Intel have been stumbling for awhile. They have always had a philosophy of arrogance, that they will doctate to the market what people will buy, rather than meeting the market's demands.
In 1998 when Intel were attempting to boost its sales of their latest processors, the Pentium II chip, they took the older Penyium I chips off the market completely, leaving a gap in the low to middle end of the market. Intel's competitors jumped on this immediately, principally AMD. AMD quickly took over as market leader in low end CPUs. Intel realising their mistake too late, rushed through a competitor to replace their Pentium I chips, the Celeron chip, which was exactly the same as the Pentium II but without any level 2 cache. The chip performed worse than its predecessor, the Pentium I and almost immediately got a bad name.
In another reactionary decision, Intel added the level 2 cache back to the celeron, but only 128KB of it, one quarter of that on the Pentium II. The Celeron was still much cheaper (since much of the price of the chip was because of the 'then' expensive L2 cache), yet it was discovered that unless an application actually utilised all of the L2 cache, the performance between Pentium II and newer Celerons was negligible. Noteably, only large calculation intensive programs, such as Autocad, really need 512KB of L2 cache, computer games in fact on some occasions ran faster on the Celeron than the Pentium II. Now also consider that the upper limit of the speed of the chip is determined by its thermal properties. A large proportion of the heat generated by the Pentium II came from its L2 cache. The Celeron, only having one quarter of the cache generated far less heat, but was rated using the specs of the Pentium II. The most noteable of these was ther Celereon 300A chip, which became an overclockers dream, able to run at 450MHz (the fastest chip on the market at the time) without breaking a sweat, simply by overclocking the front side bus from 66MHz to 100MHz.
The Celeron 300A became reknown for this, why buy a 600 dollar PentiumII 450MHz chip, when you can get the same performance from a 150 dollar Celeron 300MHz??
What was Intel's response? I'm sure you can guess if you don't already know. They took the chip off the market of course, and later Celeron chips were made less robust so they wouldn't be as overclockable.
Intel is still shooting itself in the foot today.