Paul, I see an article about the many new chip vendors assembled in one spot. I had seen them all earlier but has surfed on.
Bill
Intel clones face tough
market
By Michael Kanellos
Staff Writer, CNET News.com
September 2, 1998, 10:25 a.m. PT
update Some relatively small start-ups with big
ambitions are planning chips aimed at taking away
business from Intel, but they face daunting
obstacles that question their very survival.
Two newcomers, Transmeta and Rise, are working
on low-cost, low-powered chips for desktops and
portables. A third, Metaflow, is planning an Intel
clone with parent company ST Microelectronics.
In addition, Acer has licensed chip-making
technology from IBM and will start to make Intel
compatible chips for an upcoming line of
information appliances.
Although the microprocessor market remains one
of the more profitable segments in the
semiconductor industry,
substantial marketing
and manufacturing
hurdles lay between
design and commercial
success. As with many
products in other
industries, mass
production is often the
real test--and in some
cases the ultimate
undoing--of a new chip.
Lengthening their odds
still further is a market where established
challengers such as Advanced Micro Devices are
facing strong price competition. And Intel remains
the dominant player by far, making chips that are
used in an estimated 85 percent of all personal
computers. (Intel is an investor in CNET: The
Computer Network.)
"There's a pretty high barrier to entry, but it's still a
lucrative market," said Dean McCarron, principal
analyst at Mercury Research.
The difficulty of the challenge can be seen in the
experience of International Meta Systems, which
filed for bankruptcy protection last year. In
November 1996, the company obtained patents for
a reduced instruction set computer (RISC) product
that could also read Intel-style instructions. (Intel
chips are based on the older complex instruction
set computing, or CISC, format.)
Nonetheless, chinks in Intel's armor are proving too
difficult to resist for some challengers.
Rise will announce its mP6 processor October 12
at the Microprocessor Forum, sources at the
company said, and shipments will begin soon
afterward. Aimed at the desktop and mobile
market, the mP6 will consume less power than Intel
equivalents.
Transmeta is said to be working on roughly the
same thing but is wrapping the project in more
secrecy. The company did not return calls, and its
Web site had no content as of today.
Transmeta, however, appears to be staffed by
known industry figures. Employees include Linus
Torvalds, creator of Linux, and Robert Collins, a
former Texas Instruments engineer better known
for founding the Intel Secrets Web site, which is
dedicated to ferreting out news about the chip
giant. It also has the financial backing of billionaire
Paul Allen, a cofounder of Microsoft. (Allen is also
an investor in CNET.)
While most observers suspect that Transmeta will
come out with an Intel clone for mobile chips, some
sources indicated that the company's chip may run
Windows programs through a form of highly
efficient emulation to avoid patent or copyright
issues. This is similar to the strategy pursued by
IMS and Exponential, another one-time high flyer
that folded last year.
Notebooks could prove to become a good entry
market for a clone maker. Power consumption has
historically been a problem for Intel, and the
mobile-computing market was a relatively low
design priority for many years. Only recently has
Intel been delivering notebook chips competitive
with its desktop line.
Intel's mobile processors tend not to be cheap
either, generally commanding a significant premium
over desktop products running at the same speeds.
Intel made strides in curbing the power
consumption of its chips with the Tillamook-class
Pentium MMX processors released late last year,
but power consumption rose again with the
proliferation of the Pentium II architecture.
"There is some vulnerability in the portable market,"
McCarron said. "With Intel processors, you can
typically have performance or lower power but not
both."
But opportunity and execution are two very
different things in the business of microprocessors.
"These guys get to first base on a good design,"
said Steve Tobak, vice president of sales and
marketing at National Semiconductor, which makes
the Cyrix line of Intel-compatible processors. "Then
you have brand development, channel
development, intellectual property protection."
Cyrix itself went through the wringer in becoming
one of the leading Intel clone makers. For years,
Cyrix struggled to gain customers with its first Intel
clone chips. Most of its sales went to computer
dealers and regional vendors. At the same time, it
had to defend against various copyright and patent
lawsuits brought by Intel. Cyrix landed its first
design win with a major manufacturer in early 1997
when Compaq Computer chose to use the Cyrix
MediaGX, the first integrated processor, in its first
sub-$1,000 PC.
That boosted the company's market share. A year
later, however, production shortfalls led Compaq
to adopt chips from AMD in its consumer line.
Cyrix's travails demonstrate that even if a start-up
succeeds in manufacturing and brings a chip to
market, there's no guarantee that PC makers will
adopt it. McCarron pointed to the experience of
IDT, another clone maker, as a company still
looking for a sale breakthrough.
IDT came out with its WinChip last year, shipping
roughly 100,000 of the processors in the first
quarter. But that number promptly dropped to
80,000 in the second quarter for lack of demand.
To date, no first-tier PC maker--such Compaq,
IBM, Dell, or Hewlett-Packard--have adopted the
IDT chip.
Pricing is also a problem. Even as PC prices
continue to fall, Intel, AMD, and Cyrix are all trying
to expand their market share. For newcomers, that
translates to a tight market against established
competitors better able to absorb increasingly small
profit margins.
"Getting customers is not insurmountable. If it is
cheap enough someone will buy it. These people
want to out-AMD AMD. The question is, is there
room enough to outmaneuver AMD. Price is Intel's
weapon," said Danny Lam, director of
Fisher-Holstein, an analytical firm. "People can
build clones, but the question is execution."
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