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Intel to begin low-cost assault

The chip giant will make a major push into cheap computing Monday by releasing the first Celerons with high-speed memory.

Intel will make a major push into the low-cost computing arena Monday by releasing the first Celeron processors with integrated high-speed memory, a substantial change in design that will allow vendors to put a high-performance chip into a sub-$1,000 machine.

Meanwhile, rival Advanced Micro Devices will release a 350-MHz version of the K6-2, a chip that increasingly has been used in inexpensive systems from Compaq Computer, IBM, and others.

As a result, a slew of new computers using the low-cost chips from Intel and AMD will emerge, ranging in price from $900 to about $1,200.

Intel also will release a faster version of its Pentium II chip running at 450 MHz.

Code-named Mendocino, the 300A and 333A Celeron processors to be released Monday will mark a significant boost in performance for the often criticized low-cost Celeron family. The new processors will contain 128K of "secondary cache" memory grafted onto the same piece of silicon as the processor.

Cache memory serves as a critical quick-access data reservoir for the processor and substantially boosts performance.

Standard Pentium IIs come with 512K of secondary cache that sits alongside the processor--not directly on the chip--and therefore is slower. The first Celerons had no secondary cache, which reduced performance.

The upshot: Although the cache on the Celeron is one-fourth the size of the standard Pentium II memory, integration makes the cache twice as fast, according to Nathan Brookwood, semiconductor analyst for Dataquest. In addition, Celerons will perform as well, and possibly better, than a Pentium II at the same clock speed.

"The net of it is that the [new 333-MHz Celeron] chip is almost as fast as a Pentium II 333. The Celeron 300 should be faster or as fast as the 300 Pentium II," Brookwood said, "The 266-MHz and 300-MHz Pentium IIs, once the Celerons come out, become very uninteresting products."

The difference comes in price. Sources say the Celerons will cost $139 and $179 in volume, compared to $316 and $423 for 300-MHz and 333-MHz Pentium IIs.

Intel's processor road map
Aug. 1998

300-, 333-MHz Celerons with 128K integrated cache;
450-MHz Pentium II.

Q1 1999

Xeon and Pentium II with "Katmai" multimedia instructions at 500 MHz;
"Dixon" 333-MHz Pentium II with 256K cache memory on chip. Mostly for mobile computing.

2H 1999

"Coppermine" Pentium II with Katmai and integrated cache running up to 600 MHz;
"Cascades" Xeon plus Katmai at 700 MHz;
Katmai on Celeron; speeds up to 400 MHz.

Sources: MicroDesign Resources, others

This will make the price-performance curve drop substantially, according to Roger Kay, computer analyst for International Data Corporation. Systems with the new Celerons containing 32MB of memory, 3.2GB drives, and CD-ROM drives will sell for between $950 and $1,100. Equivalent systems with standard 300-MHz and 333-MHz Pentium IIs now sell for between $1,200 to $1,600.

"These are much better processors" than the original Celeron units, said Kay. "These should sell pretty well."

The performance boost that comes from integration also is prompting Intel to perform marketing and product development gymnastics with its product line.

The company wants to maintain technological and brand differences between low-cost Celeron processors, which sell for $100 to $200 in volume, and the performance Pentium II chips, which sell at $200 to $800. The two processor families, however, share the same core technology.

To maintain distinctions, Intel will likely keep the speed grades of the Celeron chips below Pentium II chips, noted Brookwood. In other words, speed upgrades to the Celeron line will be matched by the disappearance of equivalent Pentium II chips.

New technologies also will be slower in coming to the Celeron line, mused Keith Diefendorff, editor in chief of the Microprocessor Report, while integration will move up the line to the Pentium IIs.

"Intel will try to push the integration concept of integrated caches across the product line," Diefendorff said. "Mendocino is definitely a much more compelling product than the original Celeron."

The first examples of this technology migrating to other Intel chips will come in the first quarter, he added. Then, Intel will release the first "Katmai" chips, a new generation of chips that will contain additional multimedia instructions.

Katmai, which has been called "MMX 2", will appear on Pentium II and Xeon processors running at 500 MHz and higher. Intel is also slated to release "Dixon," a 333-MHz Pentium II processor with 256K of integrated memory. The processor will mostly be used in mobile computers.

In the second half, Intel will then release "Coppermine," a Pentium II chip, and "Cascades," a Xeon processor. These will be the first chips made on the advanced 0.18-micron manufacturing process. In addition, they will contain integrated secondary caches, Brookwood predicted.

By that time, Katmai technology will be coming to the Celeron line, Diefendorff estimated. Celerons also will get boosted to 400 MHz by the end of 1999. Celeron processors will also shift from the 66-MHz bus to the 100-MHz bus. The bus is a data conduit between the processor and other parts of the PC.

Intel, of course, will not be the only game in town when it comes to new processors. AMD's 350-MHz K6-2 is expected to draw vendor support when it is released next week.

Moreover, AMD plans to release the K6-3 in the first quarter of 1999. This chip will contain 256K of integrated memory. Cyrix, a subsidiary of National Semiconductor, also will be releasing a new generation of chips based around its upcoming core, code-named Cayenne.

"If nobody stumbles, you have AMD with the K6-3, Intel with Katmai, and Cyrix with Cayenne. All three will have really very hot products," Brookwood said. "It is going to be interesting to see what happens."

Intel is an investor in CNET: The Computer Network.