Intel Cuts Celeron Prices, Holds Steady On Pentium 4

The computer chip giant last week cut prices on its lower-cost Celeron 1.3GHz, 1.2GHz, 1.10AGHz and 1.0AGHz processors. Intel, however, didn't cut prices for its staple Pentium 4 line.

Intel seldom comments on its pricing strategy. And in a conference call with financial analysts last week, Intel CFO Andy Bryant declined to comment on the company's first-quarter pricing.

Solution providers said they don't expect the latest cuts to abate the competitive squeeze on the channel.

"Pricing pressures are bigger than ever right now," said Mark Romanowski, senior vice president at AMC, a New York-based solution provider. "The only winner short-term is the customer. The OEM and the channel are both losers. As a result of the fierce competition among the various OEMs, extreme pricing pressures are put on the channel. This is not a good sign."

Some financial analysts said Intel's tame price cuts caught them off-guard, considering its aggressive pricing stance last year. During 2001, Intel cut prices nearly once a month and at times halved prices on some processors,moves designed to regain market share lost to rival Advanced Micro Devices and to goose the adoption of Pentium 4 processors.

"We were surprised to see Intel hold prices for non-Celeron products steady on the desktop front, but we suspect the company will lower prices across the board with the official introduction of [mobile processor P4-M, which is expected sometime this month," Joe Osha, an Intel analyst at Wall Street investment firm Merrill Lynch, said in a report.

AMC's Romanowski also said he expects some pricing relief from Intel. "Perhaps the next quarter will show signs of more [pricing stability across the board," he said.