Intel's Dothan sets sail

As expected, Intel launched three new Pentium M processors--the 735, 745 and 755, running at 1.7GHz, 1.8GHz and 2GHz, respectively. The chips are the first to bear a new naming scheme focusing less on the clock speed and instead taking into account other performance characteristics, such as cache memory and bus speeds.

The chips are also the first produced with a new 90-nanometer manufacturing process. Intel originally hoped to launch the new design, known as Dothan, in February, but delayed the launch because of glitches.

A year after launching the Centrino brand for business notebooks, Intel said it is taking the brand into the consumer arena--a segment of the market that is seen to be growing faster than the overall market.

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"The corporate segment did very well with Centrino," Intel Vice President Anand Chandrasekher said at a launch event at SBC Park, the Wi-Fi-equipped home field of the San Francisco Giants baseball team. With more consumers buying notebooks and setting up home networks, Chandrasekher said, there is a clear opportunity to move Centrino into the consumer market.

"Clearly, wireless homes are happening," Chandrasekher said. "We think the consumer opportunity is now within reach."

He cited a forecast from Gartner that shows notebook sales growing at 17 percent over the next five years, with the consumer market growing at 20 percent and business notebooks increasing at 15 percent.

At the event, retail executives from Circuit City and Best Buy touted the growth they're seeing in notebook sales.

"We really saw last year as a breakout year in the notebook space," said Kevin Winneroski, a business team leader at Best Buy. Even after strong sales the past five years, Winneroski said, there is more room for improvement, given that just 15 percent of households have a laptop, compared with 66 percent of homes that have a desktop PC.

One of the challenges, said Circuit City's Brian O'Connell, is that there are so many more choices when buying a laptop, where things like screen size and battery life are added considerations. "That is putting a challenge on the consumer," he said.

A number of retailers, with some marketing dollars and urging from Intel, plan to separate out the thin and light Centrino notebooks from the less expensive but bulkier desktop replacement machines.

"It's two different customers," said Henry Chiarelli, divisional vice president at CompUSA. Chiarelli noted that his store already tries to advertise the two types of machines separately and is working to make sure they are more physically separated as well.

Others are making similar moves. Circuit City, for example, plans to change the way it markets laptops, separating notebook machines into three categories: entertainment, mobility and productivity.

Intel was encouraged to push for the separation after an experiment by British retailer Dixons showed positive results. In the past, Intel has used some of its marketing dollars for various retail efforts, but the move to push physical separation for one class of products is a fairly novel tactic.

"It's not just about selling Centrino, which of course we want to do," said Karen Regis, director of mobile marketing programs for Intel. Regis notes that most of the people that buy the bigger notebooks are first-time buyers. Such buyers often don't take battery life into account when buying a laptop but are disappointed once they buy the machine.

Intel hopes that separating out the different kinds of notebooks will lead consumers to make sure they are getting the kind of portable PC they want. "It's hard for consumers in stores where they are all cluttered together," she said.

But Intel has a long way to go, analysts said. Market researcher Current Analysis notes that for the week ending May 1, Centrino made up 11 percent of retail notebook sales, a small fraction of Intel's overall market share and roughly the same percentage as six months ago.

The challenge is that a 1.8GHz notebook with Centrino costs more than some 2.8GHz systems, says Current Analysis senior analyst Sam Bhavnani. That doesn't jibe with America's bigger-is-better worldview, Bhavnani said, noting that about 90 percent of notebooks sold at retail have at least a 15-inch screen and are bought by people that place little premium on battery life.

"It's going to really be a challenge to change that mentality," he said.