September 14, 2001 1:15 PM PDT

Prices sliding for Pentium III PCs

With Intel beginning to phase out the Pentium III, good deals on desktops with the chip are cropping up.

To help proliferate the Pentium 4, Intel is effectively eliminating the Pentium III from the desktop market. As a result, computer manufacturers have begun to reduce already-discounted prices on their existing inventories of these computers. By the end of the first quarter next year, Pentium III computers will likely be gone from store shelves. Corporations, which have bought Pentium III PCs in fairly good numbers, will still be able to obtain them for a while.

Until recently, 1GHz Pentium III systems ranged from $850 to $1150, according to analyst firm ARS. For example, a 1GHz Pentium III desktop with a monitor and printer could be found for about $949 after rebates in late August.

Now, 1GHz Pentium III PCs can be found for $650 to $850 without accessories such as monitors. Retailer Insight.com, for example, is offering a 1GHz Pentium III Emachines desktop for $619, including a rebate, as part of its deals this week.

The Pentium III, in some ways, is sandwiched between the more expensive Pentium 4 and the lower-priced Celeron. Pentium III's speeds generally range from 866MHz to 1.2GHz, while the Pentium 4 runs from 1.3GHz to 2 GHz and the Celeron ranges from 800MHz to 1.1GHz.

Although Intel first outlined its phasing out of the Pentium III in March, the company began the extinction process in earnest in August with steep price cuts on the Pentium 4. The company then kicked up the process a notch with the release of the 845 chipset earlier this month, which allows PC makers to combine the Pentium 4 with cheaper, standard memory for the first time--instead of Rambus.

PCs with 845 chipsets can be configured with 1.5GHz Pentium 4 chips and still cost as little as $849 to $900.

Retailers are offering Pentium III discounts through rebates, product bundles and price cuts. For example, CompUSA is selling a Hewlett-Packard Pavilion 2950 desktop with a 1GHz Pentium III, 128MB of RAM, a 40GB hard drive and a DVD/CD-RW drive. The system lists for $949, but drops to $849 with an instant rebate. The price cut is available until Saturday, according to the company's Web site.

Although the breadth and depth of discounts will depend largely on the amount of inventory left with PC makers, retailers and other computer sellers, analysts agree that even better deals could crop up.

Retailers can "slot that small amount of product into nice price point to clear it all out," said Stephen Baker, analyst with NPD Intelect. "They're going to be gone pretty quickly."

Inventories of Pentium III PCs are believed to be relatively low specifically because of Intel's efforts to transition from Pentium III to Pentium 4. But PC makers have also spent the first and second quarters trying to reduce bulging inventories related to the sales slowdown that first hit late last year. And at the same time, companies have begun selling more Pentium 4 PCs as the price of the chips and Rambus memory has come down.

Among Windows-based PCs, retail shelf space given to Pentium III systems has decreased by 10 percentage points over the past six months, while shelf space for Pentium 4 PCs has gained by 25 percentage points, according to ARS.

The most recent data from ARS shows the Pentium 4 category with 36 percent of retail shelf space and the Pentium III with 20 percent--just 2 percentage points less than the Celeron, which has 22 percent. Advanced Micro Devices' Athlon has 14 percent and its budget Duron chip has 8 percent, said Toni Duboise, ARS' desktop PC analyst.

By contrast, the Pentium III had 30 percent of retail shelf space in February and Pentium 4 had only 11 percent, she said.

"There (are) going to be great deals on Pentium IIIs through the year because they're basically trying to flush them out of the system," said Roger Kay, an IDC analyst. "All of the companies I spoke to said they would be out of (Pentium III) by the end of the year."

Some PC makers, such as Dell Computer, have said they plan to switch consumer-oriented systems completely over to the Pentium 4 in as little as 90 days.

The Pentium III will be available in corporate desktops for a longer period of time.

PC makers, such as Dell, have promised corporate customers to maintain availability of the chip for the next nine to 12 months. Still, Intel executives say the chip will effectively be gone by the time the calendar turns.

"The Pentium III will be 100 percent off the desktop by the end of the year," Louis Burns, vice president and general manager of Intel's Desktop Platforms Group, said at the Intel Developer Forum in late August.

Meanwhile, many corporations will likely use the good deals to stock up.

"When they start dropping the prices, as they already have, we'll buy them up," said Eric Martin, an IT manager with a door and window manufacturing company. "We see absolutely no reason to go to the new chip yet. All of the (operating systems) run just hunky-dory on the current chip."

Topping it all off, Intel has also announced schedules by which it will discontinue 866MHz to 1.1GHz Pentium IIIs with a 100MHz front-side bus, the data pipeline between the processor and system memory. The last orders for these chips are due in by early December, according to Intel's Product Change Notification service.

However, a company spokesman said that Intel has not yet announced any plans to discontinue Pentium III chips at 1GHz or faster with a 133MHz front-side bus.

 

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