May 15, 2003 12:39 PM PDT

Intel gears up for Prescott, wireless

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Intel is on track to come out with a new generation of desktop chips and improve its notebook processors by the end of the year.

Speaking at the company's spring analyst meeting in New York on Thursday, Intel President Paul Otellini stated that Prescott, the company's next big desktop chip, and Dothan, a faster version of the most recent Pentium-M, will appear in the second half of 2003. Both chips will be made on the 90-nanometer manufacturing process.

Company executives also reiterated Intel's now familiar strategy of providing silicon and other components for a wide variety of computers and communications devices. The Santa Clara, Calif., chipmaker will continue to chase market share in both the home and business markets, in part by advancing its manufacturing capabilities and by incorporating R&D breakthroughs faster than competitors do, executives said.

"I would certainly like to see the economy grow, but I think we can grow (overall)--even in a flat economy--by taking market segment share," said Intel CEO Craig Barrett.

In contrast to sales in slow economies in the developed countries, sales in emerging economies such as China continue to grow, executives said.

Wireless is beginning to spark the entire technology industry, they added. Manufacturers are shipping 27,000 wireless access points a day--making three every second--according to data provided by Intel, which is selling chips for these access points. This expansion of the wireless infrastructure should lead to increased sales of notebooks, as well as a rise in sales of servers to wireless carriers.

"Wireless is the next big technology," said Barrett. "The whole concept of wireless and the whole concept of broadband is taking off like mad."

Slicing chips
In desktops, the arrival of Prescott should place competitive pressure on rival chipmaker Advanced Micro Devices. The chip is expected to contain 1MB of performance-enhancing cache, the same as AMD's Opteron. However, Prescott will be far smaller than Opteron.

The size of a processor relates directly to its profitability, because the smaller the chip, the greater the number that can be squeezed out of one wafer. For the past two years, Sunnyvale, Calif.-based AMD has been claiming that it will have a chip production cost advantage over Intel, because its chips will be smaller. Now, it appears that Intel may enjoy an advantage in size--at least temporarily.

"There is this product called Opteron out there kicking around," said Otellini, in a fairly rare break from Intel's traditional policy of not discussing AMD or its products by name. "Opteron's die size, with 1MB of cache, is twice that of Prescott."

AMD won't move to the 90-nanometer process until next year; only then will it be able to shrink the size of Opteron. It plans to come out with a desktop version of the chip, called Athlon 64, in September. Because of the difference between AMD and Intel's manufacturing capabilities, Athlon 64 will likely be larger than Prescott, have less cache, or both.

Pentium-M at a Glance

Speed: 900MHz to 1.6GHz

Transistors: 77 million

Cache size: 1MB

Bus speed: 400MHz

Next version: Dothan

Source: Intel

In notebooks, Intel expects that Centrino--a bundle that includes a Pentium-M processor, a wireless chip and a chipset--will become more widespread.

"It will be impractical to purchase a notebook without wireless by the end of the year," said Otellini. "We are selling into a hurricane of demand."

Dothan, the upgrade to the Pentium-M for notebooks that came out in February, will launch as part of the Centrino bundle. In addition, Intel will come out with a Wi-Fi chip that can connect to 802.11a and 802.11b networks in the third quarter. A similar chip compatible with 802.11b and 802.11g technology is set to arrive in the fourth quarter. Currently, Centrino only comes with an 802.11b option, although many PC makers are matching the Pentium-M processor with non-Centrino Wi-Fi chips.

In the second half of 2003, Centrino notebooks will also begin to feature backlight image adaptation--designed to reduce the amount of energy it takes to run a screen--and improved power management technology for graphics chips. Both of these should extend battery life, said Otellini.

The spread of wireless technology and the growing popularity of notebooks are also energizing a new trend of "white book" notebooks. For years, system integrators have sold "white box," or unbranded, PCs to small and medium-sized businesses. Now, with the help of Taiwanese contract manufacturers, system integrators are moving into the unbranded notebook space. By the end of 2003, roughly 120 integrators will be selling Centrino white books, Otellini said.

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Echoing the remarks of IBM's Sam Palmisano yesterday at Big Blue's analyst meeting, both Barrett and Otellini said that it was difficult to predict the near-term outlook for the technology industry, but that the long-term trend looked sound. Corporations seem committed to using technology to improve productivity, they said.

The corporate PC base, which last got upgraded in 1999, is also getting old, which could begin to spark some upgrading, Otellini said.

At the end of three years, things start breaking down, he said. "It is not coincidental that PC warranties last three years."

In the home entertainment market, the emergence of the PC as an entertainment device will continue. Sean Maloney, general manager and executive vice president of the Intel Communication Group, said that the iTunes Music Store unveiled by Apple Computer recently is "one of the most significant moves toward the legitimization of this (music downloading) system to date."

 

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