Intel will lower the prices of processors more than originally planned in August in response to PC vendor concerns that another round of cuts in November will disrupt Christmas season pricing.
Only "select" Pentium processors will be singled out for the unusually aggressive price cuts in August, an Intel spokesman said. "This adjustment will allow for an orderly inventory build [in the retail channel]," the spokesman said.
The reductions will lower pricing for systems with 166- and 200-MHz Pentium processors to where 133- and 120-MHz system are today in the fall and winter. PCs with 133- and 120-MHz processors generally range between $1,500 and $2,500 today. Intel is planning no price cuts for the Pentium in the November time frame.
The faster Pentium processors, such as the 200-MHz chips, have "more headway" for the expected exaggerated price cuts because they are currently the most expensive, said the Intel spokesman. The company would not comment on future cuts.
The popular 166-MHz Pentium now used in many consumer and corporate PCs already dropped from $632 in February to $498 in May. It was scheduled to fall to about $420 in August, said industry sources familiar with Intel pricing, but could fall even lower now.
The 133-MHz Pentium was scheduled to drop from $257 to about $215 in August, but this range may also be cut further. The 200-MHz Pentium, currently at $599, is also a likely candidate for sharp price cuts and could drop well below the $500-dollar mark. The 150-MHz Pentium, now at about $360, may drop to $290 or even lower.
The Pentium Pro processor, however, will not be affected: it will follow the standard pricing schedule of price cuts in both August and November, Intel said. At the high end, the 200-MHz Pentium Pro with 256K of cache memory will plummet from about $700 now to about $560 in August, according to industry sources.
The changes come at a time when Intel's competitors are reeling from continuing pricing pressures.
The company said it was departing from its original pricing policy because PC hardware manufacturers and retailers found it "disruptive" to have a Pentium price cut in the middle of the key fall selling period. The policy served as a "disincentive" to carry adequate inventory or to properly stock distribution channels, according to Intel.