Intel introduces 2-GHz Pentium 4, cuts prices of other chips

With the launch of its 2-GHz Pentium 4 processor today, Intel Corp., as expected, cut prices on the rest of its Pentium 4 family, as well as many of its other processors.

Intel also introduced a 1.9-GHz Pentium 4 processor. PC vendors, including direct sellers Dell Computer Corp. and San Diego-based Gateway Inc., are offering systems based on Intel's new chips, the company said in a statement.

The 2-GHz Pentium 4 is replacing the 1.8-GHz version as Intel's fastest chip and will be sold for the same price wholesale: $562 each in 1,000-unit quantities. The 1.9-GHz Pentium 4 is priced at $375, a slight price increase for Intel's second fastest chip. The company's former No. 2 chip was the 1.7-GHz Pentium 4, which carried a price tag of $352.

In an escalation of the price war between Intel and rival Advanced Micro Devices Inc. in Sunnyvale, Calif., AMD announced a slew of price cuts in its chips last week (see story).

When Intel introduces new chips, it usually adjusts prices on old chips. To make room for the 2-GHz processor in the top slot, the company dropped the price of its previous highest-speed chip, the 1.8-GHz Pentium 4, by 56%, from $562 to $256, according to information on Intel's Web site. Intel also cut the prices of both its 1.7-GHz and 1.6-GHz chips by 45%, to $193 and $163, respectively. Intel slashed the price of its 1.5-GHz Pentium 4 by 48%, to $133. Wrapping up the cuts across the entire Pentium 4 family, Intel also reduced the prices of its 1.4-GHz and 1.3-GHz Pentium 4 processors by 31%, to matching prices of $133, to match the prices of the slowest processors in a family. Such a step is standard practice in the industry to kill off the slower-speed products.

In addition to slashing the prices of its Pentium 4 line to make room for the new chips, Intel also cut the prices of its Xeon processor family, Pentium 3 Processor-S family, Celeron desktop processors and its three fastest Pentium 3 desktop processors.

Its Xeon family, for workstations and servers, saw price cuts across all three speeds, with the 1.7-GHz version dropping 37% to $256, while the 1.5-GHz and 1.4-GHz versions dropped 41% and 32% respectively, to $183.

The Pentium 3 Processor-S chips dropped in price to $337 for the 1.26-GHz processor -- a 9% drop -- and to $257 for the 1.13-GHz model, an 18% reduction, according to Intel's Web site. These chips are built using a 0.13-micron manufacturing process, which can help Intel make processors that use less power and produce less heat than chips manufactured using the larger 0.18 process, such as older Pentium IIIs. The 0.13-micron chips were originally aimed at notebooks, where heat and power consumption are most important, but were also used to feed the fast-growing market for slimline servers, called "blade" servers.

The company also cut the price of its entire line of low-cost Celeron desktop processors to $64. Intel cut the price of its 900-MHz version by 28%, the 850-MHz and 800-MHz by 14%, and the 766-MHz processor by 7%, giving them all matching prices, according to the company's Web site.

In other news, Intel said it will also launch two desktop boards and preview its upcoming low-cost 845 chipset today at its Developer Forum in San Jose. The Synchronous dynamic RAM-based 845 platform should bring down prices of PCs even further, according to Intel.

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