Intel Says New Chip Set Technology Should Cut PCs’ Cost
In a move designed to regain its dominance in the market for microprocessors that power low-cost PCs, Intel Corp. announced a new technology Monday that should cut the cost of a personal computer by up to $100.
The 810 chip set, scheduled to appear in PCs in June, takes over the functions of more expensive dedicated processors for certain key tasks, said Paul Otellini, executive vice president of the Santa Clara, Calif.-based company.
Chip sets manage some peripheral components, such as modems for connecting to the Internet, and data-storage drives, as well as the display of graphical images.
“Overnight, it allows Intel to substantially reduce system costs, access a lower tier of the market and become that much more competitive for the broader range of customers that AMD and Cyrix have been serving,” said Dean McCarron, an analyst with Mercury Research in Scottsdale, Ariz.
Advanced Micro Devices Inc. and Cyrix, a subsidiary of National Semiconductor Corp., are key Intel competitors.
In the last six months, Intel has made substantial gains with its Celeron microprocessor--the central brain for lower-priced PCs--but has been trying to keep manufacturing costs in line with rapidly dropping PC prices. The new chip set adopts a strategy based on integration--absorbing functions that formerly required multiple chips--pioneered by Cyrix.
“The 810 embodies our whole design approach,” Otellini said. “We are deadly serious about this [low-cost] segment.”
He showed a prototype PC using the 810 chip set that can display feature films from a storage drive without using special processors. Observers noted that the picture quality seemed lower than on a typical videocassette recorder, though Intel predicted improvements in the final version.
Intel said that its current share of microprocessors for the sub-$1,000 PC market worldwide rose to more than 60% in the first quarter, but some analysts challenged the claim.
“That’s an absolutely ludicrous number,” said Matt Sargent of San Diego-based InfoBeads. Analysts estimated Intel’s share of the sub-$1,000 retail market in the U.S.--where the lion’s share of low-cost PCs are sold--at 17% to 25%.
Sargent and Bruce Bonner, a chip analyst with Dataquest in San Jose, doubt that Intel’s share overseas is large enough to bridge the gap.
Otellini also announced a higher-speed Celeron running at 466 megahertz, which began shipping in PCs from computer makers Monday.
Intel shares rose $2.69 to close at $64.44 on Nasdaq.
