The new processor crop
Null - March 1, 2000
There's no full scale assault on fortress Intel Corp., but the mightiest microprocessor maker in the world is fighting skirmishes on its flanks, especially the high-end desktop and notebook computer markets.
Advanced Micro Devices Inc., Sunnyvale, CA, has moved from the fly-on-a-bull's fanny kind of annoyance to actually threatening market share at the high-margin, high-end of the microprocessor market with its Athlon chip.
Then there's Transmeta Corp., based in Intel's backyard, Santa Clara, CA. The microprocessor design upstart recently launched its low-power Crusoe chip, which is aimed at the mobile market, including notebooks and other devices.
"Intel is being buffeted from several directions," says Max Baron, a semiconductor analyst with Cahner's In-Stat Group. "Some of these (competitive threats) are stronger today, and some are more about the future."
Baron and others agree that Athlon is the immediate threat. Intel has always made its money off the high-performance desktop market, where margins are 50% and higher. AMD and National Semiconductor Corp.'s recent forays into the low end of the microprocessor market merely awoke the sleeping giant. Intel simply under-priced the others, resulting in profits for no one.
The higher-powered Athlon is a different story. At the January Consumer Electronics show in Las Vegas, Compaq Computer Corp., Houston, demonstrated a computerized "smart" refrigerator powered by a 700-megahertz Athlon. "We're going to see AMD and Intel play leapfrog in performance at this high end," predicts Baron. "Intel hasn't been able to deliver the number of chips people want, so AMD is taking over the part of the market Intel can't supply."
As Baron sees it, the PC market has become polarized into dirt cheap and high end. There's no longer a market for the mid-level in performance and features.
Michael Slater, principal analyst at Cahners MicroDesign Resources, Sunnyvale, CA, cautions that AMD is capturing a mere 1% of the market. However, he agrees that Athlon is important to the high end because it introduces competition, something Intel hasn't had in a long time.
Athlon also gives Intel a run for its money in notebooks, another high-margin market. AMD supplied about 8% of the laptop market last year, Baron estimates. "A high-end laptop chip brings good money, much like a high-end desktop chip," he says.
In part to parry AMD's thrust into the mobile market, Intel recently introduced SpeedStep technology, which allows 600- and 650-MHz Pentium III notebooks to function at desktop speeds. Intel said its research showed that end users of laptop computers most often complained that CPU speed was not equivalent to similar chips on the desktop.
SpeedStep can automatically switch frequency and voltage depending on whether the notebook is plugged into AC power or running on batteries. When plugged into AC power, the machine switches to maximum performance, increasing voltage to 1.6 volts and speed to the actual speed of the processor-600 or 650 MHz. When operating on battery, the machine optimizes power usage and runs at 500 MHz and 1.35 volts.
Sam Wilkie, an Intel product marketing manager, says that many companies are moving most of their end users exclusively to notebook computers. They need the kind of power management and speed features SpeedStep offers.
Mobility is what will drive Transmeta, which recently unveiled its Crusoe microprocessor. The launch followed five years of tight secrecy around the start-up.
Transmeta says Crusoe is a revolutionary approach to x86 microprocessor design. It is half hardware and half software. The company has produced a 700-MHz chip that has the power of a Pentium III 500-MHz chip, but only dissipates one watt of power.
Slater says Transmeta is aiming its product, which has few buyers so far, at the Web appliance and notebook computer markets. He notes the technology is more sophisticated than Intel's but adds that its promise is as-yet unfulfilled. "If it delivers what it says it will, it could become a competitor in the mobile market," says Slater.
As one would expect, Intel publicly downplays the impact of AMD or Transmeta. As for the latter, Wilkie notes the Crusoe chips aren't even available yet for benchmarking. "We'd sure like to see one," he adds.
You bet they would. -Bill Roberts