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Intel chip draws lukewarm support

PC manufacturers aren't enthused about Intel's low-cost Celeron processor, with only a handful expected to announce new systems upon tomorrow's debut.

On the eve of the announcement of Intel's (INTC) first low-cost chip, support from PC manufacturers for the Celeron seems tepid, with only a handful expected to announce new systems upon the chip's debut.

Based on Pentium II technology, the Celeron is Intel's first chip designed specifically for use in low-cost personal computers priced at or below the $1,200 level, which the company refers to as "basic PCs."

Overall, it doesn't appear to be winning much support. IBM will highlight that fact by tomorrow announcing a new $799 PC for businesses that comes with a Pentium MMX processor Intel stumbles instead of the Celeron, according to sources, as previously reported. Gateway 2000, typically quick to parade the latest and greatest Intel technology, will not be announcing any new systems using the chip, sources said, while the response from other vendors will be decidedly mixed.

Major vendors in the Japanese market, the second largest in the world, have also been unenthusiastic about the chip, according to reports. In the U.S., Japanese PC manufacturer Toshiba will not announce any Celeron systems, the company said.

"This is the first time Intel has announced a product for lower price points rather than bring a chip in at top and shifting [the price] down over time," said Kevin Hause, an analyst with International Data Corporation. This has put companies such as IBM that use AMD or Cyrix chips in the difficult position of deciding where the Celeron fits in to their product road map, he said.

Among those announcing new consumer systems, Compaq will offer a Presario system with the 266-MHz chip, according to industry sources. Hewlett-Packard will join in with a Celeron-based system in its Pavilion line of home PCs, other sources reported.

Later this year, Dell will announce a new Dimension consumer system that uses a later version of the chip.

"Certainly, it's the right technology for basic computing, but it's probably best suited for use in corporate settings" based on Dell's customer profile, said a company spokesperson.

Part of the mixed response is related to Celeron's performance, which has been panned in early reviews by chip analysts who say the chip will not perform as well as earlier top-performance Pentium MMX chips. The shortcoming is due to the lack of the extra "L2 cache" memory chip with the initial version of Celeron. This cache memory chip improves performance.

Support for the Celeron in business PCs is also mixed. Compaq and HP aren't expected to announce new business PCs with the chip, but NEC will buck that trend with a new $800 system.

Though Dell won't announce a corporate desktop with the Celeron tomorrow, it is expected to ship an Celeron-based OptiPlex system for businesses by June, the spokesperson said. IBM will come out with a Celeron-based system priced at between $799 to $1,000 sometime later in the quarter, according to sources. That announcement could also come by June.

The faster version could help swing vendors over to the new chip. The next Celeron chip, code-named Mendocino, will contain the critical cache memory and is expected to offer better performance. The Mendocino chip will be released toward the end of the year.