Mohan-san, everytime there is a good news on Intel (read: earnings), a negative article follows. I probably will liquidate my Intel holdings and switch to Dell. Here is an article in today's "Investor's Business Daily":
Rivals Mounting Pressure On Chip King
Intel
Date: 10/15/98
Author: Nick Turner
Once considered a monopoly, Intel Corp. is feeling the sting from no fewer
than four competitors that are cutting into the chipmaker's market share.
Advanced Micro Devices Inc., National Semiconductor Corp., Integrated
Device Technology Inc. and Rise Technology Co. all sell the same ''x86''
microprocessors that Intel makes. That's not to mention companies such as
Motorola Inc., which produce processors under separate technical
standards.
Intel, with its deep research and development pockets, has kept innovation
at a brisk pace in years past. It can't hurt going forward, though, to have
five companies all racing to build a better chip, analysts say.
''Different vendors are taking different tacks on improving products for
different niches,'' said Kevin Hause, an analyst at Framingham,
Mass.-based International Data Corp. ''That's good for any industry.''
So far, the impact of this increased competition has been on prices. Some
of these upstarts, though, are trying to beat Intel on technology.
Intel still sells the bulk of microprocessors - the brains of personal
computers. Lately, the Santa Clara, Calif.-based company has been forced
to sell a cheaper line of chips.
That's in response to companies like AMD, the strongest of Intel's four
rivals. AMD made its name by selling microprocessors for 25% less than
Intel's, and boasting its chips worked at least as well.
In April, Sunnyvale, Calif.-based AMD added the ''3DNow!'' feature to its
K6 chips. 3DNow! is a set of instructions designed to help the processor
make three-dimensional graphics faster and more realistic.
The implications of competitive innovation are clear, AMD officials say.
''The user is going to get a much better machine at any given price,'' said
Dana Krelle, an AMD marketing vice president.
Processor makers still are adhering to the x86 standard, the set of
instructions that define Intel's processors. Few, however, seem content to
have technology on par with Intel's. Most are claiming some sort of
advantage.
The approach of Cyrix, a unit of Santa Clara-based National
Semiconductor, is to integrate as many functions as possible into the
microprocessor. Cyrix figures that by eliminating separate chips that create
graphics and perform other tasks, PC makers will be able to cut costs.
The company unveiled designs for its ''Jalapeno'' chip technology at the
Microprocessor Forum, an industry conference held Tuesday in San Jose,
Calif. Jalapeno will be the core of a chip called the M3, which should be
available in late '99. It's expected to run at 600 to 800 megahertz, nearly
twice the clock speed of today's chips.
Cyrix's strategy will allow it to supply chips for devices other than PCs,
observers say. Its processors are low-cost and don't require a lot of
separate chips; they'll work well with ''information appliances.'' These
consumer-electronics products will be cheaper than PCs and limited to a
few different functions.
''Cyrix can enable a whole new category of products,'' said Hause.
Rise Technology, a newcomer, sees low power consumption as an edge
for its mP6 chip, but the company offers no comparisons. Low
consumption is especially important for notebook PCs.
Santa Clara-based Rise looks to further erode Intel's hold on the low end
of the PC market. Few people need a high-performance Intel processor to
do everyday tasks, says David Lin, Rise chairman and chief executive.
Still, the mP6 has a few bells and whistles, Lin says. It's designed to jazz up
3-D games and play DVD movies.
Finally, IDT has carved out a small niche with its low-budget WinChip
processor. It began shipping the chip last December and claims to have
sold 500,000.
IDT doesn't say its chips are faster than - or even as fast as - those of Intel
and AMD. The company's only selling point is price. IDT claimed to have
the lowest prices at the Microprocessor Forum but didn't give specific
amounts.
Even IDT plans an ambitious technology roadmap, though. It said this
week it will build a chip with a new core technology next year. The
processor will run at speeds up to 500 MHz.
While Intel's competitors boast of new technology, no one expects them to
charge extra for it. They'll always have to overcome the perception that
Intel is better, analysts say.
AMD officials do say, though, that their 25% discount will be phased out.
Marketing will be key, they say. The company doesn't plan a huge
advertising campaign. Instead, it hopes the press and its partners in the
distribution channel will get the word out.
Intel's ads with the ''Intel Inside'' theme often are credited with keeping its
customers loyal. AMD's Krelle counters those ads just increased
awareness of the Intel name. They didn't make buyers demand Intel.
''There's a difference between awareness and preference,'' he said.
''Preference levels are pretty low.''
AMD has made the most of its market-share gains at retail. With its new
K7 chip, due in the first half of '99, AMD hopes to score with corporate
buyers. That may prove a tougher sell, analysts say.
As AMD hones its own technology, it will demand more of a commitment
from PC makers. Its K6 chips fit into the same slots as Intel's Pentium
processors. Its new K7 product, though, has a new interface and requires
special motherboards and chip sets.
That means there will be two competing standards: Intel's Pentium II
architecture and that of AMD's K7. Will the PC industry accept them?
Hause says yes. Since Intel introduced the Pentium II, which uses a
different slot than the older Pentium, two standards have coexisted
peacefully, he notes. More than two won't fly, though, he says.
''If Cyrix decides to go down a completely different path, that's when
people will say, 'Hold on. You get in line behind Intel or AMD,' '' he said.
(C) Copyright 1998 Investors Business Daily, Inc.
|
