Price cuts loom as Intel promotes faster Pentium

By Michael Kanellos, CNET News, 23 July, 2002 13:31

NEWS

Intel is pushing ahead the release of faster Pentium 4 processors in an effort to speed even further ahead of rival Advanced Micro Devices. The Santa Clara, California-based chipmaker will come out with a 2.8GHz Pentium 4 for desktops later this quarter, and a 3GHz Pentium 4 in time for the holiday buying season, said sources close to the company. Earlier, the company said it would come out with a 3GHz Pentium 4 in the fourth quarter. Intel will also accelerate price cuts on older chips to make way for the faster Pentium 4 lineup, analysts said. According to Salomon Smith Barney analyst Jonathan Joseph, Intel will cut prices on its fastest Pentium 4 2.53GHz chips by 63 percent when the faster chips launch. Cuts for Intel's Pentium 4, 1.8GHz chip will be roughly 13 percent. Intel will also move up Pentium 4 price cuts to 1 September from the previously planned 27 October, said Joseph. Price cuts serve two main purposes. They can be used to move PC makers to faster chips or as a tool against rivals. Intel, in this case, is likely to be using the combination of the faster speeds and the price cuts to make its chips more attractive for the holiday selling season. By then, entry-level Pentium 4 desktops are likely to come with 2GHz chips at a minimum. Additionally, the company plans to release a 2.2GHz Pentium 4 for notebooks before the end of the year and unveil "Banias" a new, energy-efficient mobile chip designed specifically for notebooks. Banias will not be sold under the Pentium name, a source said, but will be given its own brand name similar to the budget Celeron line or the Xeon chips for servers. Intel will also upgrade its budget Celeron line. Currently, top-end Celerons are based on the "Willamette" core, the basic chip core behind the first version of the higher-performing "Northwood" core currently used in the top Pentium 4 processors. Although the two chips will share the same core, the Celeron version of the Northwood design will come with only 128KB of secondary cache, a reservoir of memory located on the chip for rapid data access. Northwood Pentium 4 processors come with 512KB of cache. The new release schedule, despite a lull in computer sales, gives Intel a leg up over rival AMD in terms of chip performance. The Athlon line, AMD's flagship chip since 1999, has fallen behind Intel's Pentium 4 in terms of megahertz and overall performance. The fastest Athlon on the market today, the Athlon XP 2200 XP, tops out at 1.8GHz -- 700MHz slower than the 2.5GHz Pentium 4. By the holiday season, the gap will increase to 1GHz. While megahertz is only one measure of performance, it remains an important factor in consumer purchasing and pricing. The Athlon XP 2000, which runs at 1.7GHz, sells for about the same in retail as the 1.7GHz Pentium 4, according to Converge, which tracks component pricing. However, the Athlon XP 2000 is comparable in performance to the 2GHz Pentium 4. In any event, most analysts agree that the top Pentium 4 processors, although more expensive, outperform the top Athlon chips. Sunnyvale, California-based AMD is working on a new generation of higher-performance desktop chips -- code-named Hammer, but to be sold under the Athlon name -- but they won't ship to PC makers until the fourth quarter. While analysts are optimistic about the performance of these chips, Hammer-based PCs won't appear on store shelves until the first quarter of 2003.

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