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Cyrix heads for low end

Cyrix challenges Intel in the low-priced PC market, as it prepares to stake out its own territory.

Cyrix (CYRX) is challenging Intel (INTC) in the low-priced PC market, as it prepares to stake out its own territory.

Cyrix will attempt to define a new category of low-priced PCs based on its all-in-one chip, the GX86. Cyrix is expected to receive high-profile support from Compaq, when the number-one PC maker announces low-priced systems based on the chip.

"The fact that Compaq is doing a system with the chip speaks to the viability of the processor," said Dean McCarron, a principal at Mercury Research, a marketing research firm in Scottsdale, Arizona.

"This [low-end] market has not been exploited and the potential base of buyers is much, much larger [than the high-end PC market]," added McCarron.

The GX86 integrates chip components which are usually delivered separately, such as a graphics chip, allowing vendors to design low-cost systems. The GX86 is expected to run about as fast as a midrange Pentium processor.

Cyrix will also supply GX86-based systems to PC vendors, who will then put their own brand name on the boxes, according to Cyrix. The "reference" design that Cyrix uses calls for a VCR form factor that looks much like an audio-video component, according to the company. The systems should be priced between $700 and $1,000.

But Cyrix won't stop here. The company is also expected to ship an MMX-compatible processor called the M2. The M2 is essentially an MMX upgrade of Cyrix's current 6x86 processor.

"Cyrix will continue to position the 6x86 against the [traditional Pentium], while the M2 will hold a similar position against the P55C [an MMX-enabled Pentium]," writes Michael Slater in the Microprocessor Report, an industry newsletter.

If these processor strategies go well for Cyrix, 1997 should prove to be a better year than 1996, since sales of the 6x86--the chip Cyrix was pinning its hopes on in 1996--took off more slowly than expected.

"In 1997, Cyrix will regroup and emerge as a strong competitor with MMX processors," said McCarron. Cyrix could ship between two and three million processors overall in 1997, compared to just over one million in 1996.

But everything is relative. Intel shipments dwarf Cyrix's numbers: Intel is expected to ship as many as 90 million processors in 1997.