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Intel shaves prices on eve of new chip

The chip giant cuts prices on its desktop processors by up to 27 percent to pave the way for the 3GHz Pentium 4, due Thursday.

Intel cut prices on its desktop processors by up to 27 percent to pave the way for the 3GHz Pentium 4, due Thursday.

The cuts, which were focused on the high end of the Pentium 4 and Celeron families, are the first formal discounts for the desktop line since September, when Intel released the 2.8GHz Pentium 4.

The cuts bring the price of the 2.8GHz Pentium 4 down 21 percent, from $508, in 1,000 unit quantities, to $401. The prices on the 2.66GHz and 2.6GHz P4 chips drop 24 percent, from $401 to $305.

The 2GHz P4, meanwhile, drops 19 percent, from $103 to $83, while the 1.4GHz chip drops 27 percent, from $74 to $54.

The discounts come days before the release of the 3GHz Pentium 4, which is expected to be the highest performing chip on the market. The chip runs at a higher clock speed than other desktop chips.

At the same time, the chip will feature hyperthreading, which lets a single chip perform something like two. Overall, hyperthreading can boost performance by up to 20 percent or more, depending on the application, Intel executives have said. The technology is currently featured on servers and workstations, although most workstation manufacturers to date have shipped systems with hyperthreading turned off.

Despite the slump in technology purchasing, both Intel and rival Advanced Micro Devices have continued to increase the performance of their chips. Someday, corporations will begin to purchase PCs again, executives from the companies have said.

One thing that could help increase purchases is the fact that many large businesses haven't upgraded since 1998 or 1999.

"We've hit the shadow of the Y2K binge," said Paul Otellini, Intel president, in an interview at OracleWorld earlier this week. Support costs associated with keeping old machines around are also mounting, he added.

For its part, AMD will release the Athlon XP 2700+ and 2800+ in the next few weeks.