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I'm buying a laptop for $849.99 and it purports that the i5-450m chip "turbo boosts" up to 2.66ghz, 4 threads, and 3m cache. Is this an idealized claim, or will it actually dramatically improve performance? Also, do I have to do something special to use turbo boost? Are there power/heat/battery life concerns?

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up vote 7 down vote accepted

The CPU of this Dell model operates normally at 2.4Gh, and may Turbo boost up to the maximum of 2.66Ghz, which means an increase of 11% in CPU performance. While nice, this won't exactly turn the laptop into a super-computer, and shouldn't be a major factor in the decision of whether to buy this model or not.

Turbo boost is automatic with no possible control by the user.
This is further explained in Intel's Turbo Boost Technology frequently asked questions.

Please note that the Turbo Boost will stop when any sensor detects a temperature increase, which in a laptop may happen more frequently (normally when the GPU heats up). Power consumption considerations may also stop/block this mode.

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will it actually dramatically improve performance?

It could improve performance: if you have one thread which is maximising one core while the others are much less loaded. "Dramatically" is rather more subjective and depends on your definition (but given the clock rate ratios I would expect not).

You might find no practical difference if you never hit the scenario where it would operate. It is inherant in i7 and i5 CPUs so I would expect it to be normal on all but low-end Intel CPUs from now on.

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