Intel to lower chip prices Monday

Intel will cut prices on its desktop Pentium II and Pentium III processors by as much as 41 percent on Monday, ZDNN has learned.

According to sources, Intel will lower its 550MHz Pentium III from $658 (£408) to $487 (£302), a price cut of about 26 percent. The 500MHz Pentium III will receive the largest price cut, a whopping 41 percent from $423 to $251. The 450MHz Pentium III will be reduced by about 21 percent from $230 to $183. The recently introduced 600MHz Pentium III will stay the same at $669.

Intel will also lower prices on Pentium II chips. The Pentium II 450MHz will be reduced from $230 to about $183, while the 400MHz will fall from $173 to about $163, sources said. All of the listed prices are in 1000-unit quantities.

Intel officials would not comment on it processor pricing. Intel, however, discloses these price cuts to PC makers well in advance. The PC makers use the information to plan their own price reductions and to plan new models based on the new, lower chip pricing.

The reductions from Intel mean, for example, that a number of low-cost 500MHz Pentium III desktop models will be available for the upcoming Christmas buying season, sources said.

Hewlett-Packard and IBM will utilise the price cuts Monday by announcing price reductions on their desktop models, sources said.

On Friday, Gateway cut prices across the board on its consumer PCs. The company's largest price cut came on the Essential 450. The desktop PC -- configured with a 450MHz Pentium III, 64MB of RAM, 6.8GB hard drive and a 17-inch monitor -- was reduced from $1499 to $1299, company officials said.

According to sources, HP will reduce prices by up to 17 percent across its Vectra and Brio desktop PCs and Kayak PC Workstations. A Vectra VL model with a 500MHz Pentium III, 64MB of RAM and a 6.4GB hard drive will be priced at $1205, a 17 percent reduction. Brio models will receive a similar discount. A Brio BAx model, for example, with a 450MHz Pentium III, 64MB of RAM and a 13GB hard drive, will be reduced by about 10 percent to $1198.

IBM is expected to follow with price cuts on its PC 300 desktops and Intellistation Workstations, sources said. Intel rival Advanced Micro Devices may follow Intel on Monday with processor price cuts of its own.