache.
With the Celerons, they have had to take a step back to satisfy the lower markets by reducing the L2 cache altogether in the case of the Celeron and adding just 128k back ON the die in the Mendocino.
Later cost cuting will come from adding yet another interface called socket 470...to further save money.
Jim
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