Intel Bets On Cache To Revive Celeron Brand

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August 21, 1998 (12:00 AM EDT)

Intel is betting on the addition of cache to salvage the maligned Celeron brand, but observers wonder if improved performance is enough to save it.

As Intel Friday rolls out 300-MHz and 333-MHz Celerons with 128 kilobytes of cache, retailers said the processors must overcome the sluggish image of their cacheless predecessors and the momentum of Advanced Micro Devices' and Cyrix's low-cost alternatives.

AMD on Wednesday is expected to announce a 350-MHz K6-2 processor, which one analyst said is intended to remind technology users that AMD (company profile) still offers a faster low-cost option. Intel's challenge is to overcome negative publicity from the first Celerons, which lacked performance-boosting cache. To recast the chip, Intel (company profile) is expected to initiate an extensive retail branding and training effort.

Performance tests conducted by Computer Retail Week Labs showed that although the first Celeron worked well running multimedia games, it could barely keep up with a high-end Pentium when processing productivity applications. Recent CRW Lab tests of the Celeron with cache demonstrate significant improvements, as much as 28 percent better than the Celeron without cache.

"The 333-MHz [processor] with cache is really wonderful. Its [performance is] almost indistinguishable from the PII 333 MHz," said Nathan Brookwood, a CPU analyst for Dataquest, San Jose, Calif. "Will people remember the initial Celeron was not so exciting and [understand that] this new one is really new and improved? That's one of those interesting questions where people will be divided, and we won't know until the market votes."

Performance issues surrounding the original Celeron "made Intel lose a little of its mystique," said Isaac Sabbah, senior buyer for Nationwide Computer & Electronics, Edison, N.J. He said although customers were unfamiliar with cache in the past, they now ask about it.

Celeron is an important brand for Intel because it represents the microprocessor giant's interest in the entry-level PC space, the fastest-growing category at retail and AMD's foothold in the consumer PC market. Intel last year began segmenting the market with several brands based on the PII core processor -- Celeron at the low end, the PII at midlevel, and the Xeon at the high end.

Brookwood said many consumer brands are scrapped early if they become "smirched" and aren't backed by a significant investment. Yet some brands are able to recover.

"If Intel is willing to make the investment and stick with it long enough, they probably will, but it will be an uphill battle," he said.

Retailers said they are not sure of Celeron's sales potential, and the concerns aren't limited to the chip's performance.

'I believe the cacheless Celeron would have done much better if Intel had taken the time to teach our people how to sell it.'
-- Karen Smith
Computers Plus

Tim Christensen, a computer products buyer for Vann's, Missoula, Mont., said most customers don't understand the notion of cache and are uninterested in hearing about it from a sales associate. The real issue for Vann's shoppers, he said, is price point.

"If Intel is targeting the low end, they need to be a little more aggressive with pricing. Intel is asking a premium for its brand, but if there is a $200 delta between a Cyrix- and a Celeron-based PC, the low-end customer is going to gravitate to the better price," Christensen said.

"I believe the cacheless Celeron would have done much better if Intel had taken the time to teach our people how to sell it," said Karen Smith, buyer and marketing manager at Computers Plus.

When sales associates are not specifically trained, they tend to focus on what they already know rather than promote price and the consumer's actual needs regarding cache, she said.

Intel executives were unavailable for comment at press time.

Intel has undertaken a month-long PII promotion and training campaign at CompUSA, Circuit City, and Best Buy.

A sales associate for Best Buy in Michigan said Celeron is an acceptable solution for novice users, although enhanced performance would likely increase sales. "The Celeron has been a moderate success, but the AMD at a comparable price will blow it out of the water," he said.