Intel looks to Prescott, emerging markets for '04

Intel plans to aggressively introduce 90 nanometer processors in 2004, and expects continued growth in shipments of wireless chips and high-end server processors as it looks to emerging markets for increased demand, executives told financial analysts in New York Thursday.

Shipments of Prescott, the 90 nanometer successor to the Pentium 4, will account for 60 percent of all Intel desktop processors by the second quarter of next year, and a version of the technology will be incorporated into the Celeron product line, Intel President and Chief Operating Officer Paul Otellini said. Prescott's clock speed will hit 4GHz by the end of next year, he said.

Prescott will ship in this year's fourth quarter, but systems based on the chip are unlikely to have much impact if any on the holiday shopping season.

Otellini and Intel Chief Executive Officer Craig Barrett updated the analyst community on a number of Intel's products, and outlined some of the Santa Clara, California, company's strategies for growing revenue outside of industry growth.

Because of the dominating presence Intel enjoys in the PC and low-end server markets, it will be hard for the company to grow any faster than the general market in those areas, Barrett said. In order to achieve the kinds of growth rates that make financial analysts salivate, Intel plans to pursue business in emerging markets such as China and India, and emerging technologies such as the WiMax metro-area network wireless technology, he said.

Most of Intel's growth already comes from outside the U.S., and that trend will likely continue over the next several years, Barrett said.

Intel plans to ship its first WiMax chips by the end of the year, Otellini said. WiMax, based on the 802.16 standard ratified by the Institute of Electrical and Electronics Engineers Inc., is designed to wirelessly connect users over an area measured in square miles, rather than the more limited coverage afforded by Wi-Fi wireless access points and devices today.

The company will also ship its first chip that combines Bluetooth and Wi-Fi in 2004, Otellini said. Intel recently purchased Mobilian Corp., a company that has developed a Bluetooth/Wi-Fi chipset. Bluetooth is a short-range wireless technology promoted by a wide range of vendors.

Mobile technology has been a huge growth area for the company, as many consumers and businesses have replaced older desktop PCs with notebooks, Otellini said. Dothan, the 90 nanometer follow-on to the Pentium M, is also scheduled for introduction next year, he said.

On the server side of the business, Otellini announced that Intel has now shipped 100,000 Itanium 2 processors, comparable to the unit volumes shipped by companies such as Sun Microsystems and IBM that also make processors for high-end servers, he said.

The road to Itanium's adoption has been bumpy, but its growth has come at the expense of Sun, Otellini said.

"Sun, as Craig (Barrett) recently said, is now the Apple (Computer Inc.) of the server world. They're not in a position to drive standards," Otellini said, alluding to the deal that Sun announced Tuesday to adopt Intel competitor Advanced Micro Devices Inc.'s Opteron chip in a new line of low-end servers.

While Intel spent the majority of its time lauding its position in the processor marketplace, it also acknowledged that its decision to raise flash memory prices in the beginning of 2003 cost it both market share and revenue, Otellini said. The company hopes to make up ground in flash shipments with the rise of multilevel cells, which combine flash and SRAM (static RAM) memory chips into a small package designed for smartphones and high-end PDAs (personal digital assistants), Otellini said.

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Tom Krazit

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