Pentium II Price Cut May Spark User Rush

Observers say Intel Corp.'s announcement that it will cut prices for its 233MHz Pentium II chip by 33 percent could make that latest processor offering more attractive to corporate users.

Observers say Intel Corp.’s announcement that it will cut prices for its 233MHz Pentium II chip by 33 percent could make that latest processor offering more attractive to corporate users.

Since its introduction last third quarter, the Pentium II has been a popular choice for companies where number crunching is essential to the corporate bottom line -- for example, banks and financial firms.

Dataquest in San Jose, California, estimates that 1.6 million systems with Pentium II chips were shipped in the U.S. in 1997, but it expects that number to grow to 13 million in 1998, said Erin Collier, an analyst at the research firm.

With most Pentium II-class machines costing about US$3,000 this past year from vendors such as Round Rock, Texas-based Dell Computer Corp., IBM and Houston-based Compaq Computer Corp., users said they were waiting for prices to drop before adding the machines to their lineup in volume.

Collier said she expects vendors will offer this month Pentium II-based PCs for about $1,500 -- a drop of 50 percent.

"I have in mind how much I can spend when I buy a PC, so a drop in prices allows me to spend the same amount of money to get a better class of machine," said Larry Garden, manager of technical operations at Brewers Retail Inc. in Mississauga, Ontario.

Brewers Retail was buying Pentium-based machines with MMX technology but recently bought its first round of Pentium II machines, Garden said.

The company will continue to order Pentium II-based machines as older PCs are retired now that prices have dropped, he said.

Other users said they will purchase higher-end machines for those who need them, but only where the technology can make a difference -- such as for users who run financial or other applications that require powerful processing.

And although the Pentium II price reduction will no doubt make it an easier buy, it is still a workstation-class machine designed for higher-end users, explained John Dunkle, president of Workgroup Strategic Services Inc. in Portsmouth, New Hampshire.

"The Pentium II is still not for entry-level systems like those used for word processing mostly," Dunkle said.

Intel said it will begin to drop the prices on its other Pentium II processors later this month. Those chips feature speeds of up to 333MHz.

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