Yet another article about the new products in the microprocessor arena. One comment I have: I didn't know Intel had 75% of the low end PC market. Article says Intel is going after more. It is a long article.
techweb.com
Technology News
Intel, AMD Micros Blur
Performance Contrasts
(08/30/98; 12:11 p.m. ET)
By Margaret Quan, EE Times
The performance boundaries between
microprocessors aimed at the low and
high ends of the PC market continue to
blur, with Intel introducing faster models
of its Celeron and Pentium II processors,
and Advanced Micro Devices (AMD)
rolling out a souped-up version of the
K6-2.
But analysts said the companies' strategies
for the chips signal marketing
considerations may count more than raw
performance in determining how new
processors are positioned and priced.
With the new, faster versions of Celeron,
Santa Clara, Calif.-based Intel broadened
its PC coverage to machines costing
between $1,000 and $2,500, with an eye
toward increasing its already commanding
share of the low-end PC market.
According to Mercury Research, in
Scottsdale, Ariz., Intel controls 75 percent
of the microprocessor-unit market for
low-end PCs.
At $149 and $192 in 1,000-unit quantities,
the 300A and 333, along with other
members of the Celeron series, may not
offer much in the way of profit margin. But
Tony Massimini, chief of technology at
Phoenix-based Semico Research, said
Intel can't afford to cede the low end of
the PC market to its competitors. Future
funding levels for R&D, he said, hang in
the balance.
The Celeron 300A and 333, respectively,
deliver 300- and 333-MHz performance
and feature 128 kilobytes of on-chip Level
2 cache. Intel (company profile) is
marketing the chips as offering the fastest
performance available for basic PCs
aimed at task-oriented users.
Enhancing Intel's Lead In Low End
As such, the introductions are intended to
cement Intel's lead at the low end of the
PC market, where it is a relative
latecomer. The company fielded its first
chips -- 266- and 300-MHz Celerons --
for the sub-$1,200 PC in April, but those
offerings' lack of on-chip L2 cache dealt a
blow to performance.
That problem has been addressed with the
inclusion of L2 cache on the Celeron
300A and 333, which, respectively, are
said to provide 25 percent and 38 percent
higher performance than the original
Celeron 300.
Indeed, the new Celerons are so fast that,
based on CPU performance alone, the
Celeron now is only 10 percent slower
than a Pentium II clocking at the same
frequency and in the same system
configuration, according to Sean Maloney,
corporate vice president and director of
Intel's sales and marketing group.
Meanwhile, AMD's 350-MHz K6-2
features the 3D Now instruction set, which
enhances 3-D geometry and lighting
calculations. Sunnyvale, Calif.-based
AMD (company profile) declined to detail
pricing for the parts at publishing deadline
time, but said it will position the
350-MHz K6-2 against the Pentium II.
Analysts, however, said they expect the
new chip's performance to fall between
that of the Pentium II and the Celeron, and
that it will likely be designed into systems
costing about $1,200.
It's All In The Positioning
Massimini at Semico Research said for
AMD and other Intel competitors, the
marketing challenge boils down to
positioning their offerings against Intel's
dominant chips. "While AMD may want to
position its new K6-2 against Intel's
Pentium II and expect to get a higher price
premium on the faster chip, the reality is
AMD still has to worry about design-ins
and has to price itself below Intel," he
said.
In fact, AMD's marketing strategy in the
microprocessor space has included a
commitment to beat Intel's pricing on
similarly featured products by 25 percent.
Often, Massimini said, AMD's price falls
as low as 40 percent below Intel's by the
time a salesman finishes negotiating a
deal. Not only does the K6 lack the
brand-name recognition of Intel's chips, he
said, but AMD also has had trouble
supplying product to customers.
Late last year, the company had K6
manufacturing problems at its Fab 25, in
Austin, Texas. The consequently low
yields in last year's fourth quarter and this
year's first quarter took their toll on
average selling prices. Massimini said
average selling prices for the K6 family
averaged $86 last quarter.
To make sure it would be able to produce
enough chips, AMD struck a foundry deal
with IBM in the early part of 1998. But
AMD subsequently solved its
manufacturing problems and never used
IBM's foundry, said an AMD spokesman.
The spokesman said AMD produced 2.7
million K6 units at Fab 25 in the second
quarter, and it expects to manufacture 3.5
million units in the third and 4.5 million
units in the fourth, for a total of 12 million
units for 1998.
Semico's Massimini nonetheless said,
"The only way AMD can get a higher
price for its chips in the third and fourth
quarters is if they increase unit production
and increase the K6-2's performance
between now and 1999."
Intel's Celeron and Pentium II are both
based on the company's 0.25-micron P6
micro-architecture core. Both incorporate
Intel MMX technology and have 32 KB of
Level 1 cache. Elements that distinguish
the Pentium II as the workhorse are its
dual processing and 100-MHz system bus.
Intel said it plans to tweak the Celeron
higher by ramping the system-bus speed
from its current 66 MHz sometime in
1999. The company may also roll out
low-cost packaging options for the
Celeron in next year's first half that could
make the chip more cost-effective.
In the first quarter of 1998, Intel said it
projected Celeron chips would account
for 5 percent of unit sales for the second
quarter. Last week, the company said it
expects Celeron sales to move up
substantially from there in the third and
fourth quarters.
"We see it becoming a very high-volume
product," said microprocessor-marketing
director Richard Dracott.
Faster Processors = Manufacturer
Dilemma
Analysts nonetheless said they believe the
faster Celerons may create a dilemma for
original equipment manufacturers seeking
to sell performance desktop systems based
on the 300-MHz Pentium II against
lower-priced systems based on the
Celeron 300A or 333. Performance and
features are likely to be similar between
Pentium II- and Celeron-based systems,
and OEMs may be forced to price systems
accordingly.
Intel's Maloney conceded there will be
some overlap between newer Celeron
systems and those based on older Pentium
IIs. But he added that, in general, the
Celeron will be tuned and priced for
entry-level systems and the Pentium II for
performance systems.
Meanwhile, Intel intends to hold on to its
control of the performance-desktop and
entry-level server segments by producing
faster versions of Pentium II. The latest is
the 450-MHz version of the Pentium II,
aimed at performance PCs and entry-level
workstations and servers.
The Pentium II 450 is the third member of
the Pentium II family based on the
100-MHz system bus. Intel said the chip
offers the highest performance on
multimedia, floating-point, and integer
vectors, providing a 10 percent
performance improvement over the
400-MHz Pentium II.
Intel will market the 450-MHz Pentium II
for balanced server platforms that perform
such traditional functions as file-sharing
while targeting such new applications as
intranets, extranets, and workstations used
for digital-content creation,
computer-aided design, software
engineering, and desktop publishing. It
costs $669 in 1,000-unit quantities.
Before the end of 1998, Intel plans to
introduce a 450-MHz Pentium II Xeon
processor for mid-level to high-end
workstations and servers. It also plans to
roll a 300-MHz Mobile Pentium II. And
the Katmai-a 500-MHz Pentium II with 70
new instructions, including 3-D
enhancements-is expected to arrive in the
first half of 1999.
For its part, AMD said it plans to roll out
higher-performance chips, bringing out a
400-MHz K6-2 product in the fourth
quarter and a 450-MHz K6-2 in the first
quarter of 1999.
Later this year, AMD is also scheduled to
ship to customers the first versions of a
high-performance processor, code-named
Sharptooth, that will have 256 KB of L2
cache on-chip. |
