Dropping P4 Prices Crush Celeron Demand
Ongoing price wars make entry-level chips unattractive.
Douglas F. Gray, IDG News Service
Wednesday, December 26, 2001
When it's easy to find a great holiday deal on a PC with a high-end processor, why would anybody settle for one with an entry-level chip?
That's the problem facing chip makers Intel and AMD, which have watched their carefully planned market segmentation blow up, thanks to a faltering economy and a massive downturn in technology spending. Just a few years ago, entry-level chips were aimed at sub-$1200 PCs; now you can find a system using Intel's premiere Pentium 4 chip at a lower price than some using its entry-level Celeron processor.
As Intel has rapidly dropped prices on the P4 to compete with AMD in a tough market, the company watched its less expensive Celeron lose market share. The Celeron dropped from 27.2 percent in the third quarter of last year to 20.9 percent of the market in the same quarter of this year, according to research firm Dataquest.
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In that same period, Intel introduced the Pentium 4, and that chip went from a zero market share to 23.9 percent.
Celeron Demand Drops
"The price has gotten so close that the slight difference doesn't make [the Celeron] worth it," says Chris Roberts, technical manager at C&E Computers, a custom computer manufacturing company.
"We do offer it by request, but nobody asks for it," he says.
It's not just the price wars between Intel and AMD that make Intel's Celeron and AMD's Duron chips seem less attractive, says one analyst. PC vendor price wars are also playing a large role.
"With system pricing and Intel evangelizing the Pentium 4, we now have a situation where $900 is going to get you a Pentium 4 system, which is where the Celeron used to be priced," says Dean McCarron, an analyst with Mercury Research.
When prices are similar, choosing between the two chips is simple: Go for a P4, he says. While today's Celeron is essentially a Pentium III with fewer features and a 100-MHz bus, the Pentium 4 offers a new microarchitecture and a 400-MHz bus, McCarron says.
"Pentium 4 momentum started affecting the Pentium III first, because it was closer," McCarron says. "Now that the Pentium III has been wiped out, the top end of Celeron is starting to get wiped out as well."
Strictly based on clock speed, the fastest Celeron is only 100 MHz, slower than the slowest Pentium 4. But the differences go beyond clock and bus speeds. Most notable is the difference in L2 cache, an on-chip feature that lets the processor access a special memory buffer faster than it can access the main memory.
Most Celerons have 128KB L2 cache; the 1.2-GHz version has 256KB. Pentium 4 processors offer a 256KB L2 cache now, and future P4 chips (code-named Northwood) are expected to have a 512KB L2 cache.
Celeron's Evolution
Intel launched the Celeron four years ago with a clock speed of 266 MHz and no secondary cache. After critics panned the performance of the unit, Intel rolled out a 300-MHz chip with a 128KB L2 cache.
By March 2000 the Celeron was running at 600 MHz, and Intel had added Internet SSE (streaming single instruction multiple data--or SIMD--extensions). Intel designed its set of processor instructions to boost the performance of multimedia and Internet applications.
Eight months later, Intel's 766-MHz Celeron hit the streets, and today that chip is the company's lowest-speed Celeron on the market. That same month, Intel launched the Pentium 4 at clock speeds of 1.4 GHz and 1.5 GHz.
Why Buy a Celeron?
"The Celeron is an okay product for someone who just needs to have an Intel processor, and we understand that," says Peter Goodman, founder and chief operating officer at PCs for Everyone.
There may be little reason to settle for a Celeron-base machine at all. Careful shoppers visiting Dell's Web site can find a decent 1.4-GHz P4-based system that costs less than a 1.1-GHz Celeron-based model.
Intel downplayed the fact that Dell's Pentium 4-based system was less expensive than the Celeron-based unit. "It sounds like the Pentium 4 is a great deal," says George Alfs, Intel spokesperson.
"That just shows that Pentium 4-based systems can be had for a very reasonable price this Christmas," he says.
"As the Pentium III fades from the mainstream desktop, certainly the Pentium 4 and Celeron have to meet," Alfs says. "The Celeron often gets configured in value systems, while the Pentium 4 tends to be focused on richer offerings--there's a real clear brand difference between the two."
The Celeron has a history of changing with the times and will probably continue to do so, says Nathan Brookwood, principal analyst with Insight 64.
"They have evolved it over time from a chip that was part of the Pentium II family, to a chip that was part of the Pentium III family," he says. "They change the architecture typically about six quarters from the time [Intel introduces] the highest-speed part."
Six quarters from the Pentium 4 introduction would be in mid-2002. However, Intel remains quiet about its Celeron plans.
High End Goes Low
"The high-end [PC] is now about $1500, and the low end is about $700," Brookwood says, noting that a few years ago, the high end hovered at about $2500. "People now realize that it's probably not a bad idea" to spend more and get a high-end system, he says.
"Today, most people who are buying PCs have already had one--they may have purchased their first PC a couple of years ago on sale," Brookwood says. "Now they've learned that maybe buying the lowest priced box on the shelf might not be the best point." |
