Intel Powers Ahead With Pentium 4 Debut
Intel Corp.’s long-awaited Pentium 4 microprocessors will go on sale Monday as the chip titan grabs bragging rights from rival Advanced Micro Devices for the fastest chips running personal computers.
Compaq, Dell, IBM and other vendors will sell Pentium 4-based PCs targeted for the high end of the market, particularly for avid game players and multimedia professionals. These computers are expected to cost upward of $2,500. For certain games and 3D applications, the Pentium 4 will provide a crisper, more realistic image.
Intel’s new chips will initially be available at speeds of 1.4 and 1.5 gigahertz--a measure of processing power that is one indicator of overall performance. By comparison, AMD’s Athlon microprocessor tops out at 1.2 gigahertz. But experts say that the Athlon will retain superiority in other categories, such as certain operations within artistic and photographic software programs.
But customers will not immediately be clamoring for PCs based on the new Intel chip, experts said, because the “sweet spot”--the most popular PC price point--stands at under $1,500.
“Does the market need a 1.5-gigahertz processor? No,” said Ashok Kumar, an analyst with US Bancorp Piper Jaffray. “The demand for Pentium 4 [will be] almost nonexistent,” limited to early adopters and expert users with plenty of cash until prices drop dramatically sometime next year, he said.
Intel has found itself in an uncharacteristic struggle against AMD of late. The smaller company took the lead in the processing-speed race last summer when it introduced the Athlon, and used the advantage to make inroads on Intel’s dominance in the processor market for PCs. AMD’s share rose from 12.6% a year ago to 17% of processors sold in the third quarter of this year, according to Mercury Research in Scottsdale, Ariz.
However, most of AMD’s gains came at the expense of smaller chip makers who have nearly been muscled out of the market altogether. Intel’s share during the same period dropped modestly, from 83.7% to 81.9%. And Intel’s total revenue is more than seven times that of AMD’s.
Analysts said that the Pentium 4 machines will put new pressure on AMD--but not during the current holiday shopping season--because Intel cannot produce high volumes of the chips until early next year.
The company plans to ramp up production of the Pentium 4 quickly, however. Intel will gradually replace the Pentium III product line, which runs at up to 1 gigahertz. More than half of Intel’s processors will be Pentium 4s by the end of next year, the company predicts.
Intel will force a gradual conversion to Pentium 4 by phasing out the rest of its Pentium III line--a progression the company repeats with every new product line.
“Two years from now, we’ll all wonder how we lived without it,” said Mark Edelstone, an analyst with the investment bank Morgan Stanley Dean Witter.
Intel faces an important transition next year when it moves the Pentium 4 to a new manufacturing system to sharply reduce the size of microcircuit pathways that will reduce costs and increase performance dramatically.
“With the Pentium III architecture the company is essentially flogging a dead horse” with regard to increasing performance, Kumar said. “The Pentium 4 is the first new micro-architecture change in the last five years. So it’s very important for competing against AMD” to make the transition smoothly.
Santa Clara, Calif.-based Intel’s stock price rose $1.50 to close at $41.50 in Nasdaq trading Friday.
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Chip Speed Race
Intel’s Pentium 4 processor, available in PCs starting Monday, will capture the lead for the fastest “clock speed,” a key measurement for calculating processing power. But rival Advanced Micro Devices’ less costly Athlon chip may still offer faster performance in some computing applications.
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Pentium 4 Athlon Speed rating* 1.5 gigahertz 1.2 gigahertz Cost of chip** $800-820 $300-350 Cost of PCs $2,500-3,000 $2,300-2,800 with this chip**
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*Source: Companies
**Chip cost in volumes of 1,000; analyst estimates.
