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Intel, AMD Micros Blur Performance Contrasts
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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. |
