At the entry level, AMD officials said, the K6-2 "blows away" Intel's new Celeron because of its integrated three-dimensional instructions, called 3DNow!, which improve graphics performance, and uses a 100MHz with 128KB of integrated Level 2 cache. But AMD is positioning the 350MHz K6-2 against Intel's 350MHz Pentium II. AMD's K6-2 has 64KB of Level 1, or on-chip, cache, while the Pentium II has 32KB of Level 1 cache and 512KB of external, or Level 2, cache. The bus compared with the Celeron's 66MHz bus. Intel, as expected, on Monday rolled out 300MHz and 333MHz Celeron processors K6-2 costs $317 (£193), and the Pentium II costs about $420 (£256). However, the 350MHz Pentium II will drop to about $300 (£183) next month, which means that AMD will cut prices, too. It is AMD's policy to keep its processors priced at least 25 percent below comparable Intel processors. Despite snagging some big customers--Compaq and IBM to name two that use the K6-2 in consumer systems--AMD has not been able to penetrate the business market. "That's our next challenge,'' said Dana Krelle, vice president of marketing at AMD's computation products group, in the US. AMD will build on its success in the consumer market to first move into small-business PCs and, eventually, PCs sold to large businesses, Krelle said. Over the next year or so, he said, AMD's processors will be used in PCs branded specifically for small business, but he declined to say from which vendors. The 350MHz K6-2 will be followed next quarter by a 400MHz version of the K6-2 and a chip, code-named Sharptooth, that will have 256KB of integrated Level 2 cache. AMD has produced pre-production samples of Sharptooth.