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Redesigned Celerons coming to market

Intel's first Celeron chips based on the Pentium 4 will come out next week in a move that will allow the company to cover the entire PC market with the same chip design.

Intel's first Celeron chips based on the architecture behind the Pentium 4 will come out next week, a move that will allow the company to cover the entire PC market with the same chip design.

Intel plans to release 1.7HGz and 1.8GHz Celerons for desktop computers next Wednesday, according to sources. Some new PCs containing the chip will appear next week, but most major PC manufacturers will unfurl budget computers containing the chips for the consumer and corporate markets the following week. That's when a chipset with integrated graphics comes out, which will eliminate the need for a separate graphics chip.

Celerons typically sell for between $64 and $100, less than their Pentium counterparts. The new chips, along with the new 845G chipset, will allow Intel to make the Pentium 4 architecture available for computers of all price ranges.

Dell Computer and other manufacturers now sell sub-$800 Pentium 4 computers, but it often takes cutting back on other parts to hit those prices--for example, reducing the amount of memory or including a plain CD-ROM instead of a CD-rewritable drive. The new Celerons will give PC makers more breathing room in that regard.

Even though they will be cheap, it may take some time for sales of computers containing the chips to catch on. Originally designed as a processor for the consumer market, the Celeron has become popular in corporate America because it costs less. Corporate demand remains slack, however.

"Any replacement of PCs is related to wear and tear as opposed to a new product cycle," said Ashok Kumar, an analyst with financial advisers U.S. Bancorp Piper Jaffray. "This year is a washout. The hope is for something next year. Hope springs eternal."

Intel declined to comment, citing a policy of not discussing unannounced products.

The new chips will differ substantially from existing Celerons. Current Celerons are based on the Pentium III architecture and come with a 100MHz bus, the main conduit between the processor and the rest of the PC. These chips top out at 1.3GHz.

In addition to running as fast as 1.8GHz, the new chips will come with a 400MHz bus. However, the new Celerons will come with a 128KB secondary cache, while current Celerons have a 256KB secondary cache--a pool of memory inside the chip that allows rapid data access. The performance gap between the new chips, therefore, won't be as significant as the speed differences might indicate.

Performance, though, is often less important than price for Celeron buyers.

"There is less emphasis on performance in the corporate market," said Brooks Gray, an analyst at market research firm Technology Business Research. "With tight budgets and Celerons at acceptable speed grades for 80 percent of the user base, there is no real compelling driver behind the Pentium 4."

Even with slow corporate sales, consumer PC buying has rolled on despite the economy.

"The Pentium 4-based Celeron is going to be very popular" in consumer PCs, said Dean McCarron, principal analyst at market research firm Mercury Research. "Cheaper parts sell better."

The proliferation of the Pentium 4 architecture will likely give Intel rival Advanced Micro Devices fits as well. Although the two companies' chips are often close in terms of performance, Intel's run at faster speeds when measured in megahertz. The new 1.8GHz Celeron is faster than AMD's top Athlon chip, the Athlon XP 2100+, which runs at 1.73GHz. By the end of the year, Intel will have Pentium 4 chips that run at 3GHz, faster in megahertz than those of AMD.

While megahertz is only one measurement of performance, it remains important in pricing. In the third and fourth quarters, Intel will likely charge premium prices for its fastest Pentium 4 chips, but then it will cut prices on the 1.8GHz to 2GHz chips, said Joe Osha, an analyst at Merrill Lynch. AMD will likely be forced to price its chips closer to Intel's 2GHz processors.

News.com's John G. Spooner contributed to this report.