Speedy Mobile Pentium Chip Comes at a Cost

New notebooks featuring the 2GHz chips will be priced at about $2,500.

Intel Corp. today released its fastest mobile Pentium 4 chip, but customers will have to pay a premium if they hope to tap the power of the high-performance processor.

Confirming an earlier report, the company today unveiled its new 2GHz Pentium 4-M at an initial price of $637 per chip (in 1,000-unit shipments), about 80 percent higher than the previous mobile speed champ, a 1.8GHz Pentium 4-M, offered at $348.

In addition, Intel, based in Santa Clara, Calif., also introduced a 1.9GHz Pentium 4-M priced at $401.

Major computer makers, including Dell Computer Corp. and Hewlett-Packard Co., are expected to quickly offer new notebooks featuring the chips, but theyll likely be priced at about $2,500, or about $1,000 higher than the current average selling price for laptops.

The launch of the chips came one month after Intel slashed prices by more than 50 percent on its fastest desktop and mobile processors in a bid to boost sales.

Despite the dramatic cost cutting, Intel warned market analysts on June 6 that sales were falling below projections. During the scheduled midquarter update, Intel executives blamed weaker than expected demand in Europe for forcing the company to lower its sales forecast for the quarter.

Financial analysts expressed particular concern about Intels lowering of its projected gross profit margin, which means the company will make less money on each product sold than it had originally anticipated.

Intels warning spurred a sell-off of the companys stock that has sent shares falling to their lowest levels since 1998.

With todays introduction of two relatively high-priced mobile chips, Intel has an opportunity to boost is gross profit margins. But that hope largely hinges on computer makers experiencing a rebound in PC sales, a scenario considered unlikely in light of recent dour forecasts predicting weak IT and consumer spending through at least the next several months.

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