Intel plans even faster chips -- but who needs them?

Intel over the next 18 months will beef up the performance of its desktop and notebook microprocessors with new and enhanced products. But unless everyday software applications used at work and at home place increased demands on processors, the chip giant may have trouble finding customers willing to pay the higher prices for its new offerings, an industry analyst said last week.

Late next year Intel is expected to introduce a chip code named Coppermine, which will take advantage of an advanced manufacturing process to boost the speed of the company's forthcoming Katmai processor to as much as 700MHz in desktop PCs, said Linley Gwennap, publisher and editorial director of Microprocessor Report and a noted industry analyst.

Intel has said it will unveil Katmai in the first quarter of 1999 with products running at up to 500MHz, but a company spokeswoman declined to comment on the existence of Coppermine.

Intel has already, however, demonstrated that the Pentium II processor core can scale to speeds as high as 700MHz. In March of this year, at the CeBIT trade show in Hanover, Germany, Intel demonstrated a system featuring a processor running at 702MHz.

The Katmai processor will include the next iteration of Intel's MMX instruction set, and is expected to improve the performance of 3-D and other multimedia applications.

For notebook users, Intel in the first half of 1999 will release a mobile version of its forthcoming Mendocino desktop processor. The mobile chip will likely incorporate 256K bytes of Level 2 cache on the same piece of silicon as the processor, and increase the clock speed of Intel's fastest mobile chips from 266MHz today to 333MHz, said Gwennap, speaking at a seminar put on by Microprocessor Report's publisher, MicroDesign Resources, last week.

Later next year, Intel is expected to release a version of Katmai for notebooks, though clock speeds for those chips will lag behind desktop versions of the product, chiming in at around 450MHz, Gwennap said.

But in line with Intel's strategy of introducing newer technologies at higher price points, the upcoming processors will not come cheap. The 700MHz desktop version of Katmai will likely sell to PC makers for a list price of around $US700 in 1000 unit quantities. By comparison, Mendocino, Intel's processor for the low-end desktop space, is likely to carry a list price of around $US200, Gwennap said.

Gwennap and other analysts say increasingly that levels of processing power offered by those less expensive devices are adequate for running everyday software applications, making it harder for Intel to ask users to ditch their current PCs for ones with more expensive chips.

"That's probably the biggest issue facing Intel today, and the biggest issue facing the PC market as a whole," Gwennap said.

If PC users don't see a noticeable performance gain running applications like Word, Excel and a Web browser, then they won't buy into the faster technologies, he added.

The issue is one that may affect other companies besides Intel.

A few prominent chip makers have decided to wait until mid-1999 to introduce a more advanced, copper-based manufacturing technology, in part because today's software doesn't require users to upgrade their computer systems, said Dan Hutcheson, president of VLSI Research in California, in a recent interview.

"The industry has got ahead of the customer, and now the customers are handing them out speeding tickets," Hutcheson said.

For Intel, maintaining sales of its higher performance processors is important because that is where the company derives most of its revenues, and where profit margins are greatest, Gwennap said.

For example, chips targetted at what Intel defines as the basic PC segment -- or desktops costing less than $1200 -- account for around 35 per cent of the vendor's total unit sales, but contribute only 15 per cent to Intel's revenues due to their lower selling price, Gwennap said. The company's performance desktop products, on the other hand, account for about half of the company's unit shipments today and bring in more than 60 per cent of its revenues, he added.

A few emerging technologies, such as 3-D graphics, and speech and handwriting recognition, may help drive demand for additional computing power if their use becomes more widespread. If software companies build those technologies into the operating system, or if they become common ways in which users interact with data, that could drive the demand for faster chips, Gwennap said.

"The software guys haven't been shooting high enough. But as the performance available becomes higher, someone out there will be smart enough to take advantage of it," Gwennap said. "Of course, if they're not Microsoft, that could be tough," he quipped.

Intel, meanwhile, will continue to improve its technologies in the hopes that such advances will lure users into buying new, better -- and more expensive -- microprocessors.

Many of the vendor's new products, such as Coppermine, will be driven by the next-generation 0.18 micron manufacturing technology that Intel intends to introduce in the third quarter of 1999, and which will replace the 0.25 micron technology that is becoming widespread today.

Coppermine will carry the chips vendor through to the first half of 2000, when Intel has said it plans to release Willamette, the code name for a new PC core that builds on the current Pentium II Deschutes architecture.

Some versions of Willamette will run as fast as 800MHz, industry analyst Gwennap said. And when the company moves to the next manufacturing technology after 0.18-micron -- 0.13 micron -- Intel will be able to break the hallowed gigahertz barrier with processors that run as fast as 1.2GHz, he noted.

When the mobile Katmai chip is introduced, the mobile Deschutes processors that make up the high end of Intel's mobile product line today will move down to serve the lower end of the notebook market, displacing the Pentium MMX chips that fill the low-end price point today, he explained.

For basic PCs, Intel has said it will supplement its Celeron line in the fourth quarter of this year with Mendocino -- a version of the current Covington chip with an added 128K bytes of on-chip cache. By the start of 1999, the Celeron line will be made up of 300MHz and 333MHz Mendocinos and a 300MHz Celeron without any Level 2 cache, Gwennap said.

Sometime in mid- to late 1999, Intel will release a 450MHz version of Mendocino, he added.

That lineup will carry Intel's low-end desktop offerings through to the first half of 2000, when the chip giant will introduce a version of the Katmai priced low enough for the basic PC segment. The chip is likely to include 128K bytes of on-chip Level 2 cache and is expected to feature clock speeds of 400MHz to 700MHz, Gwennap said.

Intel can be reached at http://www.intel.com/.

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