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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Len Roselli who wrote (70125)	12/23/1998 10:42:00 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 186894

Intel to challenge AMD on pricing BY TOM QUINLAN Mercury News Staff Writer mercurycenter.com Intel Corp.'s introduction on Jan. 4 of its most powerful Celeron microprocessors will be coupled with a series of aggressive price cuts designed to undercut rival Advanced Micro Devices Inc.'s current pricing for its K6 line, sources familiar with Intel's plans said. Intel declined to comment on specific product or pricing plans, but spokesman Robert Manetta said the Santa Clara-based chip maker would be introducing the faster Celeron processors early in January. Manetta also indicated Intel would be targeting the low end of the chip market in a more aggressive fashion in 1999. Prices for the current Celeron line range from $86 to $156, when purchased in quantities of 1,000 chips at a time. That price point is somewhat misleading, as larger and mid-size computer manufacturers usually order chips in lots of 10,000 or more, and get volume discounts. Intel's fastest processor -- at 400 MHz -- will be priced fairly close to that $156 price point at the high end, but the company will lower the price of its entry-level 300-MHz Celeron below $86, sources said. Intel will introduce a 366-MHz chip at the same time. Computer Retail Week, an industry trade publication that tracks retail sales of computers first reported Intel's pricing plans on its online Web site Tuesday. Intel's aggressive plans to take a bigger role in the low-cost personal computer marketplace is coming just as it wraps up what promises to be its biggest quarter for sales and revenue ever. The company already has indicated that sales and profits will be 10 percent higher than it had expected, and some manufacturers are complaining that they can't get enough chips to meet current demand. But Intel is still feeling the effects of being extremely late in introducing chips designed specifically for computers priced at less than $1,000. That market accounted for 58 percent of all PC sales made through retail outlets in November, according to PC Data. While analysts have estimated that Intel will sell approximately 8 million Celeron processors this quarter, the company still trails AMD and National Semiconductor Inc. subsidiary Cyrix Corp. when it comes to providing chips for the sub-$1,000 PCs -- in large part because those two companies consistently have undercut Intel's pricing. AMD 25% lower AMD, which had 37 percent of the market for retail sales of PCs priced below $1,000 according to the market research firm PC Data, has been offering its chips at a 25 percent discount compared with Intel's chips. Cyrix, with 30.1 percent of that market, has not been as definitive as AMD in setting its prices below Intel, but Cyrix's M2 and MediaGX series are priced significantly below Intel's products as well. Although AMD has managed to maintain its 25 percent price difference with its lowest cost K6 processors in the $65 range, the company has said there is a limit to how low it will price those chips. AMD officials were not available for comment, but in the past they have said they need to reach an average selling price of $100 per chip to be profitable. Some analysts said that even if Intel is successful at increasing its market share at the low end, it won't significantly hurt AMD or Cyrix at this point. ''Can AMD produce chips cheaper than Intel can? No,'' said Richard Doherty, founder of the market research firm Envisioneering Inc. ''Intel's pricing will simply reflect that fact now.'' Moving up But at the same time, AMD and Cyrix have managed to leverage their success at the low end to gain a foothold in higher-priced systems. ''Both AMD and Cyrix are starting to show up in systems priced in the $1,500 range,'' he added. ''I think both companies will be able to weather this action by Intel.''