New Intel Chip Targets Servers, Workstations

Intel Corp. will launch the latest version of its Pentium III Xeon microprocessor today, in a move expected to consolidate the company’s position as the top provider of chips for server computers and sophisticated workstations that cost up to $25,000.

Analysts expect the new processor, running at a speed of 500 megahertz in its initial version, to offer only modest performance gains over the Pentium II Xeon, released last fall.

But aggressive pricing compared with processor offerings from IBM, Hewlett-Packard, Sun Microsystems and Compaq should allow Intel to gain market share supplying machines that run network operations and manage complex engineering or graphical tasks.

Intel technology dominates the market for relatively low-cost servers and workstations, according to market research group International Data Corp. in Framingham, Mass.

“Intel provides the processor, the system logic and the design, and basically hands it over as a package,” said Dean McCarron, an analyst with Mercury Research in Scottsdale, Ariz.

Pricing for the new Xeon will be announced today, but Nathan Brookwood, an analyst with Insight 64 in Saratoga, Calif., estimates that the new Xeon costs $200 to $300 to build and will be sold for $700 to $3,000, for a whopping 900% profit on the fastest chips.