<--Intel-->Price War, What price war? Intel likes to disagree.
abraves:
Interesting day shaping up.
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Intel is slated to cut prices on its line of low-cost Celeron chips on Monday, causing some analysts to wonder whether this aggressive low-end chip strategy might ultimately do more harm than good.
In a move that will likely rattle the PC and chip markets, Intel will cut prices on its increasingly popular Celeron line of chips. But some analysts think if Intel continues to sell more of these low-priced chips, revenues could suffer. In short, as Intel boosts Celeron shipments, the overall average selling price of Intel chips dips.
Prices will fall about $10 on the cheapest Celeron chips and more on higher end versions, according to industry sources familiar with the price cuts on Monday. Pentium II prices are slated to be cut on February 28 when the Pentium III arrives, Intel has said.
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Linely Gwennap, editor director of the Microprocessor Report..
"There is no doubt that Intel has ignited a price war [with the Celeron] " he added.
Intel doesn't agree. "I'm somewhat confounded by this," said Intel spokesperson Manny Vera. "Yes, we are getting aggressive with Celeron...then people assume there is a price war. But that [the Celeron chip line] is just a small chunk of our business."
Intel also takes issue with the potential revenue shortfall. Intel CFO Andy Bryant gave some "guidance" recently in a meeting for financial analysts where he asserted that profit margins for 1999 are expected to be 57 percent, up 3 percent from 1998.
Intel is counting on strong revenue from high-end processors such as the upcoming Pentium III processor and its Xeon line of workstation and server chips. Intel's chips for notebook PCs, in some cases, also sell at a premium. Intel also says that it is cheaper to make Celeron chips and therefore it doesn't take that big of a hit on profit margins.
Despite what Intel says though, the low end of the market has all the hallmarks of a price war. Advanced Micro Devices (AMD) chips, for example, are expected to go for as little as $40 in March, almost unprecedented in the Intel-compatible chip market. AMD sells most of its chip to makers of low-end consumer PCs.
Ashok Kumar, an analyst at Piper Jaffray, predicted that the price of K6-2s sold to PC makers in March will be about $40 for the 333-MHz version and range well above $60 for the 400-MHz processor.....
news.com
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