Intel Selling Two-Gigahertz Chips



Intel Selling Two-Gigahertz Chips

New York Times; New York, N.Y.; Aug 28, 2001; Chris Gaither;

Sic:3674Sic:334413Sic:334210Sic:334419Sic:334611Sic:511210Sic:334413Duns:04-789-7855Duns:04-863-4059

Edition:

Late Edition (East Coast)

Column Name:

Technology

Start Page:

C.4

ISSN:

03624331

Subject Terms:

Semiconductors

Marketing

Product introduction

Price wars

Computer industry

Dateline:

SAN JOSE, Calif., Aug. 27

Companies:

Intel CorpTicker:INTCDuns:04-789-7855Sic:3674Sic:334413Sic:334210Sic:334419Sic:334611Sic:511210

Advanced Micro Devices IncTicker:AMDDuns:04-863-4059Sic:334413

Abstract:

Only 18 months ago, Intel and Advanced Micro were in a race to be the first to market with a one-gigahertz chip. Advanced Micro won that race

but has since fallen behind in so-called clock speed. Though clock speed is only one factor in a computer system's performance, Intel has used it

as a marketing advantage, releasing faster versions of its Pentium 4 chips at increasingly frequent intervals.

Mark Edelstone, a managing director with Morgan Stanley Dean Witter, said he expected the clock-speed gap between Intel and Advanced Micro

to widen further. He also expects Intel to continue to cut its prices as it accelerates the transition from its Pentium 3 line for desktops to Pentium

4.

Purchased in batches of 1,000, the two-gigahertz chips cost $562 each. On Sunday, Intel reduced its 1.8-gigahertz chips, which were introduced

last month at $562, to $256. Prices of other, slower Pentium 4 chips fell 31 percent to 48 percent. In anticipation of Intel's move, A.M.D. also

lowered its prices last weekend.

Full Text:

Copyright New York Times Company Aug 28, 2001

The Intel Corporation today began selling versions of its Pentium 4 chips that run at two gigahertz, or two billion cycles a second, a largely symbolic performance

landmark that nonetheless opened Intel's speed lead in desktop computers.

To make room for the newest chips, Intel cut prices across its entire line of Pentium 4 products as much as 54 percent, the latest assault in an escalating price war

with its smaller rival, Advanced Micro Devices.

The chip introduction was accompanied by product announcements from leading computer makers that will use the chip. Starting at $1,499, systems based on the

two-gigahertz chip will go on sale this week from computer makers like Dell, Compaq and Hewlett-Packard.

Although the new chips are only slightly faster than their predecessors, which run at 1.8 gigahertz, Intel and computer makers voiced hope that the Microsoft

Windows XP operating system, due out in October, and the round number of the two-gigahertz chips might jump-start the struggling market for personal computers.

In trading today, Intel rose 7 cents, to $29.15.

Intel, based in Santa Clara, introduced its newest product here at the start of a gathering of companies that design hardware and software based on Intel products.

Only 18 months ago, Intel and Advanced Micro were in a race to be the first to market with a one-gigahertz chip. Advanced Micro won that race but has since

fallen behind in so-called clock speed. Though clock speed is only one factor in a computer system's performance, Intel has used it as a marketing advantage,

releasing faster versions of its Pentium 4 chips at increasingly frequent intervals.

''Clearly, at this point Intel has the megahertz advantage,'' said Paul Collas, director of product marketing for Gateway, which sells computers with both Advanced

Micro and Intel chips. ''With Pentium 4, they really turned up the heat.''

Drew Prairie, a spokesman for Advanced Micro, accused Intel of ratcheting up clock speed without sharply improving the performance of the system. He said his

company's fastest Athlon chips, at 1.4 gigahertz, run software as well as Intel's newest product.

''They have a lead in megahertz, but in terms of raw performance I think it's neck and neck,'' Mr. Prairie said.

Mark Edelstone, a managing director with Morgan Stanley Dean Witter, said he expected the clock-speed gap between Intel and Advanced Micro to widen further.

He also expects Intel to continue to cut its prices as it accelerates the transition from its Pentium 3 line for desktops to Pentium 4.

Purchased in batches of 1,000, the two-gigahertz chips cost $562 each. On Sunday, Intel reduced its 1.8-gigahertz chips, which were introduced last month at

$562, to $256. Prices of other, slower Pentium 4 chips fell 31 percent to 48 percent. In anticipation of Intel's move, A.M.D. also lowered its prices last weekend.

Consumers have benefited from the falling chip prices. Powerful desktop machines are more affordable today than ever before, as computer makers have also

reduced their prices to stimulate demand. Some computer systems based on the Pentium 4 are expected to cost about $900 before the end of the year.

Although an impressive technical achievement, Intel's arrival at two gigahertz raises questions about whether that additional speed is necessary for current computing

applications. Louis Burns, a vice president and general manager for Intel's desktop platform group, said the marketplace had often underestimated the speed of

change in the way people use computers. Corporate managers must buy machines that remain useful for at least three years, Mr. Burns said, adding that no one can

predict how much power software applications will require in three years. ''Hardware often leads software,'' he said.

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