Intel facing Celeron speed dilemma

Intel's cheap Celeron chips are about to outpace its posh Pentium III in the mobile market.

Intel is facing a mobile megahertz quandary.

The chipmaker will launch its fastest-yet mobile processors in September -- but they won't be Pentium IIIs. Instead, the mantle of fastest processor will pass to the 433MHz and 466MHz mobile Celeron chips with 128KB of integrated Level 2 cache, due on Sept. 15, according to sources.

And there's the rub. That product release will create the unusual situation where cheaper, Celeron-powered notebooks will appear to be faster than top-of-the-line mobile Pentium II notebooks.

Intel currently ships a 400MHz mobile Pentium II and a 400MHz mobile Celeron chip. When compared side by side, a mobile Pentium II chip, with its 256KB of integrated L2 cache, is about 10 percent faster than a mobile Celeron. Celeron chips, however, usually cost hundreds of dollars less than Pentiums.

The new, faster Celerons will likely be a boon for consumers, who would normally have to pay a higher premium for a top-speed rated Pentium II or Pentium III chip.The Celeron is likely to remain Intel's fastest mobile chip for a good six weeks, until the mobile Pentium III is rolled out at the end of October, sources said.

However, it is unlikely that notebook vendors, especially those selling to corporations, will adjust any plans for high-end notebooks. It's more likely they will wait to make the transition from the 400MHz Pentium II to the Pentium III chip in order to boost performance for those models.

Still, companies with the 433MHz and 466MHz Celeron chips in their notebook lineups may notice an increase in Celeron sales from consumers and small businesses that are making purchase decisions based on the amount of megahertz they can get per dollar spent, said an executive at a top-tier notebook maker.

"For any of the high-end [notebook] products, Q4 is really a qualification quarter," the executive said. "The gap will be filled by standard run-rate business... and that business will be 400MHz Pentium II [notebooks]." That means corporations will likely continue to purchase notebooks they have qualified earlier in the year, while they evaluate Pentium III-based models for use after the beginning of the new year. Consumers and small businesses will either have to wait or go with the Celeron when seeking top clock speed chips.

While Intel could close the performance gap with a 433MHz mobile Pentium II chip, it is unlikely that it will do so, sources said, even though a mobile Pentium II with that clock speed was under consideration earlier in the year.

While Intel will reach 466MHz in September, Advanced Micro Devices' fastest mobile processor to-date is the 400MHz K6-2-P. The company also has a mobile K6-III-P processor, which tops out at 380MHz.

Intel would not comment on processor specifics. "We're on track for fall," said a company spokesman.