To: Dan3 who wrote (160013 ) 2/24/2002 11:24:18 PM From: puborectalis Read Replies (1) | Respond to of 186894 Intel To Launch Chips Focusing on Server Systems Market By: Don Clark, Staff Reporter of The Wall Street Journal SAN FRANCISCO -- Intel Corp. (NasdaqNM: INTC - news) on Monday is unleashing a salvo of chips that demonstratADVERTISEMENT e its increasing focus on the market for server systems. However, many analysts remain focused on an even more important Intel (INTC) product line due out in the middle of the year. The technology bellwether is introducing a long-expected speed upgrade for its Xeon chips, used in small and midsized server systems that are popular for Web and business applications. The new Xeons operate at a frequency of up to 2.2 gigahertz and come in models priced at $251, $417 and $615 each, in 1,000-unit quantities. Intel's announcements, slated for a big gathering of hardware and software developers in San Francisco , are designed to step up pressure on rivals such as Sun Microsystems (NasdaqNM: SUNW - news) Inc. (SUNW). The Santa Clara, Calif. , company is coming off a terrible year, but Paul Otellini, Intel's president and chief operating officer, said in an interview that computer demand began to pick up at the end of last year, particularly in parts of Asia outside of Japan . "There was an inventory build-up at many computer manufacturers that took a while to work through," Mr. Otellini said. "Now we are starting to see demand pick up nicely." Intel spent heavily on the server market throughout the downturn. By the third quarter of 2001, Intel had 95% market share in servers using one or two microprocessor chips, according to the research firm International Data Corp. The company hopes to reinforce that lead with the upgraded Xeon line, which includes features from the Pentium 4 line for personal computers. The new chips offer more built-in memory than earlier models, and take advantage of a feature called "hyper-threading" that allows a single chip to work like two in some applications. As a result, Intel says the Xeons can operate up to 30% to 80% faster than earlier chips. Intel also is introducing a set of accessory chips called the E7500 to use in constructing servers. But ServerWorks Corp., a unit of Broadcom Corp. (NasdaqNM: BRCM - news) (BRCM) that now leads that market niche, also plans to respond this week with new accessory chips for Xeon. Despite its success in low-end servers, Intel has made relatively little headway against Sun in larger machines that have more than eight processors. Mr. Otellini, however, predicted that a new version of its 64-bit Itanium line, code-named McKinley, will emerge by midyear and allow Intel to woo Sun customers in the financial service and telecommunications industries. "There is a dramatic opportunity on Wall Street," he said. "That and the telco business are two of our business opportunities that are likely to be very big."