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Intel launches 400-MHz Celeron chips

Intel will kick off the new year today by releasing two new and faster Celeron processors, the first event in a busy month.

Intel kicked off the new year today by releasing two new and faster Celeron processors, launching into a busy month.

January, and the first quarter in general, will be an active time for processor makers and PC manufacturers. As Intel rolls out 366-MHz and 400-MHz versions of its Celeron chip for low-end PCs and cuts prices on existing processors, new consumer systems will arrive from leading computer makers.

In 1,000-unit quantities, the new 400-MHz Celeron is priced at either $158 or $166, depending upon the packaging option selected. The 366-MHz version costs either $123 or $131, depending upon the packaging option selected.

Intel said it is also enhancing its chipset lineup. The company announced the Intel 440ZX AGPset, a product designed to improve the performance of low-cost personal computers. In 10,000 unit quantities, the chipset costs $35.

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Paul Otellini, executive vice president of the Intel Architecture Business Group, will outline the company's strategy for the consumer segment in a press gathering at 10 am PT.

Later in the week, the chipmaking giant will release an improved version of its 450-MHz Xeon processor for server computers. By next Monday, manufacturers are expected to introduce a fleet of four-processor servers.

Then, on January 25, Intel is expected to release "Dixon," a 366-MHz Pentium II processor for notebooks. The new chip will feature 256K of secondary integrated cache memory, a first for the Pentium II line.

The same day, Intel will unveil its first Celeron processors for notebooks. New portables and portable price cuts will come out at the same time.

In early March, the company will follow up with the release of "Katmai," a next-generation Pentium II chip running at 500 MHz and faster, said sources.

Not to be outdone, rival Advanced Micro Devices will release of the K6-3, its own next-generation processor, in the early part of the quarter. As it has historically done, the company is promising to match Intel's price cuts.

As a result, consumers can expect active price wars in the bargain segments of the PC market in 1999.

As reported, Intel secretly cut prices on existing Celeron processors on December 6 and released a new version of the chip that comes in a less expensive package. Both the price cut--which reduced the price of existing Celeron chips to the $100 mark and below--and the new package were not expected until this year.

Today's price cuts come in addition to the December action, bringing the overall cost of Celeron-based systems down even further. Last month's move also meant that Intel trimmed prices seven times in 1998, nearly twice the number of price cuts in a typical year.

Intel cuts prices
Speed 10/25/98 Price 1/4/99 Price Percent Change
Pentium II
450 MHz $562 $562 --
400 MHz $375 $363 6%
350 MHz $213 $202 5%
400 MHz NA $158 and $166* --
366 MHz NA $123 and $131 --
333 MHz $107 and $115 $90 16%
300A MHz $90 and $94 $71 16%
Source: Intel
Prices are for 1,000 lot quantities in wholesale. Actual prices will vary.
*Two prices for Celeron chips are because certain chips are available in two types of packages.
Despite the accelerated the release of the 400-MHz Celeron, the pace of Intel's chip releases may begin to slow in the future, theorized Kelly Spang, an analyst with Technology Business Research.

Chip releases are simply coming quicker than computer vendors and customers can accommodate them, she said. "Even on the business side, people are getting frustrated with the speed of the Intel road map."

So while the first half may see a few additional Celeron releases, Intel will most likely use this time period to fine-tune its marketing strategy for the processor family. Intel has already said that it is working on chipsets that can be used over multiple generations of computers, an innovation that will minimize changes.

Separately, despite relentless pricing pressures, Intel, AMD, and the major PC vendors are enjoying boom times. Various financial analysts have upgraded their forecasts on a variety of companies in this segment recently because of higher-than expected PC sales.

Sales are expected to remain strong in the first quarter because of low prices, according to Mark Edelstone of Morgan Stanley Dean Witter, voicing a common perception.

PC vendors will also get a sharp boost in the first half as businesses attempt to insulate themselves from the Year 2000 bug, a number of high-tech executives have said. But analysts warn that Y2K business could grind to a halt by the second half.