As a result, by this time next year, users will be able to run robust applications, such as those requiring floating-point execution, at cut-rate prices.
Early next year, Intel plans to deliver 333MHz and 350MHz versions of the Pentium II, company officials said at Comdex here last week. By year's end, it plans to boost the Pentium II's clock speed to 400MHz.
It will follow that rollout in February with price cuts on the 233MHz and 266MHz Pentium II, shaving about $100 off those processors, sources close to the company said. Currently, the 233MHz and 266MHz parts are about $400 and $500, respectively.
And in May Intel will cut Pentium II prices again, sources said. By that time, the price differential between 233MHz and 266MHz Pentium IIs and Pentium Processors with MMX Technology will be nominal.
"The third quarter [of 1998] is the crossover time," said one source briefed by Intel. "By that time they don't want the Socket 7 architecture to have any price advantage over Slot 1."
The Pentium II is based on a new, proprietary Slot 1 architecture. Because Intel officials have said the company won't license the Slot 1 design to competitors, Intel could put the heat on rivals by continually driving down prices on Pentium II chips.
Some corporate buyers said they can accept buying systems with constantly changing processors, as long as the price doesn't change.
"I always buy the most I can for the budget I have, even though the performance increase is often minimal," said Donnie Pruit, director of information services at Clayton Williams Energy Inc., in Midland, Texas.
In April, Intel will introduce 233MHz and 266MHz Pentium II processors for notebooks, sources said. At the same time, the company will introduce the 440BX chip set for both desktops and notebooks. The 440BX supports faster synchronous dynamic RAM and a 100MHz back-side bus.
By year's end, the company plans a version of the Pentium II for notebooks running at 300MHz.
Later in 1998, Intel will release a modified version of the 440BX that supports next-generation technologies such as 1394, a high-speed digital interface for bandwidth-intensive applications, sources said.
The BX chip set for portables will also support Accelerated Graphics Port, a bus architecture that boosts performance of three-dimensional applications.
In the middle of these rapid upgrades, Intel in the first quarter will deliver its first 3-D graphics processor, called the 740.
Intel's graphics division developed the chip with 3D Labs Inc., a division of Lockheed Martin Corp.
To drive down the cost of 3-D graphics, Intel plans to integrate the 3-D technology into Pentium II chip sets. However, that may not happen until 1999 or later, sources said.
Integration of 3-D is an area where Intel lags behind X86 competitors Advanced Micro Devices Inc. and Cyrix Corp.
AMD demonstrated last week the K6-3D, a CPU with proprietary 3-D extensions. And Cyrix will add 3-D extensions to the tightly integrated MediaGX processor. Both companies will release those processors in the first half of 1998.
In an interview with PC Week at Comdex, Intel President Craig Barrett said the company will integrate additional features, such as communications, audio and graphics, into processors and chip sets to drive down costs. In fact, he said, the company is working on a reference design for a "lean" PC that could cost as little as $500.
"We will have various levels of integration across the board," Barrett said.
Another area where Intel hopes to fill gaps is in the sub-$1,000 PC market.
The company plans to release in the middle of next year a version of the Pentium II that comes without any second-level cache, enabling OEMs to keep system costs down.
Although the price will be low, some analysts believe a cache-less Pentium II that runs on a 66MHz bus will be a slow performer.
In the second half of the year, however, Intel will release a Pentium II with integrated L2 cache, also targeted at the sub-$1,000 market.
Intel officials in Santa Clara, Calif., declined to speculate on future pricing action regarding its processors.