ALL: Article...Intel setting standard to boost Laptop sales..
investors.com
Will Intel Mobile Module Reinvent Laptop Market?
Date: 4/23/97
Author: Norm Alster
The actions of market autocrats sometimes produce democratic results.
Such may be the case with Intel Corp.'s new mobile module, or MMO. Due out later this year, the MMO will for the first time integrate an Intel laptop microprocessor with cache memory and other circuits on a single 4-by- 2.5-inch package.
''The Intel Mobile Module is designed for notebook manufacturers to reduce design difficulties in the transition from one processor generation to another,'' puffed an Intel press release.
Translation? ''They want more volume,'' said Mark Yahiro, vice president of marketing and business development for Hitachi PC Corp. in San Jose, Calif.
Feed the beast. That's the common theme behind much of what Intel does these days. This is a $20.8 billion ('96 revenue) gorilla that keeps expanding its feeding grounds. To keep its stock multiple up, Santa Clara, Calif.-based Intel must come up with $3 billion to $5 billion a year in new sales.
To this end, Intel has shrewdly hit on two techniques. First, it's moved beyond selling just chips to relentless promotion of the widest possible computer use. Hence, Intel hawks digital video and lobbies for a subsidized Internet.
Fatter Core Products
Secondly, in the manner of industry co-monarch Microsoft Corp. of Redmond, Wash., Intel keeps adding to its core products features traditionally supplied by others.
By extending its grasp beyond processors, Intel carves out a bigger slice of the systems pie. An Intel MMO built around an advanced 166-megahertz processor will cost upward of $600, accounting for 20% to 30% of the retail price of a $2,000 to $3,000 computer.
But there's really a lot more to the MMO game plan than that. By making it easier to design products around each of its new laptop chips, Intel hopes to maximize laptop sales within the short lifetime of its new processors. New processors command top dollar. The faster the laptop industry ramps up, the better Intel can exploit its new product life cycle and move on to the next.
''Intel is building systems volumes for each new processor more quickly,'' said Yahiro.
Intel also moves the laptop industry a step closer to standardization by wiping out one key way vendors differentiate their products. Standardized products can be made more cheaply and, in theory, be sold in greater volume. ''Intel is trying to push this to become a commodity business,'' noted Yahiro. This, again, is the core Intel strategy: promote the widest possible use of computers.
Shaking Up The Laptop Market
The result, intended or not, is that today's laptop leaders could lose a key competitive edge. Here's why:
In the past, success has belonged to laptop firms that could most rapidly build new models around each new Intel processor. Toshiba America Information Systems Inc. (a unit of Japan's Toshiba Corp.), for example, has often leveraged its internal chip design prowess to beat rivals to market. Now, Intel will do the work of integrating its new processors with cache memory, power supply, clock and other functions.
Will this negate the advantage of superior in-house chip design skills?
Some industry analysts think it could. ''It does tend to level the playing field,'' reasoned Mike McGuire, a senior industry analyst at Dataquest Inc., San Jose, Calif.
Noted Randy Giusto, director of mobile technology research at Framingham, Mass.-based International Data Corp: ''The smaller vendors are saying: 'That's less headache for us.' They can get their designs out more quickly.''
Use MMO Or Go It Alone?
Lesser laptop players are already lining up for the Intel module. Gateway 2000 Inc. of North Sioux City, S.D., for example, will use MMO because it will shorten time to market by ''months.''
Austin, Texas-based Dell Computer Corp., a laptop market latecomer that has come on strong of late, might benefit if MMO neuters the value of laptop design expertise.
''We see the MMO as the first step to building standards for mobile computing. Standardization will lead to increased performance and bring costs down,'' said a Dell spokeswoman. Intel could not have made the point better.
Fujitsu PC Corp., which only began selling laptops in the U.S. last year, may use the MMO in some models. Bert Parekh, director of product marketing for Fujitsu PC, a unit of Japan's Fujitsu Ltd., says use of the MMO would allow Fujitsu to focus its research-and-development efforts on other aspects of laptop design.
''It could help us,'' said Parekh, indicating that Fujitsu could use MMO in some but not all models.
But support for MMO weakens in the more rarefied laptop realms. ''We're always evaluating new technology,'' said an IBM spokesman. But he added that IBM, No. 2 to Toshiba in the U.S. laptop market, had ''no current plans'' to use it.
Also hedging is Houston-based Compaq Computer Corp. ''We have seen it. We are reviewing it. We have not yet made a decision,'' said a Compaq spokeswoman.
Toshiba's MMO Plans
And what of U.S. laptop market leader Toshiba? ''I believe there will be products from Toshiba that will use the MMO and products that won't,'' said Gary Elsasser, Toshiba America's senior director of worldwide product planning. The fixed size of the Intel module would limit Toshiba's design flexibility, he says.
But that doesn't make MMO a bad solution. ''I believe that those that don't have the core competencies in engineering that Toshiba has might find this valuable,'' said Elsasser. ''It definitely helps some other companies a little more.''
Hitachi PC, a unit of Japan's Hitachi Ltd., also is a holdout for now. Yahiro says Hitachi has engineered a superior solution to the common laptop problem of overheating. The fastest processors generate heat that can cause malfunctions in other parts of the densely packed, portable machines.
Hitachi's solution to the heat problem is ''a huge selling point for us today,'' Yahiro said. But if the Intel MMO becomes an industry standard, Yahiro allows, Hitachi might have no choice but to adopt it.
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Looks like another clever way to lock out AMD also. :-)
Regards, Michael |
