Intel-Like Chips to Be Sold by IBM : Computers: Move to market the x86 will put the companies in direct competition for the first time.
In a new threat to Intel Corp.’s dominance of the microprocessor market, International Business Machines Corp. said Monday it will start selling a version of Intel’s x86 chips to other personal computer makers.
The move puts IBM in direct competition with Intel for the first time. For years, IBM has based all its machines on Intel x86 chips, helping make the family of microprocessors an industry standard found in an estimated 85% of the world’s PCs.
Heating up the competition further, IBM said it is pricing its chips significantly below Intel’s.
For Intel, which is already fighting to ward off competition from rivals Advanced Micro Devices Inc. and Cyrix Corp., IBM is expected to be a formidable competitor.
“This is a blow to Intel because it puts a serious player like IBM in a direct competitive position,” Tim Bajarin, an analyst with Creative Strategies, a San Jose-based market research firm.
For IBM, besieged by declining margins in most of its computer businesses, the chip market holds the promise of fat profit margins. Furthermore, the move is in keeping with IBM Chief Executive Louis Gertsner’s aim to participate more actively in the market for computer components.
Intel shares fell $1.125 Monday to $58.875, while IBM shares dropped $.75 to $61.625. IBM’s decision to move into the “merchant market” for microprocessors stems from an agreement signed in April with Cyrix, a Richardson, Tex., company founded seven years ago.
IBM will sell chips based on Cyrix’s x86 design, which is fully compatible with Intel’s technology and allows users to operate the same software.
IBM will add stand-alone microprocessors to its popular “Blue Lightning” family of computer subsystems, which incorporate the chips on PC boards.
The move enables IBM “to serve a wider range of customers at varying design and price targets,” said Kevin Dawson, Blue Lightning marketing manager for IBM Microelectronics.
IBM said 5-volt 486 chips will be available in volume in August and 3-volt products will be available in September. Samples of the products are now available, IBM said.
The products are priced at $195 to $295 each for volumes of 1,000. That compares with Intel 486DX2 chips, which are priced at between $250 and $360.
In April, IBM and Cyrix signed a five-year agreement under which IBM’s Microelectronics Division would manufacture for Cyrix advanced x86-compatible chips based on Cyrix’s design.
