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Intel, AMD ready fast chips at 600 MHz

Intel's new Pentium III and Celeron chips are coming next week, ahead of the first computers based around the Athlon processor from Advanced Micro Devices.

The two leading PC chipmakers will unveil high-performance processors that will hit new speed levels for the mass market in the next two weeks.

Intel, the world's largest chip manufacturer, on Monday will release its fastest Pentium III and Celeron processors, which will reach 600 MHz and 500 MHz respectively. The following week, the first computers built around the new Athlon processor from rival chipmaker AMD--formerly called the K7--will appear on the market at competitive speeds, sources say.

In a ritual that seems to occur almost monthly now, PC makers will line up Monday as Intel announces its latest processors. New Pentium III computers should hit the $1,800-$2,000 PC range, analysts say, while the new Celeron chips will be targeted at the thriving market under $1,000. Intel will also cut prices on Celeron chips.

The systems are coming for the back-to-school buying season, the second biggest purchasing period of the year.

The Pentium III is designed for performance computers while the Celeron is made for cheaper systems. The two chips are actually built around the same processor technology but differ in speed, price, and other features such as multimedia processing power.

IBM, Compaq Computer, and Gateway, among others, are expected to announce models with the new Pentium III and Celeron chips, while IBM, Compaq, and others are expected to come out with new PCs based on AMD's chip later in the month.

IBM, for instance, will launch new Pentium III business desktops along with an Internet-based "e-support" program called "PC Lifecycle Care" which gives customers guidance on upgrades, according to sources familiar with the plan. Big Blue will also introduce new workstations based on the chip.

Gateway systems featuring the new Pentium III should start at around $2,199 with a monitor and ISP contract, while Compaq boxes should be priced around $1,799 with rebates, according to sources.

Intel's release of the 600-MHz Pentium III next week will allow the company to retain the speed crown. "The consumer market, where [AMD's] Athlon will initially appear, seems largely driven by speed and price. So the fact that Intel has [the new Pentium III] will prevent the appearance that AMD has higher-performing products in the consumer segment," said Mike Feibus, a principal at Mercury Research.

"That's important for Intel going forward to prevent that perception from taking hold," he added. Athlon will run at speeds up to 600 MHz upon release, although analysts have questioned how many AMD can produce in the early months of the chip's life.

Price cuts loom
Intel earlier this month cut prices by 12 to 14 percent on the Pentium III line to make room for the new chip. Intel will impose another round of price cuts August 22. The 600-MHz Pentium III is expected to hit the market at $669 in volume.

The 500-MHz Celeron will be priced

Celeron cuts coming
Speed Current price 8/1 price Percent
500-MHz Celeron N.A. $167 N.A.
466 MHz $147 $114 22%
433 MHz $113 $93 18%
400 MHz $93 $73 22%
366 MHz $69 $69 --
*Price is for volume purchases. Actual retail price will vary.
Source: various
at $167, and other Celeron chips will be cut in price the day it arrives. The 466-MHz version will drop from $147 to $114, while the 433-MHz chip will go from $113 to $93. The 400-MHz Celeron will be discounted from $93 to $73, and the 366-MHz and 333-MHz versions will stay roughly stable at $69 and $67 respectively, according to sources.

The listed prices are for volume purchases. Actual retail price will vary considerably depending upon supply.

The Pentium III has been fairly widely accepted in corporate accounts, among higher-end "performance" users, and in foreign retail outlets, said Paul Otellini, general manager of the Intel Architecture Business group.

Developers have also begun to increase their efforts in support of the chip. About 200 Web sites and applications are optimized for the Pentium III at present. Five hundred are expected by the end of the year.

Where the Pentium III lags is in the U.S. retail market, where buyers have been drawn to super-cheap PC offers, Otellini admitted. Nonetheless, Celeron has been gaining ground in that segment.

Cheap PCs have also expanded the market a bit. "In the consumer space, there is some evidence that the $399 and $499 stuff is attracting more buyers than is the case historically," he said.

For computer enthusiasts and high-end users, looking for additional speed increases beyond the processor, other changes will come later. The 600-MHz Pentium III will initially employ the 100-MHz system bus. A bus serves as a conduit between the processor and main memory. A faster 133-MHz bus, which will improve performance, will appear in September.

News.com's Joe Wilcox contributed to this report.