Intel Corp’s latest round of CPU price cuts looks likely to see the company’s low-end Celeron chips going head-to-head price-wise with rival units from companies such as Advanced Micro Devices Inc and Cyrix Corp. An Intel spokesperson could not confirm or deny press reports that Intel would drop Celeron prices to match or even undercut the equivalent AMD K6-2 chips. However, at the very least, the cuts may force AMD into rethinking its policy of pricing its chips 25% cheaper than the equivalent Intel product. The new prices for the Celeron range, which is aimed at the sub-$1000 PC market, reflect the growth in importance to Intel of that sector. After a shaky start in the low-end market with the original Celeron processor, which lacked an L2 cache memory – meaning it was weak at tasks such as graphics processing – Intel is aggressively looking for expansion in the low-end, having only recently dropped the price of the Celeron range and killed the original 266- and 300-MHz components (CI No 3,549). With the introduction of the K6-2 in June of this year (CI No 3,419), AMD has succeeded in competing effectively with Intel, something industry watchers had previously cast doubt on. The company has managed to compete by virtue of winning OEM orders from manufacturers of sub-$1,000 machines and is banking on sales of $3.7bn for next year (CI No 3,539). It is too soon to tell how Intel’s aggressive pricing of the Celeron will affect those predictions. No one at AMD was available for comment. However, WJ Sanders III, Chairman and CEO, speaking earlier this year, claimed that rather than simply undercutting Intel, the only way to win in the market against larger and richer competitors is by innovating and offering more desirable products. With the launch of the K6-2, with the 3Dnow! 3D graphics instruction set, AMD managed to do that, pre-empting Intel’s Streaming Single Instruction Multiple Data 3D instruction set by at least six months – the Katmai processor which uses the instructions isn’t due until next year. The company must be hoping that its upcoming K7 processor will offer similar advances on its Intel alternative, although there are issues around the company using its alternative ‘Slot A’ chip to motherboard connection. Intel is expected to announce the Celeron price cuts on January 3 1999.
