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Intel's latest Xeon chips getting cool reception

While PC makers just can't enough of Intel's latest Pentium III processors, they're running away from Intel's more expensive Xeon chips.

While desktop PC makers just can't get enough of Intel's latest Pentium III processors, they don't seem to be as excited about the most recent Xeon chips.

Hewlett-Packard is dropping the Xeon--a more expensive derivative of the Pentium III--from its workstation product lines because of tepid demand. Dell, meanwhile, will not be adopting the newest members of the chip family for its workstations, although it will pick up later versions, executives at the companies said.

The cold shoulder for Xeon largely comes as a result of overlap in the Intel product line. Xeons cost more than standard Pentium IIIs but do not provide much advantage, executives and analysts said.

"People aren't necessarily following Intel's guidelines," said Shawn Willett, an analyst at The Aberdeen Group. "The chips that are supposed to have lower performance are performing at or close to the level of the higher [end] ones."

Xeons mostly get used in servers, and the volume of Xeon workstation chips remains small. Still, indifference to the product line among workstation product managers will likely have at least some impact on Intel's bottom line. Xeons for workstations cost between $50 and more than Pentium IIIs and, generally, are more profitable than Pentium IIIs.

HP had been using the chips in both its high-performance Vizualize workstations and its Kayak line. Instead, HP will depend on Pentium IIIs or its own PA-RISC processors.

"For a workstation application, there really is no performance difference between a Pentium III and a Pentium III Xeon," said Dave Morse, business manager for HP's Vizualize workstations.

Similarly, Dell Computer, which historically has adopted most Intel microprocessors, will not be incorporating recently released 733-MHz, 667-MHz and 600-MHz Xeon Pentium IIIs into its workstation line, a Dell spokesperson said.

"Xeon is doing well, and it is growing," said an Intel spokesman.

"All of the growth in workstations going forward for the next three years is based around the Intel architecture," Paul Otellini, general manager of the Intel architecture business group, said recently.

Improvements will come, but they likely won't convince everyone. Dell representatives indicated that the company would adopt enhanced versions of Xeon coming in 2000, but HP probably won't. In the past, when Xeons outperformed Pentiums, demand was still low, said Morse.

"The Xeons basically are all Pentium IIIs," said Dean McCarron, principal at Mercury Research, who added that Intel has probably not had the success it had hoped for with the product line.

"The market is very small" for Xeon workstations, added Achim Kuttler, marketing manager for HP's business desktops in North America.

The Xeon line, introduced last year, was touted as a high-performance version of the Pentium III for workstations and servers. Although based around the same processor core as desktop Pentium IIIs, the original Pentium III Xeons contained a faster secondary cache, a store of memory located near the processor for rapid data access. The faster cache boosted performance.

Xeons also came with caches ranging in size from 512KB, the same as standard Pentium IIIs, to 1MB and 2MB. Furthermore, Pentium III Xeons could be used in two-, four- and eventually eight-processor systems. The performance edge continued for Xeon in the first generation of Pentium III processors.

Along with greater performance, the chips commanded much higher prices. Xeons generally started at $931 and sold for as much as $3,692 for the versions with 2MB of cache. Standard Pentium IIIs typically premiered at under $800.

The performance equation however disappeared with the new line of "Coppermine" Pentium IIIs and Xeons that debuted in October. Coppermines differ from standard Pentium IIIs in that the secondary cache is integrated into the same piece of silicon as the processor. Although smaller, the integrated cache is much more powerful.

In fact, the improvement that comes from integration means that there is very little difference between the high-end Pentium III processor for desktops and the new version of Xeon based around the Coppermine design.

The difference mainly lies in price. The Xeons cost $50 more than Pentium IIIs running at the same speed. A 733-MHz Coppermine Xeon, for example, sells for $826 in volume. A standard 733-MHz Pentium III sells for $776. Several manufacturers are also using a chipset that allows them to build multiprocessor systems with ordinary Pentium IIIs.

Next year, the company will release Xeons with integrated 1MB and 2MB secondary caches, several sources said, which will again create a performance gap. Dell at that time will adopt higher performing Xeons, the Dell spokesperson said.