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Intel's new Celerons to further cement budget PC market

The company is releasing two new Celeron processors for sub-$1,000 PCs, a market that, up to now, has been a virtual Intel colony.

Intel is releasing two new Celeron processors for sub-$1,000 PCs, a market that is virtually an Intel colony.

The Santa Clara, Calif.-based chip giant plans to release Monday a 733-MHz Celeron and 766-MHz Celeron for budget PCs, said Jeff McCrea, director of Intel's desktop products group.

"These will be the seventh and eighth Celeron products introduced this year," he said. PCs containing the new chips will likely come out within the next 30 days, he added.

When computers with the new chips do arrive, they will be wading into a sea of Celerons. Because of hiccups in the launch of the rival Duron chip from Advanced Micro Devices, Intel controls nearly the entire budget market.

"In July, August and September, Intel had over 95 percent of the sub-$1,000 market at retail," said Steve Baker, an analyst at PC Data. "If you wanted something under $1,000, it has pretty much been Celeron."

Duron, a budget version of AMD's Athlon chip, first came out in June. Unfortunately for the company, chipsets containing integrated graphics chips were not available at the time. Integrating the graphics into chipsets cuts additional cost and has become a hallmark of the budget PC. The chipset is a necessary component on a PC motherboard that helps shepherd data between the processor and the rest of the computer.

"AMD has had to make up for the additional cost of the platform by discounting the processor," said Dean McCarron, principal analyst at Mercury Research.

Even with the discounts, acceptance among PC makers has been slow. By coming out in June, Duron was too late to fit into the "back-to-school" cycle--the second-biggest retail season--in August and September.

Some Duron systems began to filter out in late September. Recently, Compaq Computer began offering Duron systems, while Gateway models are expected shortly.

The Duron dearth will begin to fade after the release of integrated chipsets from Taiwan's Via Technologies in the first quarter, McCarron said. Sources at Hewlett-Packard said earlier this year that the company is looking to release Duron-based computers in the first quarter of next year.

Despite losing ground in the budget market, AMD has made huge strides in the more profitable, but often less volume-intensive, $1,000 to $1,500 PC market. "Since May, AMD has gone from a 3.3 percent market share to a 22.8 percent share" in U.S. retail, Baker said. AMD has also penetrated the $1,500-and-above market.

Celeron is actually due for some retrofitting. Intel continues to pair the chip with a 66-MHz system bus, the data conduit between the chipset and the processor. Most chips now come with a faster bus. Although the slower bus cuts down on manufacturers' costs, it chokes performance, McCarron said.

Next year, Celeron technology will improve. McCrea said that Intel will couple Celerons with a 100-MHz bus in the first half of 2001. Sources close to the company have said that the faster bus will come with an 800-MHz Celeron in the first quarter.

The 766-MHz version costs $170 each in quantities of 1,000, while the 733-MHz version costs $112 in those quantities.