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New Pentium II, Celeron PCs here

Most major PC makers announce new desktop computers based on Intel's new chips.

As expected, PC makers today announced their new Celeron systems and the fastest Pentium II systems yet, in concert with the arrival of Intel's new and improved low-cost processor and its newest Pentium II processor.

Almost every major PC maker today announced systems featuring Intel's newest processors, including Dell, Gateway, Compaq, Hewlett-Packard, NEC, Toshiba, IBM, Micron, and Internet PC marketer iDot.com.

System Hard Drive Price
Celeron
Dell Dimension V333C 6.4 GB $1,399
Gateway GP6-333c 6.4 GB $1,299
Compaq Presario 5050 8 GB $1,199
NEC PowerMate 5100 2.1 GB $1,039
Toshiba Equium 7000 BTO* $999
IDot.com 300LXA 4.3 GB $999
Micron Client Pro Ce 3.2 GB $1,649
Pentium II 450 MHz
NEC PowerMate 8100 6.4 GB $2,400
IDot.com 450BX 10.1 GB $2,299
Hewlett-Packard Pavilion 8390 10 GB $2,499
Gateway G6-450 10 GB $2,479
Compaq Presario 5660 12 GB $2,399
Toshiba Equium 7000 BTO* $2,299
Micron Client Pro Cs 450 6.4 GB $2,299
*Build To Order
Intel's first Celeron processor came under fire because it lacked a critical feature called "secondary cache" memory, which serves as a data reservoir for the processor and boosts performance. But Intel has brought back the cache memory in the newest Celeron, code-named Mendocino, and performance has subsequently improved, some say rivaling Pentium IIs.

Gateway's inclusion of the 333-MHz Celeron in its G and GP series systems for consumers and small businesses is significant because it was one of the larger manufacturers to forego the first round of Celeron chip.

"Now that Intel has added cache to (the Celeron), it performs pretty well. Given all of the processors available at that price point, Celeron is the best offering. We didn't offer the version (without cache memory) because the price-performance (equation) didn't work out," said Bart Brown, vice president of marketing at Gateway.

Compaq today introduced its Presario 5050 featuring the newest Celeron processor, which includes an 8GB hard drive, 96MB of memory, CD-ROM drive, 56-kbps modem, and starts at $1,199.

Systems based on the new 450-MHz Pentium II chip for desktops are also appearing. IBM, for instance, is expected to announce this week a consumer PC code-named Cobra with the new chip which will come with 128MB of memory and a 16.8GB hard disk for about $2,000. Hewlett-Packard has also announced a new Pavilion consumer PC with the 450-MHz chip.

But the new Celeron chip's marked improvements do put PC makers in a bit of a quandary as they try to figure out how to market Mendocino systems that may rival Pentium II systems for performance.

Although Intel's product line is a "little crowded at the low end," according to Roger Kay of IDC, the wealth of processor choices may benefit PC makers, and by extension, customers. "There are a lot of close choices, but PC makers can make their line coherent by choosing among the offerings," Kay said. "No one's saying that [a PC maker] has to take all of those chips."

Also, for high-performance applications, the Pentium II remains a superior processor, according to Mike Wagner, director of product marketing for Toshiba. Nevertheless, he noted that for typical PC applications like Internet access and word processing, the performance gap tends to disappear.

"[With high-performance applications] Pentium II remains faster," Wagner said. "Intel is clearly stratifying their product line between performance user and entry-level office user. The office user will be Celeron."

Not everyone agrees that Intel's product line divisions reflect the reality of PC users, though. "I do think it's an artificial division," said Dataquest analyst Scott Miller. "Vendors who offer Pentium II systems overlapping in speed with Celeron systems will find it more difficult to sell the Pentium II products."

Entry-level Celeron systems may also spearhead a move toward the sub-$1,000 PC in the corporate market, which has not been as fast to adopt low-cost PCs as the consumer market. Fully configured Celeron PCs may be more attractive to corporate buyers than some of the pared-down low cost systems currently available, according to Toshiba's Wagner.

"It will be interesting to see what [Celeron] means for the corporate market. The sub-$1,000 PC has been hyped in the corporate market, but it hasn't really materialized yet," Toshiba's Wagner said. "Although everyone is talking about [the popularity of sub-$1,000 PCs] corporate buyers insist on fully figured configurations because they have longer product cycles."

Success in the sub-$1,000 market may be a mixed blessing for Intel, because of the lower profit margins associated with that market segment, according to both Kay and Miller. "Intel has a mixed motivation," Kay noted. "For every Celeron it sells, it is not selling a Pentium II, and [profit] margins are clearly higher at the high end. Still, if they leave that flank unprotected, they'll have progressive erosion of market share."

(Intel is an investor in CNET: The Computer Network.)