All: Interesting article on the low-end retail. Intel, maybe a bit embarassed by some of the retail numbers, seems a bit more forceful in their comments!
joey
crw.com
Intel Slashes Celeron Prices for
Low-End PCs
Mark Harrington
Santa Clara, Calif.
11:02 AM EDT, Fri., Oct. 23, 1998
Stung by an uncharacteristically low share in the sub-$1,000 PC sector, Intel is
turning up the heat on its Celeron microprocessor with L2 cache, pricing it for
systems that will be offered for as little as $649.
As part of a price cut scheduled for Monday, Intel is lowering the cost of the
333MHz Celeron with cache to $155, while the 300MHz Celeron with cache will be
reduced to around $98.
The moves come as Advanced Micro Devices also fortifies its position with price
cuts that will allow its K6-2 300MHz chip to be sold in systems as low as $599.
What's more, AMD this week beat Intel to the punch with the market's first
366MHz processor, featured in a new Hewlett-Packard Pavilion at $1,099. Intel's
366MHz Celeron isn't slated to ship until February. AMD is also planning a
380MHz K6-2 soon.
Meanwhile, Taiwanese PC maker CTX said it planned to bolster its fall line with
three Celeron-with-cache systems priced at $649, $749 and $799. CTX markets
systems at retail though such chains as CompUSA and OfficeMax.
The price moves are significant in the newly segmented low-end PC market, where
Celeron has thus far played a marginal position in the upper ranges.
Accordingly, Intel has seen its market share in sub-$1,000 systems (and in retail
share over all) remain somewhat low, according to figures provided by PC Data,
Reston, Va. In the sub-$1000 PC sector at retail in August, AMD controlled
roughly 54 percent of the market, according to PC Data. In comparison, Intel
controlled 25 percent (14 percent of which was Celeron) and Cyrix controlled 17
percent.
Intel vows that will soon change. "The party for AMD and Cyrix is over," an Intel
spokesman said.
David Sheffler, vice president of sales and marketing at AMD, countered that the
party's only beginning for AMD, which plans to attack Intel aggressively at the
high end and in the notebook sector. "We expect Q4 to be a rocking quarter for
us," he said.
Though placed in a CTX-branded box, the 300MHz Celeron poses a competitive
threat to a breed of Cyrix MII 300MHz-based systems that are moving into the
market. Compaq recently introduced an MII-300 model at $799 with a $100 rebate,a
system that is expected to drop to $599 next month.
Wendy Lin, marketing coordinator at CTX, said the company is ordering Celerons
in large quantities and improving its pricing. "The Celeron is really a hot CPU in
the market right now. It's perfect for first-time PC owners," she said.
Nevertheless, she added, CTX is considering renewing a relationship with Cyrix,
and now offers a $599 system with an AMD K6-2 300MHz processor.
Other second-tier PC makers have also voiced new interest in Celeron.
Mike Culver, vice president of Acer America's consumer business division, said
Intel is realizing the unforgiving nature of low-end PCs. Acer's newly introduced
Aspire 2100 line contains AMD K6-2 chips, not Celerons.
"Intel will make Celeron work," Culver said. "I can't imagine our line in January not
containing a Celeron 333MHz."
Intel is expected to make another round of price cuts on its Celeron offerings at
January's end, as it prepares to introduce the 366MHz version in Q1.
The spokesman said Intel has worked past the sour reputation of the
first-generation Celeron, widely criticized for its lack of cache. With the focus on
the Celerons with cache, Intel is accelerating production more than at any point in
its history, and its shipments during Q4 will be four times those of Q2, based
mostly on the new Celerons.
"Starting in November and December, you'll see the landscape change," the Intel
spokesman said. "You'll see a lot more OEMs pushing Celeron. ...I'm surprised at
the price points some [companies] are going to hit. You'll see a lot more."
Market sources said price cuts expected next week from AMD and Intel are as
follows: In quantities of 10,000, the K6-2 3D 300MHz microprocessor will drop to
around $75; AMD's K6-2 3D 333MHz will drop to $95, and the 350MHz will drop to
$128. Information on the just-launched 366MHz version was not available.
The 380MHz and 400MHz K6-2 chips are due over the next two months, and will
debut at $170 and $248, respectively, a source said. The 380MHz is expected to
require a special motherboard sporting a 95MHz bus speed, the source added.
Prior to the cut, the 300MHz sold for $129, the 333MHz for $169, and the 350MHz
for $224, according to AMD. A company spokesman declined to comment on
future pricing. However, according to other sources, AMD is expected to further
reduce prices in the first quarter of next year. While the 300MHz K6-2 3D is
expected to be discontinued, the 333MHz will be cut to $80; the 350MHz will drop
to $106; the 380MHz will hit $135; and the 400MHz will be cut to $185, the source
said.
According to a price sheet shown to Computer Retail Week this summer, Intel's
Pentium II 400MHz will drop to $368 on Oct. 25; its PII 350MHz will fall to $209; the
PII 333MHz will hit $209; and the PII 300 will drop to $205. The 333MHz and
300MHz Celerons with cache are expected to drop to $155 and $98, respectively. |
