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Next Pentium II due this month

At the end of this month, Intel's second-generation Pentium II processor will appear in the fastest breed of PCs.

At the end of this month, Intel's (INTC) second-generation Pentium II processor will appear in the fastest breed of PCs, heralding a new level of high-performance personal computing.

The new Pentium II chip, dubbed Deschutes, initially will be targeted at desktop and server computers and is expected to be introduced at a speed of 333 MHz this month. Meanwhile, the first Pentium II designed for notebook PCs--to date limited to the aging Pentium processor--will be released by summer, according to sources familiar with both announcements. Notebook versions will be introduced at a speed of 233 MHz.

The release of the desktop version this month will be accompanied by new desktop systems from major computer vendors, including Compaq.

Deschutes denotes a group of processors made on an advanced production process referred to as "0.25 micron," which is the Lilliputian width of the chip's circuits. "All new Pentium IIs will use the [process]," said Richard Dracott, marketing manager for Intel's microprocessor group.

Currently, most desktop processors are made using an older, "fatter" 0.35 production technology that prevents Intel from putting Pentium II processors into notebooks since these chips tend to run too hot for the heat sensitive, cramped quarters of a mobile computer. Moreover, Intel needs to move to this process in order to crank up Pentium II speeds to 400 MHz and later a projected 450 MHz. (See related story)

Importantly, the process will reduce the cost per chip. At about the same time as the Deschutes announcement, Intel is also expected to implement price cuts across all of its processors.

Compaq is slated to come out with a Deskpro business PC with a 333-MHz Pentium II at or near the release date for the chip, with workstations following shortly afterward, according to sources. Other sources said that the company will release a Presario home PC with the chip. The home model will come with a DVD drive, 48MB of memory, an 8GB hard drive, and a 56-kbps modem. It is expected to carry a suggested retail price of between $2,000 and $2,500.

Pentium II processors will start to appear in mobile computers for the first time before the end of the first half of the year, Dracott said. The mobile version of Deschutes will come out in 233-MHz, 266-MHz and 300-MHz speeds, with faster versions of the chip to follow.

Some Taiwan-based notebook manufacturers may jump the gun and come out with Pentium II notebooks early, according to reports coming out of Asia.

Quarterly price cuts will follow from the company at the end of the month. The volume price for the 300-MHz Pentium II is expected to drop to about $530 from just over $700, while the 266-MHz Pentium II will go to $375 from approximately $500 now, said sources. The 233-MHz version is currently priced at $268. Prices will also come down on Pentium MMX processors.

The Deschutes is expected to debut at around $700. The release date is slated for January 26, added sources.

Intel is an investor in CNET: The Computer Network.