Intel pooh-poohed it over a year ago. Yet, in 1999, the company will give its full attention to what it previously downplayed as the "basic" PC market.
"If there is a very large market at the very low end, we want to participate," said Paul Otellini, executive vice president of Intel's Architecture Business Group, at a roundtable discussion.
The PC chip giant unveiled two faster Celeron processors aimed at the low-cost PC market on the same day. Weighing in at 366MHz and 400MHz, the new processors respectively cost 40 percent and 55 percent less than their Pentium II counterparts.
New Year's resolutions
More importantly, the company laid out its plan to grab back market share lost to its smaller rivals.
"I'd have to say, we were not happy with the share we had of the retail market in 1998," said Otellini. Despite that sentiment, however, the exec thought that Intel ended the year on a strong note -- 20 percent of all PC chip shipments in Q4 1998 were Celeron processors, he said.
To continue that growth, Intel will strive to make the PC an information appliance.
"We have two choices," said Otellini. "We can wait for our [computer-literate] children to grow up -- then we will have 100 percent penetration in 20 years -- or we can make computers easier to use."
For Intel, that means finding a product that attracts "the other half" of consumers -- the 50 percent of U.S. households that do not have a PC.
Celeron on TV
Already, Intel has made deals to put the pared-down Pentium II in set-top boxes, said Otellini. "Within the next 12 months, you will see set-tops with the Celeron," he said.
While Otellini would not elaborate, low-cost PC maker Emachines has already announced a DVD-enabled set-top PC based on the Celeron that could fit the bill.
Buying into business
It will be a hard sell, however, said one analyst. "The Celeron is really designed as a basic PC processor," said Carl Howe, director of computing strategies at industry watcher Forrester Research. "Business people are not really selecting it."
Despite that, Celeron is here to stay, said Otellini. "The idea is to establish Celeron as the low-cost, high-value processor of choice," he said.
What will the next Celeron look like?
Even Otellini was not certain, citing technical issues with keeping the processor speed up in the future. "It is not clear what form factor will be needed above 600, 700, 800 megahertz," he said. "We still have to obey the laws of physics."
Otellini did not bet on whether basic PC sales were increasing, but with 20 percent of the processor market made of Celeron chips -- and low-cost chips from its rivals making up at least another 10 percent -- the market seems ready for growth.
The company is also looking to the business market for increased sales by touting the processor in a new advertisement in its long-standing ad campaign.
