Glen here is the story you were talking about
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Intel Will Unveil New Microchip
To Take On 3-D Graphics Market
By DEAN TAKAHASHI
Staff Reporter of THE WALL STREET JOURNAL
Intel Corp. is once again releasing a product that will make life difficult for smaller competitors. This time, however, the chip giant is moving into a market where dominance isn't a sure thing.
The Santa Clara, Calif., company, in a long-awaited move, is releasing a graphics chip Thursday that is designed to bring sophisticated three-dimensional images to mainstream personal computers. The new I740 chip is winning praise from some analysts who have been able to test its performance.
<Picture: [Go]>PC Focus Blinded Giant Intel
In Race to Make Cheaper Chips
Intel's jump into the emerging 3-D niche will undoubtedly affect the several dozen smaller companies that produce graphics chips, and attract scrutiny for other reasons. The Federal Trade Commission is already investigating the semiconductor giant's business practices, including exploiting its near-monopoly in microprocessors to move into adjacent markets. The FTC recently approved Intel's purchase of graphics-chip maker Chips & Technologies Inc., but pointedly reserved the right to re-examine the deal later.
The new I740 chip, to be placed on $189 to $249 circuit boards for PCs that cost $1,500 to $2,500, includes two-dimensional graphics and video features from Chips & Technologies. But the heart of the product is 3-D circuitry developed by Real3D, a spinoff of defense contractor Lockheed Martin Corp. that adapted technology used to create realistic scenes in military simulation systems. (Intel controls 20% of Real3D.) Software companies want to exploit the same techniques for computer games, architectural design programs and other products.
Cost of a Delay
Peter Glaskowsky, an analyst at Micro Design Resources Inc. in Sunnyvale, Calif., said the I740 is the fastest product yet that combines multiple graphics functions on a single chip. But it would have had a bigger jump on competitors if it arrived last fall as originally scheduled.
"By the standards of what is coming out this spring, it's not that impressive," Mr. Glaskowsky said. "At least two or three rivals will be faster."
Competitors haven't spelled out their plans, but companies known to be working on advanced 3-D products include start-ups Nvidia Inc., Chromatic Research Inc., 3D Labs Inc. and 3Dfx Interactive Inc.
Brian Ekiss, an Intel product-marketing manager, and other Intel executives declined to discuss the impact of their efforts on competitors. Their primary objective, they say, is to simply make PCs more fun and increase demand for them. The company has sometimes entered markets for accessory chips to speed adoption of its microprocessors, letting other manufacturers take over those businesses as they mature.
But Intel wound up taking a dominant position in chip sets, which handle several internal housekeeping functions on PCs. Three-dimensional graphics are a particularly strategic weapon in Intel's campaign to move beyond PCs to high-end graphics computers. Some analysts say Intel might eventually choose to integrate graphics technology into its microprocessors, all but eliminating the market for 3-D add-on chips.
A Tougher Game
That isn't an immediate prospect, for several reasons. The graphics competitors aren't as weak as makers of chip sets were. Intel's new I740 chip, besides being late, is relatively costly at $34.75 apiece, relatively large and requires a lot of electrical power. That makes it inappropriate for notebook computers and low-cost desktops.
"You can never count Intel out," says Terrence Holdt, chief executive officer at S3 Inc., one rival that has struggled with financial problems lately. But he added, "We think we're prepared for them."
Intel's advantages include its brand name, huge production capacity and a captive market for its 3-D chips, in an Intel-owned operation that makes PC circuit boards. It also controls a technology called the accelerated graphics port, or AGP, which manages connections between graphics and other parts of computers. In theory, Intel's 3-D chip group could get advance word about improvements to the AGP standard or the company could limit information to competitors.
Intel says it has no plans to play favorites. Jen-Hsun Huang, chief executive officer of competitor Nvidia in Sunnyvale, Calif., says Intel has the power to "kill off the graphics companies" by withholding AGP information, but he also sees no evidence it is doing so. For one thing, the company might slow adoption of the new technology and invite further FTC scrutiny.
Some analysts contend that Intel is perfectly capable of becoming a major force in the market without resorting to dirty tricks. "People trying to wish away Intel are in denial," said Jon Peddie, president of market researcher Jon Peddie Associates in Tiburon, Calif. "If they don't work it right the first time, they will keep coming back."
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