Tech Industry

High-end notebooks, low-end sales

Notebook manufacturers are being pulled in opposite directions, toward the market's high and low ends.

Notebook manufacturers are being pulled in opposite directions, toward the market's high and low ends.

With today's release of the 300-MHz Pentium II processor for portables, the majority of Intel-based notebook makers will shift to an all-Pentium II lineup. But one of the hottest segments of the market seems to be at the low end, where functions are fewer but prices are cheaper.

The 300-MHz Pentium II chip essentially shifts Intel's portable processor lineup closer in performance to its desktop chips--though the distance is still appreciable. (Click here for detailed specifications of the new notebooks.)

The chip will also be the first mobile processor to take general advantage of the Accelerated Graphics Port (AGP), an architecture introduced last year on desktops that bolsters graphics processing by creating a separate bus, or data path, for graphics information. A new mobile module from Intel has simplified the process of incorporating AGP. (Intel is an investor in CNET: The Computer Network.)

Still, less-expensive machines are outpacing higher-end sales throughout the notebook market. Lower-priced notebooks account for roughly 70 percent of business notebook sales, according to Mike Gumbert, chief operating officer of Insight, a large corporate computer dealer.

"There is a huge pent-up demand for the low end of the market," he said. "High-end notebooks are fine, but that's not where the volume is."

Rivals echo his sentiments. Whenever a $1,399 notebook goes on sale, it sells out within hours, dealers say, while those above $1,600 are relatively easy to find.

Overall, notebook sales have been slowing, especially when compared to their desktop counterparts. Annual growth in unit sales of desktops outpaced notebook growth in the second quarter, according to both International Data Corporation and Dataquest.

Part of the reason is the price differential. Notebooks with 233-MHz Pentium II chips most selling for $2,000 and above while the 300-MHz systems sell for between $3,600 and $5,000. By contrast, a fully loaded 450-MHz Pentium II desktop sells for around $2,200. A 300-MHz Pentium II system can be had for $1,200.

But judging by lines that will debut this week, manufacturers are undeterred and venturing further into the high end. A host of companies are incorporating the Pentium II into their current lines while others, such as Compaq Computer and Dell, are releasing new, thinner notebooks with larger screens.

Compaq is unveiling two new lines of slim notebooks to go with Intel's announcement. To compete with IBM's 560 ThinkPad line, the Houston manufacturer is releasing the Armada 3500, a slim notebook with a 266-MHz or 300-MHz Pentium II and 12.1- or 13.1-inch screens. Prices start at $3,299. In addition, Compaq is debuting the 300-MHz Armada 6500, an update of the Ultra2000 notebook inherited from Digital Equipment.

Moreover, Compaq is incorporating the 300-MHz Pentium II across its product lines. An Armada 1700 with a 14.1-inch display, a 300-MHz Pentium II and 64MB of memory will start at $4,999, sources said.

Hewlett-Packard, meanwhile, is using the graduation to Pentium II to simplify its product lineup. The tiny OmniBook 800 is no longer being made, although HP is looking at other products for the mini-notebook space, said Greg Munster, director of product marketing for mobile computers at HP.

HP will also roll out its 3100 OmniBook line into the 2100 value notebook line. The 2100 comes with either a 12- or 13-inch screen and accommodates processor speeds from 233-MHz to 300-MHz.

HP is also using the new chip in the OmniBook 7150, a high-end corporate laptop, and will likely introduce a 300-MHz version of its slim 4100 OmniBook, Munster added.

"We're making a full transition to Pentium II," he said.

Among direct marketers, Gateway is using the chip across its notebook line, while Dell has rolled out the Inspiron 7000. The new system ships with a 15-inch active matrix display, the largest available on a notebook. (See related story)

Dell has also released a version of its Latitude notebook with the new chip. A Latitude CPI D300XT with a 300-MHz Pentium II, 64MB of memory, a 4GB hard drive, and a 13.3-inch active matrix screen sells for under $3,200.

Micron will move the new Intel chip into its Trek and GoBook notebooks, sources said. The high-end Trek with a 14.1-inch display and 64MB of memory will be priced at $2,999, while the GoBook ultraportable with a 12.1-inch display will be priced at $3,099.

Toshiba is making provisions in its Satellite 8000 and Portege 7000 line for the 300-MHz chip, and IBM will roll the chip out in the 380-, 600-, and 700-series ThinkPad, sources said.

The new chip comes in three different packages at three different prices. In the mini-cartridge form factor, the chip costs $637. In a standard mobile module, the chip, complete with chipset, sells for $710, while in the newer module that can handle AGP connections, it costs $715.

Intel has also improved some of the power management features with Quick Start, a new technology which drops processor power consumption when the notebook is idle.

The new chip, however, like most Pentium IIs, consumes a lot of energy, especially in comparison to its MMX predecessors. The processor consumes 7.8 watts of power without counting the L2 cache. The 226-MHz Pentium MMX chip consumed 5.3 watts. Separately, the new 300-MHz chip will be available on a new "mobile module," a modified circuit board that can accommodate different generations of processors as well as AGP.

The module was introduced last year with the "Tillamook" generation of Pentium MMX notebook chips as a way to simplify notebook design. Because one module can accommodate three or more successive chips, notebook designers don't have to change their products much to accommodate chip upgrades.

The new module will allow notebook manufacturers to carry the same designs through at least two more chip upgrades.