Intel Will Pump Up Its Processors,
Cut Prices
(07/27/99, 6:50 p.m. ET)
By Mark Hachman, Electronic Buyers' News
Intel on Monday will unveil a 600-MHz Pentium
III and a 500-MHz Celeron microprocessor,
augmenting the chip introductions with a
Celeron price cut to keep the PC market racing
ahead.
According to a spokesman for Intel, in Santa Clara,
Calif., the 600-MHz Pentium III will be introduced at
$669, and the 500-MHz Celeron will be priced at
$167 in lots of 1,000 pieces. The spokesman declined
to comment on the Celeron cuts, but sources close to
the company said prices would drop about 18 percent
to 22 percent.
The introductory prices of both parts are lower than
Intel's typical habit. For example, the recently
introduced 550-MHzPentium III was priced at $774 at
its initial release, while the usual introductory price for
the Celeron ranges between $169 and $177, the
spokesman said. "It's a bit more aggressive than we are
typically," he said.
The reasons for that are threefold. First, Intel's volume
manufacturing ramp is still "looking good," the
spokesman said. Second, the industry is moving into the
August back-to-school selling season. Virtually
non-existent five years ago, late summer sales now rank
second behind the end-of-year holidays as Intel's most
important sales period.
By charging a slightly lower price, Intel said it can help
OEMs maintain their momentum. Compaq Computer
and Gateway will announce systems based on the new
Pentium III, the Intel spokesman said.
Finally, analysts are confirming the PC industry is
already moving under a full head of steam, assuring Intel
that it can give volume discounts. According to San
Jose, Calif., researcher Dataquest, worldwide PC unit
sales are up 25 percent, year-over-year, and Intel's
revised expectation is the trend will continue into the
second half. "We originally predicted sales would trail
off in the second half [because of the Y2K bug], and it
now appears we were wrong about that," the Intel
spokesman said.
Analysts have been convinced of Intel's success, with
Boston's SG Cowen & Co. upgrading Intel's stock
Tuesday on the strength of its potential in the
subsidized, or "free PC," market. PC Data, in Reston,
Va., a research company that tracks retail and
mail-order sales in the United States, said Intel has
retaken that segment, capturing 59.1 percent of overall
unit sales and 45.4 percent of the sub-$1,000 PC
market, the latter of which represented 70.1 percent of
all U.S. retail and mail-order PC shipments.
The surge in demand has had some negative effects, as
OEMs and motherboard makers are finding Intel's
mainstream PC chip sets are even more difficult to
come by than last week.
Spot prices for Intel's 440BX, 440LX, and 440ZX
mainstream PC chip sets continued to skyrocket,
closing out last week at $36, $15, and $22,
respectively, according to NECX, an independent
distributor in Peabody, Mass. During last week alone,
prices jumped more than 30 percent for the BX and
older LX chip sets, with the lower-performance ZX
chip set increasing 17 percent. According to reports,
motherboard vendors such as AOpen are also
beginning to raise their own prices this week.
"We're overbooked," the Intel spokesman said,
referring to the company's chip sets. In September, Intel
will launch the Intel 820, or Camino, chip set, together
with the 810E for the low-cost market. Though the
current Pentium III's bus runs only at 100 MHz,
133-MHz front-side bus support will be included in
both the 820 and 810E, together with supporting
microprocessors, he said.
Although Advanced Micro Devices has begun shipping
its K7 microprocessor, the chips will only initially run as
fast as 600 MHz, the same as the new Pentium III.
Initial reports, however, have placed the K7's
performance a significant notch higher than the Pentium
III running at the same clock speed. Even so, if AMD
holds its pricing constant, then the $669 600-MHz
Pentium III will likely undercut the $699 600-MHz K7.
Intel's customers reported this weekend the 466-MHz
Celeron will be cut to $114, while the 433-MHz
version will drop to $93. The 400-MHz part will fall to
$73, while the 366- and 333-MHz versions will remain
unchanged at $69 and $67, respectively. |
