Low-cost market using Intel less By Jim Davis and Stephanie Miles
Staff Writers, CNET News.com December 10, 1998, 1:00 p.m. PT
Intel continues to be conspicuously absent from some
of the latest low-cost computers hitting the market in
the holiday season.
As Compaq Computer prepares new low-cost consumer
PCs and NEC rolls out a sub-$1,000 notebook, new
research from International Data Corporation shows that Intel
continues to be challenged at the low end of the PC market.
Compaq is getting ready to introduce five new consumer
PCs in January, with three of the computers expected to be
priced between $699 and $999, according to sources. Of all
the new systems being readied, only the priciest--a system
estimated by industry sources to cost $2,100--will offer an
Intel chip.
Prices could change by the time of the system's introduction.
Meanwhile, Packard Bell NEC is introducing a $999
notebook with an 8-inch dual scan display and a chip from
National Semiconductor's Cyrix arm, the companies said today.
As components such as displays, hard drives, and non-Intel
mobile chips continue to drop in price, the sub-$1,000 price
point may become as prevalent in the mobile space as it
has in the desktop space, analysts say.
Sub-$1,000 market a challenge for Intel
That possibility presents a new wrinkle in a continuing
challenge for Intel--how to get inside sub-$1,000 computers.
A new survey from IDC indicates that Intel's efforts to muscle
back into the sub-$1,000 PC market with its Celeron
processor did not have much of an impact in the third quarter
of this year, though recent anecdotal evidence indicates that
the enhanced version of the Celeron is getting a better
reception with PC makers.
In the third quarter, the total unit sales in the Intel and
Intel-compatible microprocessor market increased 22.6
percent over the previous quarter, with more than 90 percent
of the quarter's shipment increase coming from the low end
of the market, the report said.
Advanced Micro Devices and Cyrix continue to be the predominant
supplier of chips for cheap PCs. In the third quarter, AMD has doubled its share of the Intel-compatible chip market to 13 percent
from the same quarter a year ago,in turn reducing Intel's share
of the market to 76.3 percent from 86.2 percent a year ago. That's a new low for Intel, according to the report.
"To date, Intel has delayed introducing new technologies into
its Celeron family to play up the value of developments within
its Pentium II line. We believe this technology withholding is
hurting Intel, and allowing competitors...to grow share," Kelly
Henry, senior semiconductor analyst for IDC, said in the
report.
Overall, however, Intel's profitability isn't hurting. Third-quarter
microprocessor unit shipments and revenue were both
company records, Henry said, and gross margins
increased again after reaching a low point in the
second quarter.
Intel not inside
Compaq's new Presario 2286 will ship with a Cyrix
MII processor, while two new Presario 5200-series
systems will be priced below $1,000, sources said.
Compaq declined to comment on as-yet
unnanounced products.
The Presario 5200 systems are expected to offer
either a 350-MHz or 380-MHz AMD K6-2 processor,
64MB of memory, an 8GB hard disk drive, and a
"SuperDisk" drive that reads current floppy disks but
can store up to 120MB of information. A system with
an Intel 450-MHz Pentium II, 128MB of memory,
19GB hard disk drive, DVD-ROM drive, and a
SuperDisk drive is expected to be priced under
$2,100, according to sources.
Intel's Celeron processor, which is being aimed for
use in low-cost PCs, is notably absent from the
lineup of the world's largest PC maker. Analysts say
PC makers may be reluctant to use the chip due to
the public's perceptions about the Celeron chip.
"Celeron still has a stigma of being a
lower-performance chip" in the minds of both
consumers and retail salespeople from the product's
introduction last summer, said Cameron Duncan, an
analyst with ARS.
Compaq, however, is already using the enhanced
333-MHz Celeron in a
number of low-cost
consumer models, so
this chip may be
stemming the tide of
non-Intel sub-$1,000 to
some degree.
But Intel may face a
challenge in the
notebook market as
well with some
sub-$1,000 portable
PCs showing up on
store shelves now.
"The non-Intel
processors are helping to drive down the costs
because Intel seems to be focusing on the high-end
processors," said Terry Nozick, managing editor of
Mobile Insights, a mobile computing newsletter.
Packard Bell NEC is offering the NEC Ready 120LT
for $999. The 3.6 pound notebook comes with a
relatively small 8-inch dual scan display and has a
200-MHz class Cyrix processor. Manufacturing costs
for this notebook are reduced because the Media GX
processor integrates the functions of several different
components including audio and graphics, according
to Cyrix.
"This is an indication of where things are going, and
it's not such a surprise," Nozick said, pointing to
recently introduced $1,400 loaded notebooks from
premium vendors such as IBM.
But even with the component price drops and the
reduced manufacturing costs from integrated
processors, features on which consumers place a
premium--such as durability and portability--will
continue to keep the high end of the market afloat.
"There's a large segment of the market that's really
price conscious, but I don't know if that's always a
wise decision," Nozick said. "There's been a big trend
toward moving to magnesium alloy cases, which are
lighter but much more durable. You're not going to
see a sub-$1,000 that has a magnesium alloy case,
because magnesium alloy at this point is more
expensive material to use for ruggedization."
Also, the high end of the market is currently inhabited
by 300-MHz Pentium II chips. The MediaGX is
roughly comparable in performance to the older
Pentium MMX chips. |
