Graphics processors, which control the images users see on their screens, have improved at a frantic pace over the last three years and many are now as sophisticated--some packing in more than 20 million transistors--as the flashy Pentium III or PowerPC G4 central processors just hitting the market.
Some of the more notable examples include the Nvidia GeForce 256, which is packed with 23 million transistors and can crunch tens of billions of calculations per second. The Nvidia chip and its successors will rival the Emotion engine that will power Sony's PlayStation II, in sheer processing power, according to some analysts.
But Intel, by far the most powerful chipmaker, is stepping in to establish a 3D graphics market according to its own rules, seemingly by default after failing to make a dent as a supplier of standalone graphics chips. Intel officially entered the market for standalone graphics chips early in 1998 with its i740 chip and then retreated in August of this year.
Intel, however, is now including graphics as part of the chipset, a market which Intel dominates. Chipsets work in conjunction with processors to control basic PC functions. The "integrated" Intel 810 chipset, and the recently released 810e, include not only the traditional chipset functions but also graphics, an extra feature which PC makers will happily use--because of the low cost--to the exclusion of chips from current suppliers such as ATI and S3, according to analysts.
"By next spring, the majority of new PCs are likely to be using a chipset with integrated 3D graphics--most with Intel's name on them," said Linley Gwennap, writing in the Microprocessor Report.
This may spell trouble for some graphics companies whose chips are now used in the low-cost segment in particular. Mercury Research estimates that this integrated chipset-with-graphics market will grow from 5.5 million units in 1998 to more than 43 million in 2000 out of a total graphics chip market forecast of 145 million, according to Mercury. "Intel owns two-thirds of the chipset market, so you can guess what might happen," quips Mike Feibus, a principal at the market researcher.
Chips from companies like ATI and S3 "are the very [chips] being eliminated by [Intel]...As a result, Intel is likely to become the leading vendor of 3D-graphics accelerators within the next few months," Gwennap said.
He adds that this "transition is unusual: in many cases, PC users will see a decrease in performance when comparing the new integrated [Intel chips] with older designs" (because the integrated Intel design will use less advanced graphics technology than some of the stand-alone designs from graphics chipmakers).
This scenario could also hurt revenue for graphics chipmakers. "This trend toward integration at the low end of the market will keep total revenue in the graphics industry constant, or even cause it to decline somewhat over the next year," added Peter Glaskowsky, a graphics analyst at the Microprocessor Report.
Intel domination? Not so fast
Not everybody subscribes to this Intel domination theory. "I disagree. The graphics chipset market is still hotly competitive, and it is not clear to me that Intel can roll over them except at the very low end where there is a benefit to integration purely in cost terms," said Danny Lam, a principal at Fisher-Holstein, a chip consultancy.
"Intel has been singularly unsuccessful in competing on the basis of quality for their 3D, and they are doing it by brute force," he said.
Mercury Research's Feibus adds that the status of the graphics chip market is different than the chipset market back in the early 90s, which he says was ripe for takeover by an aggressive company like Intel. "The chipset makers were asleep at the wheel. I don't think you can say the same for graphics chip companies today."
"We agree with the trend towards integration of the [chipset] and graphics in the value segment. This is a major component of S3's overall graphics strategy," said Michael Buchanan, Director of Desktop Marketing at S3's Multimedia Division. "To this end, we have made significant investments in intellectual property."
Intel says that it is only responding to its customers'--namely PC makers'--needs. "The demand for chipsets with integrated graphics in the value and mainstream PC segments is growing at a phenomenal pace, and our customers have been asking us for help in hitting new price and performance points with their products," an Intel spokesperson said.
Consumers drawn to dazzle of graphics chips
Graphics, say many, define high-end computing. "Entertainment and information access are driving the growth of the PC market. These applications rely on advanced 3D graphics and digital video," said Andrew Wolfe, S3's chief technology officer. His company has its own plans for integration: taking chipsets from Via and combining them with its own graphics processors, due out later this year.
The overriding reason for improving graphics is that it draws in consumers: In short, if the average PC comes with the ability to generate stunning 3D graphics, that may be too much for many consumers to resist. "Our goal is to be able to render Toy Story and Bug's Life in real time," said Michael Hara, a vice president at Nvidia.
Speedy graphics chips, like faster Internet connections, can also provide relief for the data bottlenecks which still plague computers. "Applications such as word processors and spreadsheets are fairly trivial for most of today's desktop machines. However, there are several places that the typical user sees the computer slow down. The most common ones are network latency and graphics performance," said David Young, a supercomputer analyst at Auburn University.
They also offer a lot of bang for the buck. Despite their awesome processing power, graphic chips are dirt cheap. "The graphics controller has challenged the processor for complexity, using the same amount or greater number of transistors, using the same state-of-the-art [production techniques] and it is in the process of taking over even more of the computer's functions by incorporating the [chipset]," said Jon Peddie, president of Jon Peddie Associates, a marketing research firm which tracks the graphics market.
"All that and yet they sell for one tenth what a CPU [central processor] and they sell in greater quantity than CPUs," he added.
Though Intel's entrance into the low-cost integrated chipset market lessens this advantage, it is by no means a foregone conclusion that the processor giant can dominate and keep up with nimble graphics chip companies. "The graphics controller is what changes the most often," said Peddie.
Indeed, these companies have excelled at cranking out increasingly complex chips and addressing the needs of consumers becoming more attuned to the whiz-bang graphics of computers like Sega's Dreamcast or a high-end consumer box from Compaq.
"Today graphics chips are doing a lot of the processing needed for 2D animation, 3D rendering, shading, texture mapping. Thus the user...can see a real increase in performance with a machine that has a commodity processor, like a Celeron, bundled with a high quality video card, such as Nvidia's," said Young.
"The problem with spending a hundred dollars more for 33 MHz more in processor speed is that the average user doesn't experience a gain. However, if you spend 5 to 10 dollars more for a more advanced graphics processor, the benefit becomes immediately obvious," said Nvidia's Hara.
Also, maybe more importantly, it remains to be seen what many potential PC consumers will do when bombarded with advertisements and word-of-mouth about $200 game machines that deliver the superb graphics and fast 56-kbps modem speeds of much pricier PCs.
"Intel must be careful that its brand name does not become associated with inadequate 3D performance," Gwennap cautions in his report.
"Visual quality is such a simple, but emotional criteria. People like seeing better, prettier pictures," Nvidia's Hara asserts.