Paul, Article...Intel's '99 Gift List/ Fast, Cheaper Chips...
November 25, 1998
COMPUTER RETAIL WEEK : Las Vegas - Intel plans to catch the tail end of the holiday season with faster, cheaper Celerons in January and its biggest product launch ever in so-called Katmai chips by February's end.
And, by next year's close, Intel plans to increase Celeron speeds to 433MHz and push consumer-desktop chips to 600MHz with a new 133MHz system bus, said market sources at Comdex/Fall last week.
Intel's roadmap for early 1999 also includes steeper-than-planned price cuts for Celeron and Pentium II processors, and an integrated chip that could pave the way for $399 Intel-based systems by 2000.
Paul Otellini, executive vice president and general manager of Intel's architecture business group, said the "below-$399 [price point] is a target for us."
Otellini said production of Celeron chips, the heart of Intel's "basic PC " effort, is ramping up at record levels. He said the company won't resist the low-end market, much as it appears to wish prices would remain higher. "Rather than fight gravity, we decided to go with the flow," he said.
Celeron processors will get a boost starting later this year, when Intel implements a cost-efficient method to mount the chip on new motherboards in a 370-pin design called PPGA. The first motherboards will be available this year, and will be officially introduced with the 366MHz Celeron on Jan. 3. Intel has lowered the introductory price of that chip to around $160, from a previously planned $190. It will drop to around $150 on April 11, when the 400MHz Celeron makes its appearance at $180.
Also slated for steeper cuts on Jan. 3 are Celeron 333MHz and 300MHz chips, both of which sport 128KB of cache. From current respective prices of $160 and $140, the two will drop to around $120 and $90. (Previously planned prices would have left them at $150 and $105, respectively, on Jan. 3.)
Despite the lower prices, Otellini said his talks with retailers indicated most "want to find a way to get out of the 'noise' [of the low end and move beyond] yet another, cheaper box."
Craig Barrett, Intel's president and CEO, downplayed the impact of lower prices necessary to play in the U.S. retail sector. "The whole world is not U.S. retail," he said. Nevertheless, Barrett reported that Intel sees no sign of a slowdown in chip life-cycles; rather, he said, "The [technology] cycle is permanently speeded up."
To bolster higher prices points, Intel is introducing chips with a new level of MMX-like instruction sets (code-named Katmai) that will push the technological envelope-and raise prices. Otellini predicted strong software support and a weighty marketing campaign based on the processors' Internet capabilities. "It will be our biggest launch ever, no question," he said.
Sources expect the chips to be introduced on or shortly after Feb. 28 in versions running at 450MHz and 500MHz.
The 133MHz system bus enhancement, part of an effort known as Coppermine, will make its debut in the second half of next year, the sources said.
Although Katmai-class processors, which include 70 new MMX-like instructions, have been discussed for some time, Intel's strategy for the new processor was clarified in meetings with OEMs and key partners late last month. Although Intel executives declined to discuss specifics of the Katmai launch, Otellini indicated there will be several times the number of software titles available for the processor at launch than had been available for MMX.
While Intel won't discuss pricing, sources said the 450MHz Katmai will be introduced at $528 in 1,000-unit quantities, and the 500MHz will be $760-suitable for systems in the $2,000 range. Intel will launch a 533MHz Katmai at a $740 price later in the year, the sources said, and speeds will reach 600MHz by year's end.
Efficiencies in production capabilities have allowed Intel to cut its prices for standard Pentium II chips below previously indicated cuts, Intel told partners.
Accordingly, the standard Pentium II 450MHz, which dropped to around $560 on Oct. 25, will drop on Feb. 28 to $475 instead of a previously planned $520, sources said. The 450MHz will drop to $395 on April 11, and $302 shortly thereafter. Also in for a deeper cut than planned is the Pentium II 400MHz, which dropped on Oct. 25 to $375. On Jan. 3, it will be reduced to $353, then drop again on Feb. 28 to $280 from a previously planned $315. On April 11, it will drop again to $245, then to $200 shortly thereafter.
Separately, at an Intel briefing with reporters at Comdex/Fall, officials said the OverDrive upgrade program, which allowed users to boost system speeds with easily installed replacement chips, eventually will be phased out. They cited increasingly high engineering costs.
Officials also confirmed the Pentium II's eventually will include a 133MHz system bus; indicated the company's readiness for an acquisition in the home-networking arena; and rebuffed indications that Moore's law is slowing down.
By Mark Harrington
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