Maverick - New Chips Join the 400 MHz Club
Powerful Intel chip debuts
By Michael Kanellos
Staff Writer, CNET NEWS.COM
June 29, 1998, 10:25 a.m. PT
URL: news.com
Corporate computer manufacturers joined Intel in announcing new lines based on the Xeon Pentium II processor, though a bug may delay the most powerful multiprocessor computers.
Built around a Pentium II core, Intel's newest chip for workstations and servers contains
more "cache" memory and runs faster when it "talks" to this extra-fast memory,
compared to standard Pentium II chips.
Xeon chips will also enable computers to use four processors at once, a major
improvement over the two-processor limit on the Pentium II. However, a recently
discovered bug is delaying the release of the most powerful four-processor servers.
Intel confirmed that a bug exists, a problem that rules out the release of some Xeon servers in conjunction
with the chip's scheduled debut today. Regardless of the bug, sources inside the computer industry say that
only a handful of Xeon workstations or servers may be available for a month or more.
Intel is banking heavily on this chip. "It is what is standing between Intel and utter disaster because of the PC
pricing environment," said Drew Peck, a Cowen & Company analyst.
Intel has been hurt by the nonstop price-cutting among PC makers, who are slashing prices to sell built-up
inventories. Intel is also seeing more competition from clone chip makers Advanced Micro Devices and
Cyrix, whose lower-cost chips are used in the booming sub-$1,000 PC segment of the market.
As a result, Intel has been slashing its prices at a furious rate. Earlier this month for example, Intel cut the
price on its new Pentium II 400-MHz chip by 12 percent, after just two months on the market, to $722. It cut
the price of its Celeron for "basic" or low-cost PCs by 32 percent.
Wall Street has been jittery for weeks that Intel's earnings will be below expectations and there were several
rumors of a pre-announcement of an earnings shortfall.
In April, the chip giant predicted flat revenues for the second quarter versus the first quarter and said gross
margins in the quarter would be down a few percentage points from the 54 percent in the first quarter.
"Xeon is where Intel is expected to carry a good deal of their profits going forward," said Rob Enderle, an
analyst with Giga Information Group. "The numbers are small but the revenue opportunity is relatively large."
Although the duration of the delay will apparently be short, the bug is a symbolic black eye for the company.
Xeon is the first Pentium II chip slated for four-processor computers; to date, Pentium IIs have only been
capable of two-way processing in standard configurations.
Four-way processing with fast Xeon chips has been pitched by Intel and its partners as a sign that the Intel
architecture can start to take over more of the high-end corporate "enterprise" computing functions currently
dominated by the Unix platform.
Intel also plans to charge quite a bit for Xeon, in an effort to bolster sagging margins. The 400-MHz version
of the chip with 1MB of secondary cache memory will sell for $2,836 in volume while the 512K version will
sell for $1,124. 450-MHz versions of Xeon with up to 2MB of cache memory will come out in September.
(Intel is an investor in CNET: The Computer Network.)
The public introduction of the chip and new computers using it occurred at Intel headquarters in Santa Clara,
California, at an event that mostly featured workstations.
Xeon workstations will cost around $5,000 and up, generally available in the first few weeks after the
announcement. Servers are expected later.
Dell Computer introduced its Precision 610 Workstation. The 610 will come with the 512K or 1MB
processor, said Jeff Clarke, vice president and general manager of workstations at Dell.
A typical configuration might consist of a 400-MHz Xeon and dual high-performance 9GB hard disk drives
and a 19-inch monitor for $7,371. Dell said its systems are available starting today.
The direct marketer will also use Xeon in only the high end of its PowerEdge server line, which is the 6100
series, said a Dell spokesman. These servers will be capable of running one, two, or four processors.
Gateway said its workstations--available only single- or dual-processor configurations--should be available
within the next two weeks. An entry-level E-5250 with 19-inch monitor will be priced starting at $5,499. A
system with dual Pentium II Xeon processors will be priced at $9,363.
Gateway also introduced the new ALR 9200, which offers up to four Pentium II Xeon processors on Intel's
100-MHz system bus, and up to 4GB of memory. The ALR 9400 uses a proprietary system architecture that
enables up to six Pentium II Xeon processors to be used, and also adds 64-bit PCI (peripheral component
interconnect) technology for speeding data transfer to and from devices such as hard disk drive arrays,
printers and other peripherals. No pricing or availability was announced.
While in the midst of a legal tussle with Intel, Intergraph said it would incorporate the Xeon into its TDZ 2000
by the third quarter of 1998. Recently, the courts granted a preliminary injunction that requires Intel to
continue to supply Intergraph with chips and technical information. Intergraph is alleging that its business has
been harmed by anticompetitive business practices by Intel.
NEC Computer Systems Division said it would offer customers who purchased the HX4100 and HX6100 4-
and 6-way servers, which currently use the Pentium Pro processor, an upgrade kit to the new Xeon
processor starting at under $3,000. Additionally, the company expects to offer new 4-way servers based on
the chip by the third quarter of 1998.
Compaq was expected to announce new workstations, which will come out in a few weeks, while servers will
follow by September, said sources close to the company.
IBM, meanwhile, was to detail its server strategy at the event. The company will announce upgrades to its
5500 Netfinity servers, which use the Pentium II, as well as one-, two-, and four-processor servers, said
Randy Groves, vice president of Netfinity development.
IBM's one- and two-way servers will come out in the 5500 line, while the four-way servers will come out in the
7000 series, which is currently dominated by Pentium Pro servers. Although announced, the machines will
not come for 60 to 90 days.
IBM workstations based around Xeon will be rolled out later this year, according to a spokesperson.
Hewlett-Packard will announce support for the Xeon chip, but not provide product details until later.
Nonetheless, HP has annouced plans to roll out Kayak workstations in the coming weeks and follow the
announcement with details on one-, two-, and four-way servers, sources close to HP said.
Reuters contributed to this report.
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