'Tis finally the season for Intel's Core 2 Duo

Intel is finally ready to launch its Core 2 Duo processor Thursday at an event at its Santa Clara, Calif.-based headquarters, after months of talks and PowerPoint slides. And based on the early reviews, it appears as though Intel has a winner on performance.

With Microsoft's Windows Vista not ready to make an appearance until 2007, the PC industry needs an Intel pick-me-up. It's likely that the new processors will be the centerpiece of holiday PC marketing campaigns. And some think the Core 2 Duo could help the industry turn around what so far has been a dismal 2006.

Make no mistake, it's been a tricky year for PC makers. Business buyers, say analysts, are taking their time with new hardware after years of steadily upgrading their systems. With that in mind, PC makers are increasingly focused on retail consumers, who are still buying enough machines to keep the market growing.

The second half of the calendar year, of course, is always a consumer-heavy period, with back-to-school sales in August and September followed by holiday shopping in November and December.

Consumer PC sales aren't expected to slow dramatically in the fourth quarter just because people are waiting for Vista, said Todd Titera, senior manager of consumer desktop products for Gateway.

But some analysts, such as NPD Techworld's Stephen Baker, fret that without a compelling reason to upgrade a PC this holiday season, holiday shoppers will spend their money on goodies like digital televisions and gaming consoles.

In that sense, "the Core 2 Duo probably couldn't have come at a better time," Titera said. On top of the buzz that comes with a new chip, the performance delivered by the Core 2 Duo could also generate interest in high-end desktops that also deliver better margins for PC companies, he said.

Capitalizing on critical praise
The Core 2 Duo, which was code-named Conroe, has received a tremendous amount of praise from chip reviewers who had savaged the world's largest chipmaker in recent years for the poor performance of its Pentium D chips against Advanced Micro Devices' Athlon 64 X2 processors.

"I am actually more optimistic that a strong launch and the great reviews we are seeing for Conroe (and Merom, the notebook version of the chip) are going to at least help offset consumer's reluctance to purchase because of Vista," Baker said in an e-mail interview with CNET News.com. "The real shame is that we couldn't have had both those catalysts working together to help boost sales."

Consumers might also be enticed to buy a new system through that tried-and-true sales technique--the bargain. One benefit of Intel's emphasis on rolling out the Core 2 Duo processor is that Pentium D systems will become much more affordable in the second half of the year. AMD has also cut prices in response to the introduction of the new processor, and while AMD might now be behind on raw performance, during the second half of the year it should be very competitive on price.

By the end of the year, about 20 percent to 25 percent of Hewlett-Packard's consumer PCs will use the Core 2 Duo chip, said Shagorika Dixit, a senior product manager at HP. Prices will probably start around $899 for a mainstream desktop as the systems first start to appear, and will fluctuate over the rest of the year based on configuration and the availability of the new chips, she said.

Gateway has a similar plan, Titera said. "We're going to be able to offer [the new PCs] in mainstream price points," he said.

The Core 2 Duo systems might also seem more attractive alongside an offer from Microsoft and PC companies for consumers to upgrade to Vista, Baker said. Systems sold in the last few months before previous Windows launches were also accompanied by coupons or rebates for discounted versions of the new operating system, he said.

And there's nothing a holiday shopper likes more than putting the latest toy under the Christmas tree.