Intel Walks Fine Line With Pentium 4
forbes.com
This day has been a long time coming for Intel.
Much of Intel's (nasdaq: INTC) fortunes depend on today's launch of the Pentium 4 processor. Known only by its code name Willamette, the name of a river in Oregon, Pentium 4 has long been discussed as the processor of the future. And to a large extent it is.
The last time Intel brought out a chip with as much new technology as this one was in 1997, when it launched its Pentium MMX line of chips.
But history has shown that launching a new chip can be less than good news for Intel's earnings, as it learned with the Pentium MMX. Consumers held off buying new systems until the more advanced chip was more widely available. That in mind, it makes sense for Intel to hold off on promoting the chip to consumers until it's ready to deliver systems in huge volumes and at lower prices. That means you won't see any weird Pentium 4 TV commercials. In fact, Pentium III systems will continue to make up the bulk of Intel's sales well into next year. When it's ready to start delivering Pentium 4 in higher volumes, then the advertising push will begin, which will probably mean extra work for Intel's current advertising stars, the blue-faced Blue Man Group.
But it is the fastest PC chip on the planet. Until today, Intel rival Advanced Micro Devices (nyse: AMD) held that title with its Athlon processor running at 1.2 gigahertz. The fastest Pentium 4 runs at 1.5 GHz, or 300 megahertz faster. One interesting comment on how far chip technology has come is that just 26 months ago, that same margin of difference--300 MHz--was the top speed of Intel's fastest Pentium II processor.
And this chip is only going to get faster. Analysts say that once Intel makes a shift in its manufacturing processes, the chip will likely reach speeds of 2 GHz or more by the end of next year. Currently Intel's chips are made with transistors that are .18-micron wide, and it will be shifting to transistors that are .13-micron wide. (One micron is a millionth of a meter.)
As the transistors get smaller, chip designers can pack more transistors on a chip for more computing power. They also also help fight off the dual enemies of chip performance, heat and power consumptions. Smaller transistors allow the chip to drink up less electrical power and to run cooler.
Five years from now, it won't be surprising to talk about Intel chips running at 10 GHz.
But it's not a completely smooth road ahead for Intel. Its marriage of the Pentium 4 to memory technology designed by chip-designer Rambus (nasdaq: RMBS) is still problematic. Memory-chip makers like Micron Technologies (nyse: MU) and Infineon (nyse: IFX) have resisted making the transition to the new technology because they dislike paying royalties to Rambus for each memory chip built based on the Rambus technology.
Rambus memory still costs more than the current standard memory, known as SDRAM, and supplies of Rambus memory are low. To ensure that a lack of memory chips doesn't get in Pentium 4's way, Intel has said that next year the chip will work with cheaper, but slower, SDRAM memory. It is also expected to work with another upcoming standard memory known as double data rate memory, or DDR. Once it works with the cheaper memory chips, the total cost for computers with Pentium 4 will drop.
But for the meantime, Pentium 4 will not make it into mainstream computers until late 2001. Dell (nasdaq: DELL), Compaq (nyse: CPQ), Hewlett-Packard (nyse: HWP) and Gateway (nyse: GTW) all have machines running the chip starting at about $2,000. That's well above the consumer sweet spot that tends to hover around $1,000 and below. But give Intel and its partners time. |
