Celeron's lack of ambition

And that's just fine for Intel, whose healthy bottom line depends on selling millions of more expensive processors like the Pentium II and Pentium II Xeon. The company on Monday announced new 366MHz and 400MHz Celerons. At the same time, many PC makers also announced low-cost systems built around the chips.

To ensure that Celeron holds its place serving home and small business users, Intel will continue to turn the crank on the more expensive Pentium II -- which will support a faster bus, advanced memory and 3D instructions -- while withholding those capabilities from the Celeron platform.

For example Celeron's bus speed will probably hold steady at 66MHz, its current speed, said Ron Peck, director of platform marketing, here Monday. The bus speed for the Pentium II, now at 100MHz, will reach 133MHz later this year. Peck said Intel is on the fence about whether to push Celeron's bus speed to 100MHz this year. Sources say that's because the company doesn't want the performance of lower-priced processors to overlap too much with that of higher-priced chips.

But there already appears to be a problem with that plan. Intel claims the 400MHz Pentium II is 10 to 15 percent faster than the new 400MHz Celeron, although PC Week Labs found there is virtually no difference in performance when running typical business applications. This despite the fact that the Pentium II has a larger Level 2 cache and a faster bus.

Paul Otellini, executive vice president and general manager of Intel's Architecture Business Group, said he has personal knowledge that typical business applications, such as Microsoft's Outlook, run a lot faster on a Pentium II than on a Celeron. "At Intel, we send a lot of attachments [via Outlook] and I can tell you I can open and edit them a lot faster on a Pentium II,'' Otellini said.

Although Intel has no plans to outfit the Celeron with 3D Katmai New Instructions or next-generation Rambus Dynamic RAM, it will boost the clock speed to 433MHz by the end of March, sources said, with faster chips due throughout the year.

In the meantime, Intel is broadening Celeron's reach beyond sold-at-retail home PCs to small business buying directly and through resellers. The company has kicked off a marketing and advertising campaign to that effect and is also training resellers on the differences between the two platforms and how to position them to customers.

Otellini does not expect Celeron PCs to breach large enterprise sites, adding that "the hardest part [of making the segmentation strategy work] is keeping the Pentium II's performance above Celeron.'' He also said it's too early to tell whether low-cost PCs are creating new legions of users or simply creating nice buying opportunities for seasoned PC users.

As Intel continues to push the envelope with Celeron, it is also finding new uses, such as set-top boxes. Otellini said Intel has struck a deal with a set-top box maker, which will be announced sometime this year. Intel also has a Celeron mobile road map for low-cost notebooks. "We do know that Celeron is no longer a point product," Otellini said. "Celeron is and forever will be our value product.''

Take me to the Katmai special.