Intel's Pentium 4 Strategy Paves Way for 2GHz Version
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Friday July 27 06:51 PM EDT
Intel's Pentium 4 Strategy Paves Way for 2GHz Version
By Jay Lyman, www.NewsFactor.com
In the face of a sluggish PC market, micro-processing giant Intel (Nasdaq: INTC - news) is using big price cuts and its "technology treadmill" to push the Pentium 4 processor into the mainstream and pave the way for a 2GHz version this quarter.
The company, which has failed to meet sales expectations with the high-end Pentium 4, says price cuts, increased performance and an 845 chipset that allows for less expensive SDRAM memory will help move the processor to the mass PC market. The result could be Pentium 4 desktops that retail for US$800.
"We'll do whatever is necessary to make sure the Pentium 4 is in all mainstream price points by the end of this year," Intel spokesman Robert Manetta told NewsFactor Network.
Prices Slashed
Analysts say the company has little choice but to increase performance and continue cutting prices, referring to a greater than 51 percent drop in the price of Intel chips during the first half of this year.
"Intel's strategy is to drive [Pentium 4 sales] very aggressively in the second half [of the year]," IDC vice president of semiconductors Mario Morales told NewsFactor. "They're going to do it with price and they're going to do it by offering very high performance parts in the second half. They're going to be priced to move."
Morales said the price cuts are a result of consumers and corporate PC customers "taking an upgrade route" instead of making new-equipment purchases. At the same time, Intel will have to increase performance to stimulate demand, Morales said.
"It's going to be a very tough environment," he said. "I think the only thing that Intel can do right now in order to stimulate demand is to keep cutting prices."
Speed To Spurn?
Intel's Manetta said the company is pushing for the Pentium 4 to replace the Pentium III in the marketplace and for high-end computing plans. A 2GHz Pentium 4 should appear by the end of this quarter with an even faster version due by year-end.
"The economy is not doing well. We've always felt that the way out of a recession is technology, and we're really pushing that now," Manetta said. "[We] can be aggressive because we have a manufacturing machine."
IDC's Morales said that despite dramatic price cuts already in place, demand in the PC market is still "anemic."
"They're hoping the new performance specs they have out there and the new parts that are faster or perform better will help encourage the market to grow," Morales said. "Especially with the price points they're going to."
Technology Treadmill
Referring to Intel's "technology treadmill," Manetta said the company is also using innovations such as the more efficient .13 micron technology -- which reduces production costs -- and a ramp-up of 300mm wafer technology that enables more CPUs at lower cost, to promote PC growth.
Citing digital photography, audio, games and other applications, Manetta said Intel does not believe a lack of applications that require high-end performance is hurting sales of the latest technology.
"That's an aggressive thing to do, but we've been doing it for years, and it's worked out," he said.
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