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Intel plans summer price cuts

The chip giant shows no signs of easing up the pressure in the processor market and plans multiple price cuts and chip introductions through September.

Intel shows no signs of easing up the pressure in the processor market and has slated multiple price cuts and chip introductions through September.

The chip making giant will kick off the summer silicon social season on May 16 with a round of price cuts on the Pentium III and Pentium II lines and also introduce the 550-MHz Pentium III, according to sources. A number of computer manufacturers are expected to come out with machines incorporating the new processor.

A number of resellers, in fact, are already selling the 550-MHz Pentium III processor for $820 in retail, although the price will drop to around $730 when it officially rolls out in nine days.

More price cuts will follow in July and again in early September in conjunction with the release of the "Coppermine" Pentium III chips. Running at 600 MHz and 533 MHz, the Coppermine processors contain architectural innovations to boost system performance.

Intel Price Cuts
Speed Current price May 16 July 18 Sept.
Pentium III
N.A. N.A. N.A. $761
550-MHz N.A. $730 $658 $520
533-MHz N.A. N.A. N.A. $415
500-MHz $637 $482 $423 $299
$411 $268 $230 $213
Pentium II
$396 $268 $230 $213
400-MHz $234 $193 $183 $163
350-MHz $163 $163 $153 $153
N.A. N.A. N.A. $185
466-MHz $169 N.A. $157 $147
433-Mhz $143 N.A. $133 $113
400-MHz $103 N.A. $93 $83
366-MHz $73 N.A. $73 $73
Source: Various

Rival AMD, meanwhile, will likely slash prices within hours of Intel each time as well as roll out its K7 processor in June. Consumers, of course, will likely benefit through the months with regular discounts on PCs, notebooks, and servers.

The heightened sense of urgency that has come to the PC processor market is partially reflected in the short time span that occurs between major product events. In years past, Intel cut prices on its chips approximately every three months. Price cuts and product introductions are now coming on average every other month and sometimes in shorter intervals.

The discounts have effected each of the players in this market in different ways. Intel's desktop processors, especially those selling in consumer systems, are now selling for less than they did in years past. The company has managed to maintain an average selling price of more than $200 of its processors largely through sales of chips into the workstation and server markets. The company's Xeon processors, for instance, start at close to $1,000 and go up to close to $3,600.

AMD, lacking a server and workstation line of chips, has not fared as well. The company gained market share throughout 1998 and in the first part of 1999, but suffered significant losses in the first quarter. The average price of its chips descended to $78. Layoffs and further losses are expected, although the upcoming K7 could help the company to turn around. (See related story.)

As difficult as life has become for AMD, it has been even tougher for others. National Semiconductor announced that it will sell off its PC processor unit, while IDT admitted it was seeking funding so that it could continue to products its WinChip family of computer microprocessors.

"If you have to compete in the X86 market at the low end, it's really tough," said Fred Zieber, an analyst at Pathfinder Research.

Innovation beyond speed
While both Intel and AMD will come out with faster chips over the next three months, the two companies will also introduce innovations into the platform.

In June, a number of business PCs will come out using the integrated "Whitney" chipset with a built-in graphics subsystem. While the graphics quality of a Whitney system will not be as high as a system that uses a separate 3D chip, these machines will cost up to $100 less, according to, among others, Peter Glaskowsky, graphics analyst at MicroDesign Resources.

The Coppermine chips will then come out in September, which will boost performance on high-end PCs. The Coppermine processors will contain 256KB of integrated secondary cache. Cache memory serves as a handy data reservoir for the processor, which reduces the time required to access oft-used data. While Coppermine will contain half the cache of a standard Pentium III today, integration will make it far more effective, said many.

In addition, the company will release the "Camino" chipset, which will allow computer vendors to include high speed Rambus memory into computers as well as take advantage of the latest version of the Accelerated Graphics Port (AGP), a chipset-level technology that speeds graphics performance.

"Coppermine will clearly be a more attractive product," in comparison to standard Pentium IIIs, said Nathan Brookwood, principal at Insight 64, a microprocessor consulting firm, in March of this year.

AMD, of course, will release its touted K7 processor in June at 500 MHz, 550 MHz and 600 MHz. Although AMD has traditionally played second banana to Intel in terms of performance, a number of analysts have said that the chip will equal and even best the Pentium III.

"We believe that we will be able to have the highest performance Windows-compatible processor for the next six to 12 months," boasted chief executive W.J. "Jerry" Sanders at AMD's recent conference call.