Swing low…According to analysts at the PC Technology Forum Intel is struggling to compete in the sub-$1,000 PC market, with its Celeron microprocessor taking flak because of its performance. Tom Foremski reports on a market Intel is marching into the workstation high ground that used to be the preserve of performance fiends like the Alpha processor, but may be losing control of the personal computer lowlands where IDT and others are skirmishing for territory. This is the story that emerged from analysts and executives from US PC companies gathered at the recent PC Technology Forum. At the low end of the market, Intel is facing more competition than it has for many a year. IDT, in the vanguard of the attack, said that it will bring out later this year versions of its WinChip family of microprocessors with support for better 3D performance and, pandering to a specification drunk market, increased clock speeds. “Increasing clock speeds doesn’t mean that you have a higher performance,” pointed out Glenn Henry, senior vice- president at IDT “But the market demands it and that’s why we will bring out new versions with high clock speeds.” IDT’s main goal is to offer cheap Pentium compatible microprocessors for as low as $50 each, taking advantage of strong growth in the sub-$1,000 PC market. Intel is trying to compete in this sector, but so far, its Celeron microprocessors have been poorly received because of low performance. “Celeron is a lacklustre chip. But if Intel brings out Mendocino with its on-chip cache, that will be a much better product,” said Michael Slater, principal analyst at MicroDesign Resources. Slater pointed out that with Mendocino, Intel will face a challenge in keeping that chip in the low end of the market because it will be a strong competitor to Intel’s mid-range products. He added that Intel executive vice-president Paul Otellini conceded that Intel’s focus on microprocessors for specific segments is difficult. “You really have to understand the needs of each sector,” he said. But Intel’s focus on the Celeron low end market is very strong, “it is not a trivial thing for us. We have about 800 designers working on Celeron products,” he added. Intel is desperate to boost demand for more powerful PCs and has invested more than $750m in companies that are developing products and technologies that will drive demand for more expensive PCs. Otellini called for help in this process, warning that unless the entire industry gets together to drive the market as a whole, PC sales will be “anaemic”. Although still complex, the workstation end of the market is more likely to go Intel’s way. It is making a major push behind workstation class PCs especially as it prepares for the roll out of its 64-bit Merced microprocessor late next year. The company sees strong profit margins for workstation class microprocessors such as its forthcoming Xeon microprocessors which offer faster performance in workstations compared with the mainstream Pentium II microprocessors. “The workstation market is very exciting for us because it is showing large growth compared with Unix/Risc workstations,” said Otellini, speaking at the conference. “The prices for workstation class microprocessors are very good and will offset the lower prices for low end microprocessors.” Otellini said that although the workstation market represents a small part of Intel’s business, it has assigned more than 800 designers to work on future workstation microprocessor products. The chips and technologies developed for this market will then filter down into mainstream and lower end markets. Microprocessors such as Xeon offer workstation users very high performance through a Slot II module which has large amounts of cache memory and a faster bus. Intel is also working on chip sets for workstation class PCs that support faster versions of its Advanced Graphics Port which speeds graphics performance. Otellini also said that Intel is working on integrated microprocessor designs that could combine things like graphics processing on the chip for even higher performance. And Xeon microprocessors are also designed to be able to work together in multiple microprocessor based systems, which can dramatically increase workstation performance. Intel’s Pentium II microprocessors suffer in terms of integer and floating point performance compared with Risc microprocessors, especially the top performing Alpha microprocessor. But the introduction of the 64-bit Merced will change that performance comparison significantly and will drive Risc microprocessors out of the market, says Linley Gwennap, senior industry analyst at MicroDesign Resources. “Merced’s Epic (explicitly parallel instruction computing) can run applications in parallel and it offers very fast integer and floating point performance, which have been a weakness for the Pentium II,” said Gwennap. Compaq Computer’s acquisition of Digital Equipment also raises some questions about whether Compaq will continue supporting Alpha based workstations. “Compaq has said it will support Alpha-based systems but if Alpha offers little performance advantage over Merced, I can’t see it continuing that support long term,” Gwennap said. He added that Risc microprocessors will gradually fade away from the desktop market. The customer’s angle PCs designed for the living room could become a major market but industry observers pointed out that the marketing principles are different for the PC market. Potential customers are less concerned about what processor is inside the system than what it can do, and what the system features are. PC prices have been falling quickly over the last six months, but future price drops are likely to be small. “PCs are cheaper mainly because of sharp drops in the price of memory chips,” pointed out Mel Thomsen, senior analyst at MicroDesign Resources. “Hard drives are also cheaper and there is greater chip integration. But there is a limit to how much further prices can fall.” Thomsen added that low end PC prices have proved popular because of a lack of new software applications that require more powerful sys tems, making older PC designs “good enough” for most uses.