January 19, 2005 2:26 PM PST

Intel seeks lift from Centrino follow-on

When it comes to laptops, lightweight doesn't have to mean light on features.

And if Intel has its way, that means the great mobile migration of the last few years--during which consumers have moved from desktop PCs to the portability of notebooks--will continue in 2005.

The chipmaker unveiled on Wednesday a new version of its Centrino chip family for notebooks, a recipe it aims to use to boost the performance of lightweight wireless notebooks--mainly machines that weight about 5 or 6 pounds--making them more useful as everyday computers.

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What's new:
Intel unveils Sonoma, an update to its Centrino package for wireless laptops, packing in more power, which could prove tempting to a new wave of buyers.

Bottom line:
It's not just Centrino. Lower LCD prices are also helping make lightweight but potent portables more affordable. That could be just the thing to get consumers to shift from desktops and chunkier notebooks.

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The new laptop technology, sometimes referred to by its code name Sonoma, pairs a handful of slightly faster Pentium M processors with the Intel Mobile Express 915 chipset, a group of supporting chips code-named Alviso that incorporates a number of performance enhancements, including a faster bus and higher-performance graphics, as well as a Wi-Fi module. One of two modules, a dual-band 802.11b/g module or a tri-band module that allows a notebook to operate on 802.11a, 802.11b or 802.11g networks, are required for a machine to be sold under the Centrino brand.

Those features are bound to tempt a new wave of laptop buyers, according to PC manufacturers.

"You're going to see a lot of people who were buying value notebooks one or two years ago who are going to step up, and they're going to be extremely happy with the overall performance jump they're getting," said Will Diehl, senior director of mobile products at Gateway.

For Intel, this means an opportunity to sell a wider variety of chips for each computer. A substantial portion of Pentium M notebooks come with the full Centrino chip bundle. Currently, 60 percent of Centrino notebooks also come with the more expensive chipset available in the Centrino bundle that includes integrated graphics, a number that will increase with Sonoma, Mooly Eden, vice president of the mobility group at Intel, said at a Wednesday press conference in San Francisco. The company has also worked to make wireless technology easier to use.

"Two years ago, the attach rate for wireless was less than 10 percent," he said. "People would tell me, 'It is user-friendly. I'd say, 'It is user-friendly. You need a hell of a lot of friends to use it."

So far, Intel has garnered $5 billion off Centrino since it started reaching consumers about in March 2003, he added. Because notebook shipments are growing at about 16 percent annually, the number of notebooks in use will likely double from 2004 to 2008, Eden added. "I believe that everything eventually will be mobile," he said.

Intel and Centrino won't be the only driving forces behind the continuing mobile migration, he said. Prices on key components such as LCD panels have been falling as of late, helping PC makers lower their prices or offer models with larger screens.

"A lot of those trends, together with some of the performance (from Centrino)...are going to drive great growth rates in notebooks and will potentially start to cannibalize a lot of the desktop growth," Diehl said.

In the fourth quarter, PC shipments worldwide jumped a healthy 13.7 percent, according to market researcher IDC.

Notebooks have been especially popular with consumers recently, with unit retail sales growing at double-digit rates in the United States. During the 2004 holiday season, between Thanksgiving and Christmas, notebook sales jumped by 26 percent at U.S. retail outlets, according to preliminary figures from The NPD Group. Gartner, meanwhile, predicts that during 2005, notebook shipments will rise 16 percent to 54.5 million units. Consumer notebooks, it said, will total just more than 20 million units, up almost 20 percent from 2004.

But Intel can't count on hogging the market. Rival Advanced Micro Devices recently began talking up its Centrino challenger, Turion, and expects to release the lightweight-laptop chips in the first half of this year.

Weighing on their minds
Many of the more popular consumer notebooks lately have been larger, less-expensive machines, sometimes called desktop replacements. Intel has set out to change that with the new Centrino, which it aims to use to boost the performance of lightweight notebooks and thus make them more mainstream, at the same time that it captures a larger piece of the notebook market with the Pentium M bundle.

Although consumers have been able to purchase 5- or 6-pound notebooks for years, buyers typically had to make compromises to purchase those systems. A given 5-pound machine's performance is usually lower or its price higher than a heftier 7- or 8-pound model, which might have a higher-performance processor, a larger

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