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Marketing blitzkrieg for Pentium III

Intel says it will spend approximately $300 million to promote the chip, but the promotional onslaught is actually much costlier than that.

Intel said it will spend approximately $300 million to promote the Pentium III processor in 1999 in the biggest advertising campaign in the company's history, but the promotional onslaught is actually much costlier than that.

In addition to the ad campaign, Intel is aggressively working with hardware makers, software publishers, and content providers to ensure that applications and services that take advantage of the processor's multimedia enhancements come out sooner rather than later.

Excite, for instance, will come out with a 3D Web search tool that initially will be useful only for Pentium III owners.

Sabre Group is piloting an online commerce system for travel agents that takes advantage of the serial numbers incorporated on the Pentium III. Expect several video applications and CD recording packages tuned for Pentium III. "We took advantage of the instructions," said Peter Forman, CEO of Ligos, which makes video compression software. "There is a significant difference in performance."

Intel will not disclose the amount spent to nurture these efforts, but most believe it is a large number.

"Lots of zeros," guessed one source. "We've been working with Intel for eight months," said another. Talk City, which will host chat rooms accessible only to Pentium III users, has investment funds from Intel. "Intel approached us?" is how most companies explain their Pentium III product plans.

Although the resources spent on these efforts remains undisclosed, Intel admits it's a separate matter. The $300 million will go to TV and radio spots, billboards, and in-store promotions that feature Intel and the processor, said an Intel spokesman. It does not include funds that will be distributed to computer and software makers in the "Intel Inside" campaign.

The budget on this runs hundreds of millions annually, said Dean McCarron, principal at Mercury Research. The total also doesn't include funds or technical support provided to these companies to tweak their products for the Pentium III, the spokesman said.

The company's developer drive stems largely from the history that surrounds the launch of the Pentium MMX chip. Pentium MMX chips were designed to boost the multimedia performance on applications. Unfortunately, few existed at the time.

"When we got to releasing MMX, we had ten applications that you just couldn't get. [For the Pentium III], we cranked it up in order of magnitude," said Pat Gelsinger, corporate vice president of the Desktop Products Group.

Competitive computer economics are also a consideration. With the popularity of sub-$1,000 systems, Intel has to find a way to convince customers to invest around $2,000 for a Pentium III system. The picture is further muddied by the fact that AMD's 3DNow offers similar benefits, said Nathan Brookwood, an analyst at Insight 64.

"If Intel does a really good job of creating demand for these enhancements and then can't meet AMD at the low end, it could benefit AMD," he said. One way around the dilemma is applications optimized for Pentium III.

Where's the beef? Video
So far, the benefits of the chip are coming on audio, video, and 3D. The Pentium III essentially improves the performance of the processor's floating point unit, which controls the complex mathematical functions that lies behind most multimedia applications.

"With something like video, [performance] doubles. Voice--big hit. Graphics--30 percent," said John Joseph, semiconductor analyst for NationsBanc Montgomery Securities. "Ordinary office users, however, will only see incremental improvements."

Vendors largely agree. Most state that the new chip does not give them new capabilities. However, it enhances what can be done on the Pentium II.

Software for recording CDs, for instance, is substantially improved, said Giacomo Biondi-Morra, vice president of business development at Audiosoft. "Before it [recording] was too slow for consumers," he said. "It's very CPU-intensive."

In addition to the floating point improvements, the Pentium III handles video data from main memory more efficiently than earlier processors, said Ligos' Forman and others. This leads to more frames per second as well as better viewing resolution.

Serial number coming to business
Some companies are adopting the controversial serial number feature. Currently, only about five companies are ready to release programs or applications centered on the serial number feature, said Intel's Gelsinger, but approximately 25 such programs will be up and running in the near future.

Sabre's program, for instance, will use the serial number as a way to establish the identify in transactions with travel agents, said company representatives. BackWeb, which specializes in Internet push software, will adopt the serial number plan to improve filtering of push information.

Talk City, meanwhile, will require visitors to provide serial number identification to get into chat rooms. At first, the serial number scheme will be used on chat rooms reserved for kids, but will be expanded to chat rooms set up to facilitate communication between business partners, said Jenna Woodul, vice president at the company.

While the serial number plan rankles privacy advocates, Woodul maintains it is one of the few ways to guarantee civility in certain chat rooms. "I have people who come into chat rooms and flood it with obscene materials and then get off," she said. Catching the perpetrators of these "drive by shootings" is difficult because these people will often have multiple user names and well as ISP accounts, making it difficult to stop them.

"A persistent identity makes all the difference in the world in the accountability level."