Where is Intel's Future?
You can't go to a computer site right now that doesn't have at least one link to a review on the Pentium 4. Most reviews show that right now the P4 is not worth the money that it costs. What does Intel think of the reviews?
Here is a comment from an Intel rep, George Alfs, "As far as the web reviews out there, I think they tend to convey exactly what we expected, that Pentium(R) 4 processor shows large performance gains where end users need it (video editing and encoding, intense 3D processing, MP3 encoding, new internet technologies, etc). Most office applications spend most of their time waiting for end user input, so that wasn't the focus. I would say where it matters, the Pentium 4 processor far exceeds the performance of the Pentium 3 processor. As well, Pentium(R) 4 processor provides plenty of performance and headrooom for office applications"
Intel is confident that the P4 is the best on the market for end users. Some reviews still show diffrently. If Intel says it's the best, why don't the reviews agree? This is a question that worries stockholders and, hopefully, worries Intel.
In the past, Intel was "the" processor maker. With the onslaught of competition and the market driving to produce more, better and faster, Intel has pumped out successive generations of processors. Lately, the market has been heated by Intel and AMD rapidly coming out with faster processors. Intel's new breed or processing muscle lies in their newly released Pentium 4. From the beginning, Intel has been a force in the CPU market. Originally with the 286, then the 386, followed by the 486. The name Pentium was given to the next line of processors. The original Pentium was released in 1993 and ranged in speeds from 60MHz to a big ol 200MHz with bus speeds of 50MHz to 66MHz. The progression continued with the MMX, Multi-Media Extensions, enabled chips in 1997, which brought speeds of 166, 200 and 233MHz and advertised capability of enhanced video and multimedia processing. The next addition to the Intel family was the Pentium Pro chips, and Intel branched yet again into new advances. With the Pentium Pro, Intel had created the first integrated L2 cache, allowing for more powerful processing which was greatly appreciated by servers and workstations. The previous processors had relied on the L2 cache onboard the motherboard, which proved to be much slower. Following in the steps of the Pentium Pro, the Pentium II was then born with the code name "Klamath." Followed shortly thereafter with the "Deschutes" Pentium II, the Pentium II in total spanned speeds of 233MHz to 450MHz, and more importantly brought forth the idea of in-house L2 cache. With more added pressures from the AMD released K6-2, Intel launched the Celeron line of CPUs with the "Covignon" chip. Based off of the Pentium II design, originally the Celeron was deprived of a L2 cache, and as a result was deprived of performance. With the arrival of the Celeron "A" (or "Mendocino") chips, the performance market was again taken back into Intel's grasp. The new Celerons had added 128KB L2 cache (1/4 of the PII) which drastically increased performance, and also became infamous overclockable chips. The Pentium II Xeon was also born with similar features of the PII, but with a full speed L2 cache of various sizes, the Xeon stormed the server market.
In 1998, Intel released the third generation of Pentium processor, the Pentium III. The processor eliminated the competition in performance. AMD has applied great pressure with the K6-2, K6-III and now the infamous Athlon Thunderbird and Duron, and has become quite the debate as to which chip should be on top. Intel's answer to the Thunderbird's powerful 1.2 GHz stride is it's new flagship, Pentium 4. For most of you out there, the P4 may only be a dream for now, as the prices still have that "just been released" tag on them. With the new leader rolling in, the Pentium III prices dropping, and gift-giving holidays right around the corner.
How has Intel's stock (INTC on the Nasdaq) been affected throughout all this? The stock history has seemed to have no negative affect from any competition. The amount of trading has been increasing for 10 years since Intel first became public.
The stock growth has slowed in the last couple of years, but continues to grow, just at a slower pace. Over all stockholders have no reason to complain and shouldn't have one for a long time. Intel has continued to grow outside of their original market. Intel has aquired several other companies dealing with all ends of computer related technology. Intel now has a great deal of influence all over the computer world. This is why it is very difficult for competitors to compete, and why Intel can get away with its major screw-ups. Intel is hoping that the P4 will not be added to that list.
The P4 will succeed, but not with the current market. The P4 like most new products has its problems. The major problem is that its current systems are not easily adapted to running a P4. In order to run a P4, you pretty much have to buy a whole new system, and a current P4 system will run you at least $2000 to buy. The current chipsets now on the market can only run the P4 with RDRAM. RDRAM is a Rambus Inc. product and is very spendy. Intel claims that memory chips designed by Rambus are the best match for ever-faster microprocessors. Third party companies such as VIA say RDRAM is too expensive and has more speed than most consumers require.
VIA, a Taiwan based maker of chipsets, back double data rate (DDR) memory chips, which at a speed of 266 megahertz are twice as fast as the current standard, but slower than Rambus's data exchange rates of up to 1,066 megahertz. VIA is one of the biggest chipset makers, and has a secure foot in the market. VIA has made chipsets for both Intel and AMD processors. These chipsets usually are on the top of the market on release. If Intel wants the P4 to survive and thrive they will need the help of VIA and other chipset makers.
Intel is unable to experiment with products that use DDR or other forms of memory because it has a long-standing deal with Rambus to only use their memory. Rambus has been a thorn in Intel's side lately. There is a lawsuit out now by Rambus against Intel for using unlicensed technology. Rambus is also very expensive which drives the price of Intel systems way up. This large price tag on Intel systems allows for competitors like the AMD Duron, and Athlon Thunderbird to invade the market more easily.
Here is a quote from Michael Sullivan that shows Intel has not been totally quiet about its ideas for using DDR or licensing the P4 technology out to third party chipset makers.
"DDR is not a mainstream memory technology right now, and we are planning to support it when it becomes mainstream." He added that DDR support was expected in the second half of 2001.
Intel has licensed technology in the past which has led to great advances and has increased Intel's dominance in the PC market. The ability to work with third parties to increase sales and lower prices is crucial after this year's slowing of PC sales. Intel must realize that the full potential of the P4 wont be realized until other companies get a hold of it and work on perfecting a system that will best run it. Intel needs to do this in order to lower its prices and stay the leader in the PC market. This is a must in order to increase the PC market to what it has been in the past.