Intel ships new low-cost chip

In tandem with price cuts on its mainstream Pentium II processors, Intel released a new 300-MHz version of its Celeron microprocessor for budget computers, which is expected to spawn a spate of new low-cost machines, including the first for less than $1,000 from Dell Computer.

And, unlike the lukewarm reception that the 266-MHz version of the chip met with upon its release, nearly all of the major PC manufacturers, including Dell, are expected to release systems based around this latest version of the chip over the next few days, sources close to Intel said.

Intel also cut prices across the board on its Pentium II and Pentium MMX processors.

Intel chip prices plummet
Processor	Speed	4/15 price	6/7 price
Pentium II	400 MHz	$824	$722
Pentium II	350 MHz	$621	$519
Pentium II	333 MHz	$492	$412
Pentium II	300 MHz	$375	$305
Pentium II	266 MHz	$246	$198
Pentium II	233 MHz	$198	$161
Celeron	300 MHz	NA	$159
Celeron	266 MHz	$155	$106
Pentium MMX	233 MHz	$134	$106
Pentium MMX	200 MHz	$95	$95
Pentium MMX	166 MHz	$95	$95
Source: Intel Figures refer to volume wholesale price. Actual wholesale and retail price will vary.

Dell's Celeron box will mark the company's debut in the sub-$1,000 market. Among the major manufacturers, there appears to be only one remaining holdout: "We're still waiting to hear on Gateway," said Carl Larson, product marketing manager for microprocessors at Intel.

The 300-MHz Celeron will sell officially for $159 in volume, according to Intel, while the 266-MHz version of the chip will now officially drop from $155 to $106. Intel also cut prices across the board on its desktop processors.

Actual prices, however, are lower. Intel has allegedly given discounts on the chip to certain companies to spur adoption, according to some sources. A slight surfeit of chips, especially for budget computers, has also lead to lower prices. The 266-MHz version, for instance, has been selling for $119 in retail outlets, $40 under the posted wholesale price.

Celeron chips are essentially discount versions of the Pentium II, built around the same processor core but in less expensive packages. It also does not contain performance-enhancing high-speed "secondary" cache memory. Intel released the Roman-legion sounding line of processors earlier this year to attack the sub-$1,000 computer and intelligent device market.

Companies that will adopt the chip for low-budget computers include Dell, IBM, Hewlett-Packard, Compaq Computer and Packard Bell-NEC, according to sources close to Intel. These computers will sell for $999 and less.

Still, the ultimate success or lifespan of the chip could be short lived. Like the 266-MHz, this second take at Celeron will lack a secondary, integrated memory cache. A secondary cache is one of the chief architectural features of the Pentium II chip, according to analysts, because it speeds up the rate of data exchange between the processor and main memory.

Intel will begin to tackle this problem in the fourth quarter with 300-MHz and 333-MHz versions of Celeron with 128KB of memory integrated onto the same piece of silicon as the processor.

The 300-MHz version of the chip comes because Intel is having better-than-expected success with the .25-micron manufacturing process, said Larson. The speed upgrade was originally not part of the Celeron lineup.

Although analysts have criticized the performance of the cacheless Celeron chips, Larson said that users will experience better floating point performance, which should translate into better graphics computing, than they would with Pentium MMX chips.

(Intel is an investor in CNET: The Computer Network.)