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Intel cuts mobile chip prices

Intel reduces the cost of processors for portable PCs, paving the way for more Pentium models around the closely watched $1,000 mark.

Intel cut prices on
Mobile Pentium II chip prices
Chip Old price New price
266-MHz Pentium II $637 $444
233-MHz Pentium II $391 $262
266-MHz Pentium MMX $348 $241
233-MHz Pentium MMX $213 $134
200-MHz Pentium MMX $134 $95
166-MHz Pentium MMX $95 $95
Source: Intel
its processors for portable PCs, paving the way for more Pentium notebooks priced around the closely watched $1,000 watermark.

The price cuts should precipitate "price compression" similar to that which has occurred in the desktop market. Price compression is a phenomenon in which prices for computer products consolidate in narrower bands, closer to the low end of the spectrum, shaving the margins of PC vendors and reducing their profits.

At the high end of the pricing spectrum, Pentium II notebooks now priced well above $4,000 at many of the major vendors could fall to more reasonable levels as a result of the cuts. Plunging prices for other components such as memory chips and LCD screens should conspire to bring some Pentium II notebooks into the $2,000 to $3,000 range over the next few months.

Meanwhile, more notebook PCs with low-end 166- and 200-MHz Pentium MMX chips should begin to appear around the $1,000 price level.

Intel also said that notebooks using integrated Celeron processors should start to hit the market in the first half of 1999 and should sell for under $1,500. Low-cost Celeron processors are based around the Pentium II core and run at speeds of 266 MHz and higher.

Sources in the notebook industry have indicated that Intel will release a chipset with integrated graphics functions at the same time.

Separately, Intel released its Xeon chip for high-end workstations and servers. The pricey chip is expected to help the chipmaker recover sagging margins, which drooped to 54 percent last quarter.

Intel is an investor in CNET: The Computer Network.

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