February 26, 1999 10:40 AM PST

PIII debuts amid controversy

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Intel's newest chip, the Pentium III, will debut today amid a controversy that even a $300 million marketing campaign might not be able to surmount.

The new Intel processor has probably gained more attention for protests over the company's decision to insert an ID number into the chip than for its modest performance enhancements, which include new multimedia instructions and faster speeds.

Today, all major PC makers are announcing surprisingly inexpensive systems based on the 450-MHz version of the chip. IBM, for instance, is announcing a business system for $1,499, as is Gateway (see chart).

Still to be seen is whether the objections raised by privacy advocates before the chip's introduction about the possible misuse of the serial code ID feature will result in stunted sales or whether the problem is as serious as some groups claim.

Intel executives may be feeling a sense of d?j? vu. The company has faced this type of public relations battle before: In 1994, the Pentium processor was sullied by an obscure floating point bug, although overall sales were not really affected.

Intel has said it will spend approximately $300 million to promote the Pentium III processor in 1999 in the biggest advertising campaign in the company's history. In addition to the ad campaign, Intel is aggressively working with hardware makers, software publishers, and content providers to ensure that applications and services that take advantage of the processor's multimedia enhancements come out sooner rather than later.

Intel chose to pull Pentium III ads for the SuperBowl in January, although the company denied the decision was tied to the serial code flap.

The feature generating the protests--including a demand filed today by the Center for Democracy and Freedom for an Federal Trade Commission investigation--is an identifying serial code hardwired into each chip.

Designed to provide an extra layer of security for e-commerce transactions and aid information technology managers trying to track computers, the serial code could also be used by marketers and those with nefarious intentions to track users based on their Web behavior, privacy groups argue.

Inexpensive Pentium III computers launch today
Company Computer Chip speed, in MHz Price*
Gateway E-Series 500 $1,999
Hewlett-Packard Brio 450 $1,649
Dell Dimension 450 $1,799
IBM 300GL 450 $1,499 (without monitor)
Toshiba Equium 450 $1,499 (without monitor)
iDot 450P3BX 450 $999 (without monitor)
Source: Various
* Price varies according to configuration
In response to the protests, Intel developed a software utility that allows users to enable or disable the serial code. PC makers are also taking this one step further by turning off this feature in the boot-up software, called the BIOS. The latter is considered a more secure method than the software utility.

A German technology publication c't reported it had discovered a way to read the serial code without a user's knowledge or permission. Intel has confirmed that under certain circumstances, there is a short window of opportunity when a hacker could read the serial code, even if the user had previously turned the number off.

Intel countered that such a hack is so sophisticated as to be unlikely. And, if the person hacking your system is that adept, you may have bigger things to worry about, the company argues.

Discussion of serial code privacy issues and potential breaches of security have remained theoretical until the chip's release. But, as the with the earlier Pentium bug, the mere perception of a problem is what often drives these controversies.

"The positive aspect [of the serial code] is being able to have more secure identification of users, but it's not clear that there's a whole lot of benefit there--and it's hard to believe that there's no way to hack this," said Linley Gwennap, a processor analyst at MicroDesign Resources.

Other industry observers are doubtful that the brouhaha will actually keep people from buying Pentium III computers.

"I think it will blow over," said Scott Randall, managing director of Soundview Technology Group, at this week's Intel Developer's Conference in Palm Springs. He believes the serial code is a good extra layer of security for online transactions. Randall thinks that Pentium III sales will be strong, driven by Intel's mammoth marketing campaign.

Elizabeth Marks, product manager for Equium desktop computers at Toshiba, noted that the only factor which may slow sales is the delay in applications that can take advantage of the new Pentium III multimedia instructions. "As with all technology announcements, there is a lag time between when the technology is available and when the software is optimized to take advantage of it."

"There may be a weaker demand in the beginning until the software is optimized," she said.

New systems galore
Whatever controversy the ID feature stirs, it won't stop PC makers from flooding the market with new systems.

In addition to mainstream PCs, computer vendors are propagating the new Pentium III chip across their server and workstation lines.

IBM's cutting edge
Pentium III system IBM, Compaq, Hewlett-Packard (HP), Gateway, and Dell are among the companies revving up their products with the new chip.

Servers and workstations, which often spend less time idly waiting for the next user command, benefit more than ordinary systems from processor improvements.

Gateway reports speed boosts of up to 12 percent in its servers and HP up to 10 percent in its servers going from the 450-MHz Pentium II to the 500-MHz Pentium III. Those speed improvements are close to what would be expected just from the clock speed increase.

But many of the real performance improvements of Intel's Pentium III chip won't show up until later this year, when the chips benefit from a smaller, faster design and from a 256 kilobyte on-chip cache.

However, HP's workstations will see doubled performance in some three-dimensional graphics tasks because of use of Evans & Sutherland's AccelGalaxy graphics card, the company said. The card can take advantage of new instructions in the Pentium III.

Compaq has updated its ProLiant servers with the 500 MHz versions of the new chips, the company said. The machines, available today, can be bought as or upgraded to two-processor versions.

IBM will use the chips in its new workstations and servers, which will be available immediately, said an IBM spokesman. Included in IBM's plans will be a four-processor version of IBM's Netfinity server, the spokesman said.

IBM will offer a two-processor Pentium III IntelliStation workstation for about $2,800. The new workstations also include a graphics processor designed and manufactured by IBM. This is the first time IBM has used its own processor in its IntelliStation line.

Gateway will refresh its server and workstation lines, claiming a performance boost of up to 12 percent going from the 450-MHz Pentium II to the 500-MHz Pentium III. A basic 7200 server with a 450-MHz Pentium III and a 4 GB hard drive is priced at $2,497.

In addition, Gateway's entry-level workstation will come with a 500-MHz Pentium III, 128MB of memory, a 9GB hard drive, and a 19-inch monitor, at a cost of $3,599.

Dell's Precision workstations will benefit from the new chips, with an entry-level model using the 450-MHz Pentium III starting at $1,997.

The Pentium III will be spread across Dell's PowerEdge server lines. A basic PowerEdge 1300 begins at $1,699, while the more expandable 4300 starts at $5,395.

Hewlett-Packard's workstations have been pumped up with the 500-MHz version Of the chip. A model with a 500-MHz Pentium III, 128 MB of memory, a 9 GB hard drive, and a lower-end graphics chip costs $3,460.

HP will put the new Pentium III chip in its server line, as well.

 

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