With the launch of its 2GHz Pentium 4 processor Intel yesterday, as expected, cut prices on the rest of its Pentium 4 family, as well as many of its other processors.

Intel also introduced a 1.9GHz Pentium 4 processor. PC makers, including direct sellers Dell and Gateway are offering systems based on Intel's new chips.

The 2GHz Pentium 4 is replacing the 1.8GHz version as Intel's fastest chip and will be sold for the same price wholesale: around £367 each in 1,000-unit quantities.

When Intel introduces new chips, it usually also adjusts prices on old chips. To make room for the 2GHz processor in the top slot, Intel dropped the price of its previous highest-speed chip, the 1.8GHz Pentium 4, by 54 percent. Curiously this is exactly the same amount as predicted by Lehman Brothers analyst Dan Niles at the beginning of August.

Intel also cut the prices of both its 1.7GHz and 1.6GHz chips by 45 percent. Intel slashed the price of its 1.5GHz Pentium 4 by 48 percent and reduced the prices of its 1.4GHz and 1.3GHz Pentium 4 processors by 31 percent. Matching the prices of the slowest processors in a family is a standard practice in the industry to kill off the slower speeds.

The company also cut the price to PC makers of its entire line of low-cost Celeron desktop processors to just under £45.