Intel's Price Cuts Bode Well For Long, Hot Summer

The Santa Clara, Calif.-based chip maker late last month cut prices on all Pentium 4 processors except for its best-performing and newest 2.53GHz chip.

Intel's biggest price cut was reserved for the mobile Pentium 4 line. The price of the 1.7GHz Mobile Pentium 4 was chopped 53 percent, from $508 to $241 in 1,000-unit quantities.

The pricing moves position Intel's 2GHz Pentium 4 processor at the sweet spot of the white-box space for the summer season, according to some solution providers.

That processor was reduced in price from $262 to $193 in 1,000-unit quantities. Sub-$200 processors provide the most attractive total system price, some systems builders believe.

"I've been doing a real good job of getting Pentium 4, 2GHz [sales," said JoAnn Evans, vice president of Net-Works, a Minneapolis-based white-box maker and solution provider. "I really, truly think the next couple of months are going to be very busy for us on the Pentium 4 machines."

Evans thinks Intel's recent pricing action follows the vendor's usual price-slashing pattern. "I thought it was the normal [seasonal drop," she said.

"I think it's pretty great we can just basically work on 2GHz [systems in the summer," Evans said, adding that she doesn't expect any further cuts from Intel until autumn.

Intel's official line on price cuts is that, from time to time, it adjusts pricing for a variety of reasons.

Other price reductions enacted by the chip maker affect the 2.2GHz Xeon processor for servers and workstations, whose price was cut 44 percent, from $465 to $262; and the 1.8GHz Mobile Pentium 4, which was cut in price by 45 percent, from $637 to $348. All prices are based on 1,000-unit shipments.

In all, the company cut prices on 21 processors across all three computing platforms,desktop, mobile and servers.

Intel executives recently said the company is on track to ship a 3GHz Pentium 4 by the end of 2002.

The massive price cuts coincide with a new global ad campaign from Intel, which the vendor unveiled just days after the price-cut announcement.

The advertising initiative, aimed at increasing awareness of the Intel brand in the enterprise, will encompass all media and target mostly CIOs and CEOs.