News March 27, 00:22 Eastern Time
Mar. 26, 1999 (Electronic Buyers News - CMP via COMTEX) -- Intel registered more than an 80% share of the microprocessor market in 1998, with its sales growing by $1 billion, to $20.2 billion. But MPU vendors Advanced Micro Devices and National Semiconductor's Cyrix also achieved some growth-either by taking on Intel directly with new x86-like architectures, or evading confrontation by chasing markets in which Intel isn't yet a presence.
AMD moved to second in 1998 from third the year before, with $1.29 billion in sales, while National jumped to fourth from ninth, more than doubling sales to $429 million, according to Semico Research Corp., Phoenix.
Following its recent announcement of the Pentium III, Intel is readying six other MPU versions in either chip or module form, including the Willamette, the seventh-generation core due to ship in the second half of 2000, said Linley Gwennap, editorial director of the Microprocessor Report.
Measured in end-equipment shipments, the MPU market is robust. Including workstation, dedicated server, desktop, notebook, and sub-portable systems, total units should increase from 123.1 million in 1998 to about 136.8 million this year and almost 155 million in 2000, Semico estimates. Leading the charge will be the desktop segment, up 9.8% this year, to 96.8 million units, and notebooks, up 14.7%, to 25.7 million units, the research firm predicts.
This year, most desktops and notebooks will convert to Intel's Pentium II or competitors' MPUs, according to Semico. By the end of the year, high-end desktop PCs will contain Pentium IIs with 800-MHz clocks, achieved via a 0.18-micron technology process and a 133-MHz system clock, Semico said.
Within the desktop segment, sub-$1,000 PCs accounted for 26.3% of worldwide shipments in 1998 and will constitute a third of the desktop PC market by 2003, according to Semico. This is where AMD and National/Cyrix caught Intel asleep at the wheel, as they rushed out with MPUs tailored for sub-$1,000 PCs. Intel's response, the Celeron, was seen as arriving a little too late and not being ready for prime time, although the company has brought out an updated version.
Of the two strategies to compete against Intel, AMD's is to go head-to-head, said Michael Steele, divisional marketing manager of AMD's Computational Products Group, Sunnyvale, Calif. The company's plan is to offer processors for lower-cost PCs that are being bought as second or third machines for the home, to provide more fully featured 3D software, and prepare for intra-home networking as family members share files off the Web for printing and games.
Cyrix's strategy is to develop MPUs for markets that Intel hasn't entered, according to Stan Swearingen, PC products vice president of the Cyrix Group, Richardson, Texas. An example is Windows-based terminals with no rotating media for corporate "thin clients," he said.
Things have gotten more complicated for Intel, because it has to configure Celerons, Pentium IIs, and Pentium IIIs in such a way that they don't cancel out each other's sales, Swearingen said. For example, "corporate markets follow retail channels by about a year, so what happens when corporate CIOs discover they only need Celeron-class MPUs instead of Pentium IIs or IIIs?" Swearingen asks. This gives rise to Cyrix's tactic of "making Intel fight on multiple fronts," he said.
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