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Notebooks to tap speedy new Intel chips

Pentium III and Celeron processors, from 700 MHz to 850 MHz, make their way into portables from Dell, Gateway, Hewlett-Packard, IBM and Toshiba.

Brawnier notebooks are coming next week, but the real value may be sale prices on slightly older, slower models.

Intel Monday is expected to release new mobile processors--800-MHz and 850-MHz Pentium III and 700-MHz Celeron chips--and major PC makers are lining up new models.

Sources say Dell Computer, Gateway, Hewlett-Packard, IBM and Toshiba are among the notebook manufacturers planning to offer the processors in new systems next week.

But as with desktop systems, few consumer or commercial buyers will initially need that much processor power, and they may instead look for older, discounted notebooks or slower models, analysts said.

"If they bring in more stuff at the top end, it kind of cascades down to reduce the pricing at the low end," said PC Data analyst Stephen Baker. "That makes the faster speeds that someone might want more accessible."

Whenever Intel or rival Advanced Micro Devices releases new processors, there are always bargains to be found on last year's models. But in the notebook market--where buyers routinely pay a premium over similarly equipped desktop systems--the deals can be especially good.

New systems expected to debut this week will most likely boast the $3,000 and higher price tags generally associated with leading-edge systems. That means that the previous crop of high-end systems will soon be available for several hundred dollars less.

Performance and price gaps
The gap between desktop and notebook systems has narrowed this year, as mobile processor performance approaches that of desktop systems. Also, the 600-MHz Pentium III--found in both notebook and desktop systems--is seen as powerful enough to run most software applications. Other important factors closing the gap are higher-resolution displays, beefier hard drives and heftier graphics accelerators.

"People are overly focused on megahertz, and they're not as clear on the total system performance and what contributes to that," said International Data Corp. analyst Roger Kay. For most applications, a 600-MHz Pentium III is satisfactory, he said, but some multimedia and Internet streaming applications demand more processor power.

Still, portables trail desktops in terms of price--typically costing $1,000 more than PCs for similar features--and are dogged by the perception they cannot muster equal performance.

"You don't just sell stuff on what people need," PC Data's Baker said. "That's not the only reason that people buy something, that it fits their needs. It's your perception, how it makes you feel, all those marketing words. Nobody really needs that kind of processor, but people like to have it to say they have it."

As a result, notebook sales have remained flat, at roughly 20 percent of total PC system sales, say analysts.

"This perception thing is a factor that holds back the growth of the marketplace," Baker said. "It makes it appear that things don't happen as quickly in the portable market."

Notebook manufacturers have tried to combat the price gulf with lower-cost models, such as Compaq Computer's $999 Notebook 100. But these sub-$1,000 models tend to rely on smaller displays and hard drives and to skimp on memory.

But with falling component costs making it cheaper to offer better, larger displays, bigger hard drives and more memory, manufacturers are near the point of offering affordable portables.

Affordable portables?
"In the fall, you're going to see $1,199 products that are very acceptable to students and consumer buyers--not loss leaders," said Steven Andler, Toshiba's computer systems vice president of marketing.

Cheaper components also mean more attractive midrange to high-end notebooks. Hard-drive size is quickly reaching a 12GB or 18GB standard, graphics memory is more commonly 16MB, and higher-resolution SXGA and SXGA+ displays are more common. With SXGA+, mobile workers get a resolution up to 1,400 by 1,050 pixels, comparable to that of 19-inch monitors.

Buying habits are changing, and notebook makers must keep abreast of them, Andler said. Processor speed, for a long time the first criterion in choosing a portable, has given way to emphasis on other features, he said. DVD now is one of the main factors influencing decisions.

"If they decide on DVD, people will spend more and tend to go up to 14.1-inch screens," Andler said. He warned that this shift in buying patterns may catch some notebook makers off guard, as consumers leave DVD models with smaller, 12.1-inch displays on store shelves.

"DVD on 12-inch screens--it's like having a Ferrari with skinny tires," he quipped.

Fierce competition
The portables market is fiercely competitive. Dell dominated the U.S. notebook market during the second quarter with 21.5 percent share of the market, as measured in units shipped, according to market researcher Dataquest. This compares with second-ranked Compaq's 16.6 percent. Toshiba and IBM followed with 13.4 percent and 12.1 percent shares, respectively. HP rounded out the top five with a 5.8 percent share.

PC makers "need to find other ways to differentiate notebooks and make them more attractive to corporate buyers," Dataquest analyst Mike McGuire said.

In a quest for distinctiveness, some companies are offering features exclusive to portables. Dell later this month is expected to announce its first portables with integrated wireless for connecting to corporate networks through the air.

IBM next month will start selling the ThinkPad i Series 1300, also with integrated wireless networking. Both companies are following a trend ushered in by Apple Computer with the July 1999 launch of iBook.

While the market changes, the more immediate attention grabber will be the faster notebooks available next week.

Sources close to HP said the new processors would be available right away in commercial OmniBook 6000 and consumer Pavilion N5000 portables. New OmniBook 6000 models will also feature SXGA+ displays. The commercial portable will be available with 600-MHz or faster processors, either Celeron or Pentium III.

Gateway will outfit Solo 5300 and 9300 notebooks with the new Pentium III processors, said sources familiar with the situation. Dell, IBM and Toshiba also plan new models with the processors, sources said.