Intel hits the gas on Pentium 4

Intel expects improvements Andy Bryant, CFO, Intel

Intel intends to accelerate its Pentium 4 road map, cranking the clock speed of the chip past 2GHz before the end of the year. Although 2GHz-plus speeds have been expected for some time, Intel will likely introduce them sooner.

Introducing faster Pentium 4's sooner will allow the company to aggressively cut prices on existing chips, as its ultimate goal is not so much to offer the fastest PC processor but to drive Pentium 4 into all Intel-based desktop PCs priced at $800 and higher.

The move will increase the chip's presence in the mainstream part of the PC market while collapsing the current pricing gap between PCs based on Intel's Pentium III and systems based on the Pentium 4 processor. The end result will be a full transition from Pentium III to Pentium 4 on the desktop before the end of the year, said Paul Otellini, executive vice president and general manager of Intel's Architecture Group.

Intel previously expected the Pentium 4 to dominate its desktop PC market in early 2002.

Intel will rely heavily on its forthcoming 845 chipset, expected in September, and on demand generated by the introduction of Microsoft's Windows XP to help drive sales of Pentium 4 PCs.

The 845 chipset will allow the Pentium 4 to work with standard SDRAM memory instead of with costlier RDRAM. The chipset "will begin volume shipment to customers within two weeks, well ahead of schedule," Otellini said. "We are poised for a high-volume introduction (of 845) to coincide with the back-to-school season."

The lower price of the 845, combined with use of lower-priced SDRAM, will help PC makers shave the cost of their Pentium 4 PCs. Intel says the chipset has been designed into more than 250 motherboards worldwide.

By pushing to higher clock speeds, Intel will increase its slowest Pentium 4 to 1.5GHz, cutting prices on the chip to move it into the mainstream of the market by the end of the year. Meanwhile, it will take the highest-performing Pentium 4 above 2GHz in the same time frame, Otellini said.

"On pricing, we will do what we need to do to transition from the Pentium III to the Pentium 4," he told analysts.

"We have had a goal of accelerating (the Pentium 4 transition), and now we have a firm plan and road map in place to achieve this," he said.

Analysts said it's about time Intel juiced up its plans.

"All this points to (Intel) becoming more competitive," said Mike Feibus, principal analyst with Mercury Research. Intel "needs Pentium 4 top to bottom to do that."

"This didn't just hit them," Feibus added. "What's different from last quarter is that they now have the vehicle to do that: the 845."

Intel believes the combination of its accelerated Pentium 4 road map and faster Celeron chips "will put us in a position to gain market share throughout the second half and beyond," Otellini said.

Intel has seen some of its market share captured by rival Advanced Micro Devices in the last year. AMD now claims 22 percent of the market, up slightly from the second quarter, when it garnered just below 21 percent.

As it boosts Pentium 4, Intel also has big plans for its desktop Celeron chip. It will use Celeron to protect the back door--PCs priced at $800 and lower.

Intel will boost the Celeron chip to 1GHz and then transition it to its 0.13-micron manufacturing process as the second half of the year progresses. The new process will help push clock speeds past 1GHz, boosting the performance of budget PCs. At the same time, it will reduce chipmaking costs.

The Pentium III will live as the Pentium III-M in mobile products through 2002 and likely at least until early 2003 in various forms. Pentium III-M, manufactured using Intel's new 0.13-micron process, is otherwise known as Tualatin. The chip will be introduced later in the month at speeds faster than 1GHz, Intel executives confirmed during the conference call.

But the Pentium III is nearly dead on the desktop. Intel recently began shipping a 1.1GHz Pentium III based on its current 0.18-micron manufacturing process. That chip is available from PC makers such as Gateway.

But faster Tualatin desktop Pentium IIIs will be few and far between, Intel executives said.