Intel chips in for cheaper Pentium 4 PCs

Intel will ante up to ensure widespread adoption of Pentium 4 systems despite the premium price for Rambus direct RAM.
Written by John G.Spooner, Contributor

Intel is planning to subsidise the cost of Rambus direct RAM for PCs based on its forthcoming Pentium 4 chip, sources said Friday.

The company, sources said, will offer PC makers a subsidy for each Pentium 4 PC sold in order to offset the cost of the memory technology to PC makers. The subsidies could shave $100 (£70) off the prices consumers pay for Pentium 4-equipped desktop PCs.

Intel officials would not confirm the existence of the subsidy program, although Intel spokesman George Alfs did say, "We're taking actions to ensure that Pentium 4 will successfully ramp in the marketplace."

Analysts say such a program would make a lot of sense. "With RDRAM pricing and availability such as it is, Intel wants to make sure that it doesn't stand in the way of Pentium 4 adoption," said Mike Feibus, principal analyst at Mercury Research. "If I were Intel, I would hate for another piece of the system to prevent that."

It is not clear subsidisation will overcome the higher price and relatively limited adoption of Rambus direct RAM (RDRAM).

Part of what remains to be seen is how much performance RDRAM buys you over synchronous dynamic RAM, Feibus said. "Our suspicion is that it will buy performance. If that's the case then (consumers) can stand a little premium. But we'll have to see."

Pentium 4 PCs are targeting the high end of the PC market, where users demand high-powered PCs for applications such as video editing and gaming. In general, such users have been willing to pay more for technologies that increase speed, but they have been unwilling to pay extra when performance gains are unproven.

Alfs declined further comment. However, the subsidy program has been rumoured for some time, most recently in reports published on the Web by InQuest Market Research.

Intel Senior Vice President Albert Yu told ZDNet News in a recent interview that he thought Rambus prices were too high. "(Prices for Pentium 4 PCs are) very much in the hands of the RDRAM suppliers," Yu said. "We're working with them on that issue. A little premium over SDRAM is OK, but not what we've got now. The premium is way too high," he said in that interview.

With the subsidy, prices for Pentium 4 PCs are expected to start at roughly $2,500. But it is likely that PCs loaded with memory, large hard drives and fast video cards would cost $3,000 or more.

ZDNet sources confirmed that Intel's RDRAM subsidy program would offer PC makers $70 per Pentium 4 system sold in the fourth quarter of 2000 and $60 per system in the first quarter of 2001. PCs could cost about $100 less than they would have without the subsidies, analysts said.

It's not clear whether Intel will continue to subsidize RDRAM into the second quarter of 2000. The chip maker clearly hopes that RDRAM prices will subside in early 2000.

So far, RDRAM prices have fallen from about $1,000 for a 128MB RIMM (RDRAM Inline Memory Module) to $250. Nevertheless, the premium over standard synchronous dynamic RAM (SDRAM) is still about 200 percent. Currently, the fastest SDRAM, PC133, costs $150 or less for a 128MB memory module.

Intel is expected to ship its Pentium 4 in mid-October. Although the launch date is still somewhat fluid, the company has said the chip will debut at speeds of 1.4GHz or faster. That likely means Intel will also ship a 1.5GHz Pentium 4 at launch.

Time after time, people who have recently met Intel's Andy Grove -- the senior travelling evangelists will drop the phrase "customer-facing" into the conversation. It's the latest Grove buzz-word and Guy Kewney thinks it reflects his feeling that there are things going on, out there in the Internet world, which are hidden from Intel. Go to AnchorDesk UK for the news comment.

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