The Cutting Edge: COMPUTING / TECHNOLOGY / INNOVATION : Chip Fiasco Aside, Intel Still Leader--So Far : Computers: Whether its market monopoly will be hurt remains unclear. Some doubt it will.
While computer vendors and industry analysts on Tuesday generally hailed Intel Corp.’s decision to replace defective Pentium chips “no questions asked,” it is not clear whether the chip giant has avoided long-term damage to its position as the near-monopoly supplier of personal computer microprocessors.
Many observers tend to dismiss the possibility that Intel’s market position has been hurt. The PC standard, after all, is still based on Intel chips and Microsoft software, and Intel’s bungled handling of a relatively minor glitch in the Pentium chip does not change that.
“The reality is that Intel owns that code. It’s still got a monopoly. It’s still got us all by a chokehold, and it’s pretty hard to shake, even when they shoot themselves in the foot,” says Stewart Alsop, editor of Infoworld, a computer trade publication.
While AMD and Cyrix have built profitable businesses by “cloning” Intel chips, both are still a long way from a clone of the Pentium--and the task gets more difficult with each subsequent chip generation. Intel can spend many times more than these rivals on R&D; and manufacturing.
Competitors that offer faster microprocessors based on so-called RISC technology--notably the Power PC alliance of IBM, Apple, and Motorola--still must face the reality that the overwhelming majority of PC software is written for Intel processors and Microsoft software.
And yet, even the Intel monopoly is not forever. The company may have not only lost credibility with consumers, but also sufficiently angered its already disgruntled PC customers that they will be doubly motivated to consider alternatives. Microsoft, whose position is in some ways similar to Intel’s, is watching carefully, and said Tuesday it will delay shipment of a new operating system to avoid bugs.
Apple Computer, whose Power PC offers comparable performance to the Pentium-based computers without using the Intel chip, said its sales had already benefited from the Pentium flaw.
“Customers are turning in their Pentiums to buy Power MacIntoshes, especially in situations where they’ve noticed mistakes in their work,” said Apple spokesman Eric Wee.
Some analysts said Intel’s weeks of inaction--which left computer manufacturers on their own to allay consumer fears--would make them rethink their long-term commitment to Intel.
“This is certainly the kind of problem that makes the PC manufacturers nervous and angry,” said Bluestein. “This will add impetus on the part of Packard Bell and Dell and Gateway to go through the same strategic reassessment that Compaq and IBM went through about their reliance on Intel as a chip supplier.”
IBM, the company with the deepest roots in corporate computing and one that has never been successful in the consumer PC market, may come out looking best of all as the Pentium crisis winds down. With its decision early on to stop shipping Pentium-based computers and its continuing pressure on Intel to concede its problems, the company bought a lot of customer goodwill.
But whether Intel’s apology is as sincere as it says--and whether it will assimilate the culture of the consumer market into its own--has yet to be seen. And if it doesn’t, that could mean more problems down the road.
Says a cynical Alsop: “I don’t detect that Andy Grove has learned his lesson. All he’s saying is despite the fact that this is a really minor bug and no one should care about it, we’re going to have to do something about it because of all the fuss. That’s Intel, though. It’s just a bunch of engineers that still haven’t learned how to deal with the real world.”
* MAIN STORY: Intel offers to replace chips. A1
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