Intel looks to high-end for profits

Intel looks to high-end for profits

Intel's "divide-and-conquer" strategy to propagate multiple central processor unit (CPU) models for different applications should give users greater choice in high-performance systems, but may also artificially inflate the prices of workstations and servers, analysts said.

"We will continue to meet and support the needs of unique market segments from products to pricing," said an Intel representative.

The P6-generation Pentium II processor has already been honed for mainstream applications with the introductions earlier this month of 350- and 400MHz desktop chips and 233- and 266MHz notebook processors. The 266MHz Celeron processor, introduced along with the high-performance Slot 1 desktop chips, targets low-cost systems.

"The fact that Intel announced two very high-end processors on the same day it introduced a product at its lowest-ever introduction price is no coincidence," said Kelly Henry, senior analyst at IDC.

"Intel is making its increasingly segmented view of the market clear," Henry said. And Intel is showing that Slot 1 scales from low-cost PCs to mainstream computers.

At the same time, Intel has priced the Pentium MMX at its typical end-of-life levels, with a 166MHz CPU selling for less than $US100, Henry said.

"Intel is pushing Pentium IIs down into lower and lower PC price points," Henry noted.

Intel has announced that it has ended "wafer starts," the first step in the manufacturing process, on Pentium desktop processors. The work-in-process will keep the pipeline full through this year, the company said.

That will leave the more-expensive Pentium II as the mainstream PC CPU.

"As is Intel's usual strategy, products with the newest technology are being sold at a considerable premium," Henry noted.

Neither the Celeron nor the mainstream Pentium II will fit into Slot 2, and without the necessary multiprocessing hardware in the cartridge, these chips are unsuited for configurations of more than two CPUs.

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