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By Richard Morochove
First published April 29, 1999
Can Intel make a go of it in the Internet Service Provider (ISP) business? Last week the world's largest chipmaker announced it would build large data service centres aimed at servicing the Internet needs of large companies and smaller ISPs. Each data centre would contain thousands of Intel PCs to service web sites and handle e-mail.
What does the chipmaker know about providing services? Intel compares the skills needed for the data centre business to the methods required to run its billion-dollar chip fabrication plants 24 hours a day, seven days a week.
Yet I see this more as a move to diversify Intel's business. The sale of microchips is directly dependent upon the sales of PCs. Even in the best of times the PC business is cyclical, surging near the end of each year due to holiday season sales while slipping back in the early months of the following year.
The Internet service business promises more steady demand all year 'round. Furthermore it's booming as more businesses open up electronic storefronts to sell their wares on the Web.
I also think this is also a sign that Intel doesn't believe the current boom in PC sales will go on forever. Worldwide PC sales increased by a healthy 17 to 19 per cent in the first quarter this year, depending on which market researcher you believe, the Gartner Group or IDC. Yet Intel has been hit hard by cheaper chips from AMD and National Semiconductor's Cyrix division and the trend to lower-cost PCs.
Intel's new 466 MHz Celeron chip, announced earlier this week, is designed to blunt the impact of the competing chips by offering faster performance to home computer users. The new chip sells for $169 U.S. in quantity, so it will make it into home PCs selling for less than $2,000.
Intel is walking a tightrope, introducing a faster Celeron to stave off the competition, yet holding back on some new features to avoid cannibalizing sales of its higher-priced chips. For example, the SIMD (Single-Instruction, Multiple-Data) instructions that enhance multimedia capabilities, particularly on the Internet, are currently available only on the Pentium III chips. Intel will eventually incorporate SIMD into the Celeron line, but not this year, to avoid cutting into profitable Pentium III sales.
While computer models featuring the Celeron 466 should be in computer stores by the time you read this, another Intel chip announced at the same time won't be available until June.
The Intel 810 chipset is aimed at motherboard manufacturers that want to save money by integrating graphical capabilities for better 3D graphics without an add-on board. The new chip also allows better software control of modems, DVDs and PC audio. You won't get better performance using this chip, but it will shave manufacturing costs, cutting perhaps $100 off the retail price of a PC.
The Intel 810 also drops support for the venerable ISA (Industry Standard Architecture). There are still millions of ISA option boards in use, and many people re-cycle usable boards by removing them from their old PC and slipping them into the new one. Intel's making either a gutsy move or a stupid one by cutting off this option with its new chip.
Removing space for the boxy ISA slots makes way for PCs that look like nothing you've seen before. Intel's trying to boost the sales of PCs that use its chips by encouraging PC makers to experiment with wild new designs.
If you think Apple Computer's iMAC looks strange, a teardrop all-in-one PC available in several colourful models, you'll be bewildered by Intel's concept PCs. These do away with the familiar beige box in favour of brightly coloured Aztec pyramids and leaning towers.
I don't know if I'd feel comfortable with a lime-green, rocket-shaped PC on the desk in my office. Yet they could be just the right touch for a college dorm room. You'll see some of these cool designs make it into computer stores in time for back-to-school sales this fall.
Notebook computers have lagged the performance of desktop PCs for some time. They'll move closer to speed parity as a result of Intel's new "Geyserville" technology that shifts supply voltage to more smartly manage power.
Using the new technology, when you plug your notebook into AC power it will operate at close to the speed of a desktop unit. When your notebook is on battery power, the speed will ratchet down to maintain long battery life. Notebooks using Geyserville will pass the 500 MHz. mark later this year.
Next month we'll see new uses announced for the StrongARM processor. Intel acquired the manufacturing rights for this low-power chip (formerly used in Apple's Newton handheld) when it purchased a fabrication plant from Digital Equipment Corp., prior to its takeover by Compaq. Look to see the StrongARM in a new generation of handheld PCs, cellular telephones and automobile PCs. CW
Richard Morochove, FCA, is a Toronto-based computer consultant.
Copyright ©1999 by Morochove & Associates Inc. All rights reserved. This work may not be copied or distributed by any means without our prior written permission.
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