Chip Tease

__ Intel Rolls Out the Pentium III __

"Intel used to operate under the principle that you could have any chip you wanted as long as it was black," Karen Alter, the company's director of microprocessor marketing, says with a smile. How times change.

Faced with declining profits (down 13 percent over 1997), Intel is revamping its business model. No longer can it confidently introduce a new high-end - and high-priced - microprocessor and rely passively on more complex software to spur demand (as Windows 95 did for the original Pentium). Now killer apps are Internet related - more bandwidth-suckers than processor-hogs - and consumers are bypassing $2,500 PCs in favor of dirt-cheap econo-boxes. In November 1997, the chipmaker's share of the sub-$1,000 PC market was 65.7 percent; In November 1998 it was 31.7 percent.

Intel's answer to a world in flux? Phase out Pentium II, and bring on Celeron and Pentium III, belle of a raucous February rollout.

Intel's Celeron line - which is both cheaper and more powerful than it would have been without credible competition from AMD or Cyrix - costs Intel about $65 to make and sells for as little as $71, according to Sunnyvale-based MicroDesign Resources. Numbers like that will hardly support the company's historic 60 percent gross profit margins. For that, Intel needs the Pentium III - which, costs about $73 to manufacture and will go for nearly $700. The new Pentium comes in 450- and 500-MHz versions, and Intel claims it gives you the same horsepower multimedia professionals get from SGI workstations. More than 200 software vendors and Web developers have Pentium III-friendly software in the pipeline.

"The reality of the market today is that there's a lot of volume selling at prices below $1,000, but there's still a lot of volume at higher price points," says Alter, one of the chip giant's vice presidents. "There really is a market for this."

Decision time: Upgrade to the Pentium III, or scale back to the Celeron? If you're wondering whether the III is nothing more than its predecessor with tailfins, you'll want to consider the basics. Here's the lowdown, spec by spec.

Pentium II

Clock speed
333 to 450 MHz
Intel built its rep by pushing the clock-speed envelope. And at 450 MHz, the Pentium II has long been the fastest one out there (though Apple's G3 is now closing in fast). It's that 450 MHz that let's you zip so deftly around the Windows environment. Instruction set
The instruction set tells the processor how to execute specific commands. All Pentiums use the x86 - the Pentium II was one of the first to run on top of Intel's P6 microarchitecture.

Multimedia enhancements
Intel designed MMX (multimedia extensions) to help the Pentium II run multimedia software. (MMX is included on all three chips.) It assists with integer calculations typically used for compression and decompression of video.

Price
As of January, the Pentium II was priced from $181 (333 MHz) to $562 (450 MHz). With the processor being phased out this year, there are no second-quarter prices yet.

Celeron

Clock speed
300 to 400 MHz
The 366-MHz Celeron is only 5 to 10 percent slower than an equivalent Pentium II. It packs 128K of onboard cache (storage space built onto the processor), which is more efficient than the Pentium II's 512K of closely coupled cache. For Web surfing and wordprocessing, the Celeron's plenty speedy. Instruction set
The Celeron uses the same instruction set as the Pentium II. But next year, Intel will introduce the Pentium III instruction set to Celeron for a souped-up but still reasonably priced chip.

Multimedia enhancements
Like the others, Celeron has the MMX instruction set, designed to run video, graphics, and game apps.

Price
The Celeron costs $123; analysts expect a drop to $85 by Q2. There's no point in dumping your Pentium II until the Celeron includes the Pentium III instruction set (see above); then consider the as yet unannounced 500- or 600-MHz Celerons.

Pentium III

Clock speed
450 or 500 MHz
Although the new processor makes very little difference when running applications not designed for it, many of tomorrow's coolest apps will need the Pentium III (or AMD's similar 3DNow! chip) to run properly. And if the speedy 500 MHz just isn't enough for you, wait until the second half of the year, when Intel will shrink the die size to 0.18 microns to build a 600-MHz version. Experts believe that by year's end Intel will be well on its way to producing a 1-GHz processor. Instruction set
The Pentium III couples its own instruction set with the Pentium II's. The new set enables software developers to represent objects as mathematical equations and easily translate these into images. The new chip processes up to 2 billion floating-point calculations per second, double that of the fastest Pentium II. And because such calculations are used for speech synthesis and pattern/voice recognition, the Pentium III is a better chip for handling encryption.

Multimedia enhancements
The secret to the Pentium III's blazingly fast multimedia is the new instruction set's 70 SIMD (single instruction multiple data) extensions for floating-point data types. The Pentium III provides more realistic graphics with smoother surfaces, as well as real-time rendering of shadows and reflections.

Price
The 450-MHz Pentium III processor costs $496, the 500-MHz version $696. Prices are expected to drop fast, reaching $350 and $530 by the second half of the year.