Intel and Apple act to fend off a recession

Intel and Apple are both taking action to boost sales as the computer market starts to feel the pinch of belts being tightened in...

Intel and Apple are both taking action to boost sales as the computer market starts to feel the pinch of belts being tightened in anticipation of a period of recession, write Daniel Thomas and Eric Doyle.

Intel is battling against internal competition between the Pentium 4 (P4) and cheaper Pentium III chips which are holding back P4 sales.

Apple Computer is having to cut prices across its Macintosh range to boost flagging sales and shift the inventory that has amassed as a result. Additionally, the company is expected to announce new models at the Macworld Expo this week.

Intel has begun shipping a lower cost 1.3GHz version of the P4 in the hope that customers currently ordering the older Pentium III will be attracted. Dell released a PC based on the slower P4 chip last week and Gateway was also due to begin shipping PCs based on the new chip last Friday.

Dell will be able to sell its 128Kbyte Dimension 8100 PC, based on the new 1.3GHz chip, for about £1,260, whereas a comparable Pentium III 1GHz system with fewer I/O ports would cost £1,150. The main disadvantage is that extra RDRam memory for the P4-based system costs £120 more than SDRam, as used with the Pentium III, per 128Kbytes.

"The idea of the new chip is to accelerate the switch to Pentium 4," said an Intel spokeswoman. "It is being shipped to all the major OEMs in volume, to help drive it into the mainstream."

The P4 was released late last year, with many industry observers believing only customers using richly graphic programs, such as Flash, would need the chip straight away. Intel hopes that the more affordable 1.3GHz chip, along with an exten-sive advertising campaign expected to begin in the spring, will trigger the P4 market.

Apple cut its sales and profit forecasts in December and promised to clean out inventory from the sales channel, which stood at 11 weeks of stock. Accordingly it has reduced the price of the G3 Cube from £1,300 to £1,056 and Powerbook laptops running at 400MHz have been cut from more than £2,000 to £1,643.

In the US, Apple has cut up to $1,100 (£730) off its Power Mac G4 servers but the company has not committed itself to a similar move in the UK.

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