Intel's Confused About What Buyers Want
By Jim Seymour
Special to TheStreet.com
08/30/2001 12:25 PM EDT
The Intel Developer Forum is one of the most important audiences Intel (INTC:Nasdaq - news - commentary) plays to. The people sitting in the San Jose McEnery Convention Center this week, listening to Intel's pitches about the magic of the chips in its pipeline, are the people who will be developing the products that will help sell those chips. Or fail to sell them.
It's an odd situation for Intel: While PC makers appear to be its main customers, it already has that audience in its pocket. What it needs to do now is twofold.
A Direct Approach
First, Intel needs to leap over the PC original equipment manufacturers and peddle its wares and its chips' advantages directly to the public, much as Big Pharma learned a decade ago to leap over physicians and sell products to the general public, who would (and did) then demand Celebrex, Meridia or Prevacid when they went to see their doctors.
The brilliant "Intel Inside" campaign the company started several years ago marked the beginning of that strategy, which Intel has pressed with some success. Those guys in the brightly colored bunny suits on TV had the same purpose: to persuade you that a PC with an Intel chip inside was somehow better, sexier, than one with a chip from dull old AMD (AMD:NYSE - news - commentary).
Second, Intel must again leap over those PC makers and go directly to the developer community, lining them up behind Intel's new chip designs a year or two before those new chips appear. If Intel's going to build in features X, Y and Z, it has to make sure developers will exploit those features in their software products. If they don't, no one will care about those features. And no one will buy new PCs with chips incorporating those features.
Intel first faced this problem in the mid-'90s with its 200MHz Pentium chips, which introduced the "MMX" features. A 200MHz MMX Pentium was supposed to be able to do all sorts of magical multimedia tricks -- MMX stood for "multimedia extensions" -- but because few developers added support for MMX (read: few wrote in features that used the multimedia extensions), MMX fell flat. (It didn't help that computer buyers didn't seem to care about those flashy but extraneous multimedia tricks.)
Fueling Demand
Now, Intel faces its biggest crisis of all in driving users to buy ever-newer, ever-faster PCs: Intel central processing units are already so fast and powerful that they are no longer the big bottleneck in improving system performance. More memory, a faster Net connection and a bigger and faster hard disk all make much greater contributions to perceived PC speed than just a faster chip.
Even worse, today's software runs fine on yesterday's CPUs. You'll see only a small difference in most programs running on today's fastest PCs, doing the things we do most often at our computers, vs. those same programs and tasks running on 2-year-old PCs using CPUs running at 800MHz or so.
That problem -- that new, faster CPUs don't necessarily translate into a perceived "better PC experience" -- is what has driven Intel over the past few years to try to develop and to help others develop new, power-hungry things to do with our computers. Person-to-person video-conferencing was long seen at Intel as a potential big demand driver, but customers' problems getting fast ISDN connections from their phone companies, then their ho-hums when they actually got things up and running and found little reward in unexpectedly seeing Granny in her bathrobe when they "called" her, sunk those hopes.
Intel's venture-capital operations and its in-house development efforts have been heavily focused on this theme of developing appealing, bandwidth-hogging new applications and products. One side of Intel pushes chips to run faster and faster; the other tries to find things to do to absorb that power ... and quickly make it inadequate.
Now, Intel faces a hugely complicated problem. And it seems unsure which way to go.
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Find out how Intel views this problem, what it proposes to do and why failed leadership is putting the enterprise at risk in the second part of this column.
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Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. |
