SAN JOSE, California--Intel acknowledged that it has licensed an underlying and hitherto proprietary piece of microarchitecture to an unnamed third party, loosening its stranglehold on the high-end computing market.
The licensing of the Pentium II's "P6 bus" technology, earlier reported by CNET, will subject Intel to competition in the chipset market for Pentium II computers for the first time. It may also, at least in one area, mollify Federal Trade Commission concerns that chip giant company unfairly wields its monopoly over its intellectual property. (See related story)
Paul Otellini, executive vice president and general manager of the Intel architecture business unit, told a PC Tech Forum audience in a keynote speech that a third-party chipmaker has been granted a license for the P6 bus and that this company will start to sell chipsets in the near future.
"We have concluded a license with a third-party company that will make chips," he said. "We will license to [other] companies...Our philosophy is value for value," Otellini added, implying that the licenses could come at a high cost.
A chipset works in tandem with the main processor and its bus, and together they constitute the core electronics in a computer. The P6 bus is the main data path for the Pentium II, a critical piece of the chip's intellectual property. The term P6 is usually used to describe the architecture that forms the foundation of the Pentium Pro, Pentium II, and future Pentium II-compatible processors.
Until recently, Intel has not licensed its P6 bus technology to third-party chipset vendors, giving it a virtual monopoly in the Pentium II-compatible chipset market. This control has drawn complaints from analysts as well as chipset vendors, while attracting the scrutiny of regulators. (Intel is an investor in CNET: The Computer Network.)
Otellini did not state the name of the company, but some sources believe one candidate is Standard Microsystems Corporation, a company that makes input/output (I/O) chips for the PC's main circuit board. Opti, a domestic chipset maker, is another likely possibility. Toshiba may also be another. Ultimately, several chipmakers are expected to license the technology.
Any of these may in the future license the P6 bus technology from Intel. Moreover, even if these companies do not get direct licenses from Intel, some are expected to try to bring P6 chipsets to market by partnering with IBM, which will insulate them from legal liability, sources said.
Otellini also used the occasion to implore PC companies to expand their product offerings and seek out growth opportunities.
For too long, PC manufacturers have been content to steal market share from each other and concentrate on cost cutting as a way to improve their bottom line, Otellini said. The market has changed, however, forcing computer vendors to focus on volume sales and market segmentation. If the industry is to continue to grow, PC vendors must begin to incorporate new technologies into the machines, such as voice recognition and ease-of-use technology, even though that will increase risk and cost.
"You will all have to worry about it to be successful," he said. "Otherwise, we are going to get anemic growth going forward...Growing this business is our collective responsibility."
Such a strategy would also force PC vendors to take a long view of the market. Nearly every successful technological initiative Intel has pushed forward has taken four years. PC vendors should therefore not expect immediate returns.
PC vendors have been reluctant to adopt new technologies, but some are moving forward nonetheless. Sony has adopted IEEE 1394, a plug-in protocol that will allow users to connect a variety of consumer electronic devices to the PC. 1394-based systems from Sony will start to appear in the United States later this year.
IEEE adds about $9 of manufacturing costs per machine, a seemingly small amount that has nonetheless caused some to balk. "$9 on the $799 PC is still a lot of money. $9 on the $1199 PC is OK," Otellini admitted.