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Intel's plan for sub-$1,000 sector

An Intel executive describes a strategy for cranking out different versions for different markets, including the low end.

As the sub-$1,000 PC market surges, Intel (INTC) is responding with a bevy of lower-cost Pentium II processors that will include the chip's next generation, code-named Deschutes.

Next year, Intel will release at least two different Pentium II-based processors for the low-end sector, according to Richard Dracott, Pentium II marketing director at Intel. "The sub-$1,000 market is growing faster than we expected," he explained.

Following 1998's introduction of the low-cost, "cacheless" Pentium II for the sub-$1,000 market (a move Intel has already described publicly), the company will introduce a second-generation Pentium II for this market.

The second-generation Pentium II for the sub-$1,000 market will have 128K of "level 2" cache memory on the same "die," or chip, as the processor. Cache memory is critical for speeding up system performance. This is a departure for Intel because it will be the first time it puts this high-speed memory directly on the same chip as the processor.

Currently, Intel includes a small amount--32K--of "level 1" cache directly on its Pentium II chips, but the larger level 2 cache is on a separate chip. This creates a data bottleneck.

Higher up the chip chain, Intel will also release a Pentium II with 256K of level 2 cache directly on the processor. (Intel is an investor in CNET: The Computer Network.)

Dracott also outlined strategies for other Pentium II chips. Early on, the company will release a 333-MHz version, followed at the end of the first half of next year by chips running at 350 MHz and 400 MHz. A 450-MHz version will come along at the end of the year.

"It's not the maximum performance," Dracott said of the "cacheless" Pentium II and the version with the integrated 128K cache memory. "We can address the needs of the marketplace to address the needs of these segments." Compared to these, the 256K cache memory version will be a "higher-performance, higher-priced chip," he added.

These processors will contain 66-MHz buses and run at 333 MHz, 300 MHz, and possibly lower speeds, he noted. The chips will be based around the current "Slot 1" architecture. A bus is the data pathway between the processor and the chip's other components.

By contrast, next year's higher-end Pentium II Deschutes processors will run at speeds of 350, 400, and 450 MHz, employ a wider and faster 100-MHz bus, and be built around the more complex "Slot 2" architecture. These chips will be found in workstations and servers.

Analysts and competitors have posited that Intel is not hitting its sales goals with the Pentium II. Dracott disagreed but also admitted that the popularity of sub-$1,000 computers was greater than expected. "It grew faster than most people expected. We will continue to pursue our usual market share strategy."

The recent price cuts on the chip have come as a result of plant and process investments.