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New Intel Celeron chips, systems coming

Computers using the new chips come at a time of rapid change in the computer industry.

PC makers announced new business and consumer computers today with the arrival of the latest Celeron processor from Intel.

Compaq, for instance, today released a Prosignia 320 with the new chip, starting at $1,315 with a 17-inch monitor.

Later in June, a number of these companies will relese more Celeron boxes for business that include Intel's newest chipset design, dubbed "Whitney," which combines a graphics chip with another key chip. Compaq will release Deskpros containing Whitney at the time. HP will come out with Vectra and Brio PCs with the new technology, 64MB of memory, and 8.4GB hard drives starting at $929.

IBM, meanwhile, said it will come out with business PCs with the new chipsets in the near future. Dell will come out with systems in June, sources have said.

Hewlett-Packard (HP) also announced plans to integrate the new Celeron into its Vectra and Brio business PCs. A Brio with an 8.4GB hard drive, CD-ROM drive, and Windows 98 is expected to sell for $929.

Both Compaq and HP will offer highly compact desktop designs.

The new chips come at a time of rapid change in the computer industry, Intel says, starting with the demise of the familiar desktop personal computer. Intel executives described their view of the future at an analysts' briefing in New York last week.

Desktops in the workplace will be supplanted by notebook computers and powerful workstations, claimed Intel executives. In the home, PCs will remain, but they'll get smaller, will encompass a variety of designs besides the "beige box," and will increasingly come from Taiwan, Intel predicts. In addition, more PCs will be free, an effort funded (or at least encouraged) by the chipmaker.

"We're seeing the rapid emergence of telecommunications carriers subsidizing the PC," said Sean Maloney, corporate vice president and director of the sales and marketing group.

"We're seeing this in every country in the world. We are working on many of these deals with our partners," said Maloney, who's increasingly playing a strategic role at Intel. (See related Q&A)

New Intel notebook chips and and Intel-based notebooks, along with price cuts on existing models, will also be coming out over the next two weeks, sources said.

Although Celeron started slow, Intel claims that the processor has begun to gain acceptance. The Celeron is aimed at the lower-end of the computer market, an area in which AMD and other chipmakers have rapidly been gaining market share.

"In the first quarter of 1999, we regained all of the market share we lost in the sub-$1,000 [PC] segment we lost in 1998," said Paul Otellini, executive vice president and general manager of the Intel Architecture Business Group.

Faster chips coming
As the year progresses, consumers should expect to see a number of product developments, said Otellini.

In the value-PC segment, Intel will increase the speed of Celeron to 500 MHz in the second half and beyond 500 MHz in the first half of 2000. The company will also phase out the "Slot 1"-style packaging of the chip, which saves approximately 25 percent in costs.

As for performance PCs, expect to see Pentium IIIs running at above 600 MHz by the end of the year and above 700 MHz in the first half of 2000. More interesting, many of the concept PCs Intel has demonstrated in the past will start coming to market toward September.

"All of those products are moving out of concept and into product for back to school," Otellini said, holding up the "Aztec," a prototype PC that resembles a Central American ziggurat.

The concept designs become possible because of a shift to the 0.18-micron manufacturing process and other innovations. The shift in manufacturing means the chip gets smaller and produces less heat, which means it can fit into smaller boxes. These system will also use a new, smaller motherboard. Moreover, much of the legacy technology, such as the ISA bus, will disappear, leading to more streamlining.

A number of these systems will emerge from Taiwan, according to Maloney, who added that the island is rapidly becoming the center for PC innovation. Formerly, Taiwan mostly functioned as a standard PC assembler.

"We're seeing a migration of manufacturing out of the U.S. into Asia. We're seeing increasing sophistication in computer design in Taiwan," he said.

Notebooks, meanwhile, will pass the 500-MHz mark this year and ratchet up to 700 MHz, largely because of Intel's "Geyserville" technology, which manages power more efficiently.

"As we go to 0.18 micron we essentially hit desktop equivalency for the first time in a long time," Otellini said.

The improved performance of notebooks, combined with the price drops occurring in the workstation market, will start to lead to a decline in prominence for desktops at the workplace, Otellini predicted. Employees with ordinary computing needs will shift to notebooks. Those with data crunching needs, meanwhile, will shift to workstations.

AutoPC products, handhelds, and cell phones based on StrongArm chips, and set-top boxes based on Celerons are also on tap. Otellini said Intel has landed designs wins, as yet unannounced, for putting Celerons into set-top boxes.

"Whitney" chipset comes out--sort of
Today also marks the announcement of Intel's 810 chipset, code-named Whitney, which fuses a 3D graphics chip with a standard PC chipset. The 810 will also allow PCs to control DVD drives and audio functions through software, eliminating more hardware costs, sources said.

Chipsets with integrated graphics functions are not new--Via Technologies released one for PCs late last year. But they generally don't provide the same level of performance that can be achieved through separate chipset-graphics solutions. Instead, the appeal of the integrated chipsets comes in cost savings, which has become an obsession for both Intel and customers, according Peter Glaskowsky, graphics analyst with MicroDesign Resources.

With an integrated chipset, computer makers don't have to install a separate graphics processor, which can cost as low as $10, or a port for a graphics chip. Computer makers can also use smaller motherboards and cases, which can save another $10 or more. In the end, this can add up to a $100 discount from the retail price, according to Glaskowsky.

The 810, however, will remain a tough product to find until June. Intel is announcing the product and shipping it into commercial channels, said sources close the company. As a result, major PC makers won't have Whitney-based systems on shelves until June. Nonetheless, it is likely that Whitney motherboards and systems will leak out early among some PC makers and computer dealers.