Paul: re: SUNTEL
What do you make of this?
investors.com
Intel To Collide With Sun In High-End Chip Market
Date: 4/8/99
Author: James DeTar
When Intel Corp. last month unveiled a new chip for high-end desktop computers, it took dead aim at a company not always considered among its main rivals: Sun Microsystems Inc.
But Intel's Pentium III Xeon chip is geared to run workstations and servers, which are Sun's domain. Sun, with its Sparc chip, is about the only rival left for Intel in the market for chips to run these higher-end machines. Some companies have left the market. Others are regrouping.
This leaves an opportunity for Sun and Intel. Servers, the linchpins of the Internet and other networks, are expected to become more crucial to computing.
''Those battle lines have been forming for about a year,'' said Tony Massimini, an analyst with Semico Research Corp. in Phoenix.
Massimini says the budding rivalry will hit a fever pitch next year, when Intel starts shipping Merced, an even higher-end chip for servers. He sees that market becoming more important for Intel. With PC prices rapidly falling, Intel can't make as much money in its traditional stronghold.
''You can sell a lot of PCs at the sub-$1,000 level, but you make your money at the upper end,'' he said. ''That's why Intel wants to be there.''
One of Sun's defenses, as is typical for the company, is to take the offensive. Sun has started making versions of its Sparc chip for systems priced less than $5,000. In other words, it's setting up camp in Intel country, while Intel's doing the same in Sun country.
Ken Okin, vice president of Sun's workstation products group, calls the debut of the Pentium III Xeon a non-event.
''The Pentium III is just a piece of hardware,'' Okin said. ''We're operating at a different level. We offer a real, complete enterprise solution.''
Indeed, Sun makes the complete system, and thus has a captive market - itself - for Sparc. But only a few other small players use Sparc. Intel can find a market among Sun's workstation and server rivals, which would prefer not to buy their chips from Sun.
Though the Sun-Intel rivalry is rising quickly, Intel only in the last few years has moved into the higher end. ''Intel's strategy is to scale up to capture the high end of the market,'' said John Miner, vice president of Intel's enterprise server group.
Miner says sales of servers using Intel chips are rising over 30% a year. For servers that don't use Intel microprocessors, growth has been only slightly above zero, he says.
And the market for high-end chips is growing at about 30% a year, says Piper Jaffray analyst Ashok Kumar. This should provide plenty of opportunity for those who stay the course, Kumar says.
Workstations and servers had been dominated by a group of companies that made both the chips and the machines. Besides Sun, these companies included Hewlett-Packard Co., Digital Equipment Corp., IBM Corp. and Silicon Graphics Inc.
But HP will quit making its own chips, licensing some of its design to Intel for the Merced. HP plans to use Merced chips.
DEC was acquired by Compaq Computer Corp. last year. Compaq has since formed a company called Alpha Processor Inc. with Korea's Samsung Group. Compaq and Samsung will use Alpha chips, but it's not certain if anyone else will.
IBM uses PowerPC, a chip it co-develo
PD 0 4/0 8/99
PG A6
TITLE Computers & Technology
Intel To Collide With Sun In High-End Chip Market
:AUTHOR: James DeTar
When Intel Corp. last month unveiled a new chip for high-end desktop computers, it took dead aim at a company not always considered among its main rivals: Sun Microsystems Inc.
But Intel's Pentium III Xeon chip is geared to run workstations and servers, which are Sun's domain. Sun, with its Sparc chip, is about the only rival left for Intel in the market for chips to run these higher-end machines. Some companies have left the market. Others are regrouping.
This leaves an opportunity for Sun and Intel. Servers, the linchpins of the Internet and other networks, are expected to become more crucial to computing.
''Those battle lines have been forming for about a year,'' said Tony Massimini, an analyst with Semico Research Corp. in Phoenix.
Massimini says the budding rivalry will hit a fever pitch next year, when Intel starts shipping Merced, an even higher-end chip for servers. He sees that market becoming more important for Intel. With PC prices rapidly falling, Intel can't make as much money in its traditional stronghold.
''You can sell a lot of PCs at the sub-$1,000 level, but you make your money at the upper end,'' he said. ''That's why Intel wants to be there.''
One of Sun's defenses, as is typical for the company, is to take the offensive. Sun has started making versions of its Sparc chip for systems priced less than $5,000. In other words, it's setting up camp in Intel country, while Intel's doing the same in Sun country.
Ken Okin, vice president of Sun's workstation products group, calls the debut of the Pentium III Xeon a non-event.
''The Pentium III is just a piece of hardware,'' Okin said. ''We're operating at a different level. We offer a real, complete enterprise solution.''
Indeed, Sun makes the complete system, and thus has a captive market - itself - for Sparc. But only a few other small players use Sparc. Intel can find a market among Sun's workstation and server rivals, which would prefer not to buy their chips from Sun.
Though the Sun-Intel rivalry is rising quickly, Intel only in the last few years has moved into the higher end. ''Intel's strategy is to scale up to capture the high end of the market,'' said John Miner, vice president of Intel's enterprise server group.
Miner says sales of servers using Intel chips are rising over 30% a year. For servers that don't use Intel microprocessors, growth has been only slightly above zero, he says.
And the market for high-end chips is growing at about 30% a year, says Piper Jaffray analyst Ashok Kumar. This should provide plenty of opportunity for those who stay the course, Kumar says.
Workstations and servers had been dominated by a group of companies that made both the chips and the machines. Besides Sun, these companies included Hewlett-Packard Co., Digital Equipment Corp., IBM Corp. and Silicon Graphics Inc.
But HP will quit making its own chips, licensing some of its design to Intel for the Merced. HP plans to use Merced chips.
DEC was acquired by Compaq Computer Corp. last year. Compaq has since formed a company called Alpha Processor Inc. with Korea's Samsung Group. Compaq and Samsung will use Alpha chips, but it's not certain if anyone else will.
IBM uses PowerPC, a chip it co-developed with Motorola Inc., as well as Intel chips. But the PowerPC has found few takers outside IBM, and the companies now are targeting it at the embedded market.
Silicon Graphics has been using chips made by its Mips unit. These are the chips used to create special effects for such movies as ''Terminator II.'' But Silicon Graphics plans to exit the chip business after three more generations of Mips chips, says SGI Senior Vice President Tom Furlong.
SGI spun off the chip unit, called Mips Technologies Inc., in July. Silicon Graphics owns a majority stake in Mips.
When the dust settles, that will likely leave only Sun and perhaps Compaq-Samsung to face Intel, the world's largest chipmaker, says Semico's Massimini.
Okin says Sun's next chip, code named Cheetah, will be more powerful than Merced and will be released before Intel's planned mid-2000 release of Merced. ''We see ourselves ahead in the battle,'' Okin said.
Sun's ready to take on Intel, says Marge Breya, vice president of corporate marketing for Sun Microelectronics. That Sun unit makes its Sparc chips. ''We're used to aggressive force from Hewlett-Packard, IBM and DEC. They've all been formidable,'' Breya said.
Sun also is focusing on areas where it's a leader. These include higher-end markets for systems that use many chips. Sun systems today can have up to 64 chips. By year-end, that capacity will rise to 1,000 chips, Breya says.
In contrast, Intel systems - for now - are limited to but two chips.
Intel, though, has multichip plans of its own. It intends to ship a chipset called Profusion by midyear. Profusion will let designers put up to eight P3 Xeon chips in a single system.
Already, designers can ''cluster'' server motherboards. They can connect up to eight servers this way, Intel says, to boost performance of systems using Xeons.
--------------------------------------------------------------------------------
(C) Copyright 1999 Investors Business Daily, Inc.
Metadata: INTC SUNW HWP IBM SGI CPQ MOT MIPS I/3675 I/3572 I/3573 I/3575 I
Srini. |
