Analyst pinpoints MMX price cuts

Intel (INTC) will drive the price of its MMX Pentium processors down to the "sweetspot" of the market in the third quarter of this year, while it introduces fast but pricey mobile processors and eases pricing for the Pentium II.

Upcoming 1997 Intel price cuts
Desktop	Q2	Q3
Pentium II 300	$1,850	n/a
Pentium II 266	$725	$650
Pentium II 233	$595	$520
Pentium Pro 200	$480	$455
Pentium Pro 180	$380	$380
P55C MMX 233	$555	$415
P55C MMX 200	$465	$315
P55C MMX 66	$255	$190
Pentium 200	$240	$140
Pentium 166	$195	$115
Mobile
Tilamook 233	$770	$691
Tilamook 200	$615	$530
P55C MMX 166	$465	$375
P55C MMX 150	$305	$268
P55C MMX 133	$265	$203
Pentium 150	$215	$134
Pentium 133	$155	$99
Source: Southcoast Capital Corp.

Intel will reduce the price of high-performance MMX Pentium processors in the third quarter to levels that will allow top-tier PC vendors to bring out systems costing as little as $1,500, according to Southcoast Capital Corporation, a marketing research firm based in Austin, Texas.

"The classic [non-MMX Pentium] will be at the entry-level and MMX [Pentiums] will move into the volume price points," said Ashok Kumar, a principal at Southcoast Capital. Volume pricing indicates PCs in the "mainstream" of the market. These are not low-end PCs, but feature-rich, fully loaded systems with reasonably low price tags, usually between $1,500 and $2,000.

Currently, MMX Pentium systems are close to the high-end, starting at around $2,000 and ranging up to $2,500.

The most popular chip to move into this mainstream segment will be the 200-MHz MMX Pentium. It is currently priced at about $490, according to Intel price lists. In the third quarter, this chip will dive to about $315, according to Southcoast Capital estimates.

The 166-MHz MMX Pentium, which is currently at $270, will fall to about $190, according to the market research firm.

Meanwhile, a new 233-MHz MMX Pentium for desktop PCs will make its debut at $555 but quickly fall to about $415 in the third quarter, the firm said. "Intel will push [the 233-MHz MMX Pentium] for the consumer market. They will advise PC vendors to use the 233-MHz Pentium II for business systems," Kumar said. Intel is advising PC manufacturers in this way so consumers will not confuse 233-MHz Pentium systems with 233-MHz Pentium II systems in the consumer PC market, he said.

Systems built around the 233-MHz chip will be priced in the $2,000 to $2,500 range.

On the mobile Pentium front, Intel is expected to introduce the new "Tilamook" MMX Pentiums for notebook PCs, in the second half of the year. These will find their way into notebooks that are priced starting at about $4,000 later this year, according to Kumar. Currently Intel's mobile Pentium chips run no faster than 166 MHz.

Pricing for the 233-MHz Tilamook chip is expected to be slightly less than $700 later this year, while the 200-MHz version will hit about $530. The current 166-MHz MMX mobile Pentium is expected to fall from about $480 to $375.

The Pentium II chip is expected to debut next week at about $600 for the 233-MHz version, and well over $700 for the 266-MHz version. The 300-MHz Pentium will be priced at close to $1,900.

In the third quarter, this pricing should fall to $520 for the 233-MHz version and $650 for the 266-MHz version, according to Southcoast. No pricing was given for the 300-MHz version.

In the entry-level Pentium market, the 200-MHz classic Pentium will plummet from about $250 to $140 in the third quarter. The 166-MHz classic Pentium will fall to $115 from $195. The 133-MHz Pentium will drop from about $160 to $99, according to Southcoast.