Forecasting the Impact of PC-on-a-Chip
National Semiconductor Corp. recently announced that it had developed the means to produce a so-called PC-on-a-chip, a sliver of silicon that would integrate almost all the essential functions of a personal computer. The company’s brass trumpeted the development as a breakthrough that would usher in the era of the sub-$500 PC and give birth to new categories of computing devices--the kind you might hang on a wall or use to surf the Web in your car.
The PC-on-a-chip isn’t due out until June 1999, but debate has already begun about what its impact and use will be.
Michael Slater is uniquely qualified to separate the innovation from the hype. The founder and principal analyst of MicroDesign Resources, a leading semiconductor think tank/consultancy based in Sebastopol, Calif., Slater is also editorial director of the influential Microprocessor Report. He talked with Times staff writer Edward Silver about what PC-on-a-chip might mean to the computing business, the computing public and the chip king, Intel.
Question: What applications do you expect for this new chip?
Answer: There will be two potential markets here. One is entry-level PCs--personal computers built as real consumer products, without expansion slots, with fewer options and low price points, an appliance sort of model.
Then there’s the real information appliance market where it’s not even perceived as a PC. You’ll see lots of twists on this.
It could be used in a WebTV kind of box, it could run a cable set-top box that provided Internet access, played DVD software, and it would be PC-compatible so it could run PC games. But it won’t rival the 3D graphics on mainstream PCs or game consoles.
Q: Would the PC version be considered competitive with the mainstream?
A: It can be a viable entry-level PC. The question is how many users will accept something that’s slower than everything else on the market just because it is cheaper.
Q: Is the $500 estimate realistic?
A: It requires less than $150 worth of silicon to build a PC today in a totally non-integrated way. The rest of the costs are disk drive, keyboard, connectors, etc.--all fixed costs. Those don’t change just because you integrated it. It’s not apparent how, even with this chip, you can build and sell a useful PC for $500.
Q: Nevertheless, it sounds like it will be the cheapest box yet. Where will it fit into the PC industry?
A: In the business world, many workers don’t have any use for the full power of today’s computers, so this could possibly be a replacement to terminals and preempt network computers.
Intel’s business model depends on software continually changing to demand greater performance. In some sense, [the one-chip PC] is a bet that this is not going to happen and that there will be many users who don’t care if software evolves.
As the mainstream applications like spreadsheets and word processing were evolving rapidly, there was a big jump in the processing power you needed. But the hardware caught up and now there’s a gap in developing software that delivers value out of higher-performance systems.
Q: So commodity PCs like this dovetail with this trend of lagging software, calling into question Intel’s strategy of more brains-more brawn for its microprocessors.
A: It’s a serious threat to Intel’s near-term profits and a serious [long-term] threat if nothing changes. In fact, it would be catastrophic, but I think it’s likely to change in the next few years. [Computers will require faster processors as they gain] natural interfaces, with voice recognition, or much more automation that notices the things you commonly do with your computer. Of course, any one of these may well not pay off, but it would be a bad bet that in five years there will be no good ideas to spur demand for high-performance processors.
Intel is likely to lose a chunk of the market for the least expensive PCs, and that trend will continue. That’s where there’s the least money to be made, but the risk to Intel is that that segment becomes the predominant chunk of the market. There’s no question that Intel faces more challenges now than it has for a long time.
Q: Another is that Intel’s new low-priced chip, Celeron, drew negative reviews. Is Intel going to get serious about low-cost computers?
A: The Celeron product is indeed mediocre, but the second Celeron out in fall will be much better. Intel isn’t going to push as low in price as its rivals. We see them play in $1,000 PCs, when National Semi is at $800. Maybe next year, they will play in $800 PCs, and National Semi in $600 PCs. However, if Intel is ever sitting on excess manufacturing capacity, they will lower prices themselves.
Q: You believe the PC-on-a-chip’s major role will be in non-PC-type devices. Is this a breakthrough in that sphere?
A: This is perhaps the biggest leap forward in reducing the cost of the hardware to create that information appliance world. I think ultimately there could be a very big market for that kind of appliance. The National Semi news is an enabler, but it won’t allow the category to take off by itself.
The biggest hurdles are product design, software design, consumer acceptance, communications infrastructure. It’s likely to come together, but it will take longer than anybody who is selling the equipment wants. [Futurist] Paul Saffo said, “Never mistake a clear view for a short distance.”
With the amount of attention that computers require today to use them and deal with problems when they come up, the things are just too hard to use and too slow. The “too slow” does not come from the processor, it comes from communication--the network. This imposes a constraint on the providers of these easy-to-use Internet access appliances. Another constraint is Windows. Windows is harder to use than most consumers are going to put up with.
Q: But could this be a boon for Windows CE, Microsoft’s stripped-down operating system for hand-held computers and other devices?
A: Yes. Windows CE is one way to implement them. The defining feature of an info appliance is that it doesn’t run Windows 95. The operating system would not be so visible or prominent that you’d need to learn it. If all you want to do is e-mail and Web browsing, there are ways to get around Windows.
Q: Of course, this info-appliance idea isn’t new. Just because we might have the engineering capability now doesn’t mean people will really want these things.
A: Right. One fundamental barrier that this info appliance industry has to overcome is that most people simply don’t want more gadgets in their lives. A single-chip hardware solution is not the big advance that will bridge that gap. It’s about getting this stuff to be more valuable to consumers, how you sell it, how you support it. It will all be worked out, but it looks like a five-year process.
