Intel Corp. is releasing a revamped line of Celeron microprocessors Monday, fueling speculation that the improvements will help the chip giant regain its footing in the fast-growing market for computers selling under $1,000.
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The new line represents Intel’s full-fledged stab at the budget PC segment, where the chipmaking giant has lost market share to low-priced competitors. Top-tier computer-makers including Hewlett-Packard Co., Compaq Computer Corp. and IBM Corp.–which have relied on Intel competitors such as Advanced Micro Devices Inc. for the processors that serve as the brains of their budget PCs–are slated to put the chips into consumer and business computers.
Intel will unveil the new design running at two clock speeds Monday, a 300- and 333-megahertz version. The chips will cost $139 and $179, respectively, said Piper Jaffray analyst Ashok Kumar. Intel will also launch a 450-megahertz Pentium II the same day.
HP plans to incorporate the new chips into its business computers in the Brio and Vectra lines starting at under $1,000, while Dell Computer Corp. will use them to power its OptiPlex business models and its consumer line, Dimension.
“The first Celeron processor was a dog,” said Nathan Brookwood, an analyst at San Jose, Calif., research firm Dataquest Inc. “It wasn’t worth the money. This one is.”
Intel launched the Celeron line in April but the first processor drew sneers from critics because the chipmaker removed a secondary memory chip to cut costs, compromising performance. The new Celerons, developed under the code name of Mendocino but to be sold as the Celeron-A, will contain the extra memory chip, otherwise known as integrated cache memory, which allows speedier operation. Intel will sell both Celeron models initially, but will phase out the older version after the Celeron-A takes hold, analysts predicted.
The Celeron-A “will give the Celeron line the kind of performance it should have had from the beginning,” said Keith Diefendorff, editor of Microprocessor Report in Sunnyvale, Calif.
Intel’s miscalculation of the popularity of budget PCs helped widen the door for competitors such as Sunnyvale-based AMD. Intel’s market share in the sub-$1,000 market nose-dived to 35 percent in June from 72 percent a year ago while AMD sprinted ahead to grab a 51 percent share, according to research firm PC Data. The budget PC arena, one of the fastest-growing segments of the computer market, accounts for roughly 10 percent of all computer sales.
With the release of Celeron-A, many analysts think Intel has a chance to bounce back. The chip’s performance is very comparable to Intel’s 333-megahertz Pentium II, which sold for nearly $800 early this year.
“The Mendocino is impressive,” Brookwood said. “Intel’s late but they still have time to catch the main attraction and most of the party.”
The only potential obstacle to the Celeron line’s success is the now-tainted name itself, several analysts pointed out. “The first Celeron system wasn’t good at all–and that’s putting it mildly,” said Matt Sargent, analyst with ZD Market Intelligence. “People have negative feelings about the Celeron. It’ll take some trust for them to go with the line.”
The budget PC market is “a segment where we want to deliver product, price and value,” said Mike Aymar, Intel’s vice president and general manager of product launch operations. “We want to earn the customers’ choice.”