Intel Releases New High-Powered Chip

Bloomberg News

Intel Corp. introduced its Pentium II Xeon chip, which costs as much as $2,800 and can be used in high-powered computers that run corporate networks or to make movies. The Xeon runs at 400 megahertz and is now Intel's top-of-the-line product. It brings Intel chips into workstations that cost more than $15,000 and servers that cost as much as $100,000. The world's largest chip maker said last week there is a flaw that occurs when the chip is used with other chips for servers with as many as four processors, and that specific product will be delayed by a few weeks. Xeon brings Intel products to some of the most expensive, and profitable, segments of the computer industry, which is important because prices for standard PC processors have been plummeting as competition increased and demand for cheap PCs exploded. And there won't be big demand for Xeon until Microsoft Corp. introduces its Windows NT 5.0 operating system for corporate networks later this year. Analysts expect Intel's revenue from Xeon this year to be insignificant, growing to as much as $4 billion in 1999 though not breaking $10 billion until 2001. Santa Clara-based Intel shares fell 56 cents to close at $75.81 on Nasdaq.

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