A vicious price war has broken out on the processor front with Intel slashing prices by up to 50%, forcing AMD to follow suit with swingeing cuts.
That could lead to renewed skirmishes between PC vendors as they adjust prices on their machines, and drive some into the AMD camp because Intel has pushed its 'classic' Pentium chips out of the picture, leaving a gap for the clone chip makers to fill.
Intel's strategy means Pentium MMX chips will effectively become the entry-level processor, with 'ordinary' chips such as the Pentium 166MHz, 150MHz and 133MHz now priced at around the $100 (#60) mark.
Graham Jackson, managing director of Acer UK, said such a move could be a miscalculation by Intel: "Intel wants to push everyone to the MMX chip, but business users don't see a requirement for it." He added that could provide an opportunity for AMD and Cyrix to satisfy the demand for so-called "classic" Pentiums.
Intel's price cuts, affecting almost its entire range, mean the 300MHz Pentium II with 512Kb cache, falls from $1,981 to $851, a 57% cut. But prices of the Pentium Pro largely remain stable, reflecting Intel's desire to restrict supply of that processor to the high-end SMP machines which will use it.
There are major price cuts on the 233MHz and 200MHz MMX chips, which drop from $594 to $386 and $492 to $252 respectively. That is an effective repositioning of these processors as entry-level units.
The 'classic' Pentiums will now have a restricted supply with prices for the 166MHz chip dropping from $209 to $106, the 150MHz from $150 to $95 and the 133MHz from $134 to $95.
Richard Baker, marketing director of AMD UK, said his company had followed suit with cuts averaging 46% across its line of K6 processors. The K6 233MHz now costs $290, the 200MHz $189 and the 166MHz $109. He said that in the third quarter, AMD will be able to reduce the size of its processors by almost a half and provide chips with higher clock speeds.
But Brendan Sherry, managing director of Cyrix Europe, recently acquired by National Semiconductor, said Cyrix would not adjust its prices."We're still very competitively priced against Intel," he claimed. "Our thinking is that we will capture the 166MHz slot."
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