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Intel stresses imaging, low-cost devices

The Intel reorganization highlights how broad a technology company it is becoming and where PCs are headed.

Intel's (INTC) reorganization, announced today, focuses on emerging product categories, highlighting just how broad a technology company Intel is becoming and where PCs may be headed in the future.

Four new groups have been created. Namely, the Consumer Products Group, the Business Platform Group, the Small Business and Networking Group, and the Digital Imaging and Video Division.

One of the most prominent changes is the creation of a new division to focus on digital imaging, a red-hot category for almost every top-tier PC manufacturer, as well as a host of peripheral device makers. Hewlett-Packard and Compaq have made this a priority, as have a slew of digital device makers including Kodak, Sony, and Epson.

"We used to have different folks all looking at digital imaging. This is significant and important to the company so it is now unified," said an Intel spokesperson.

"Given the segmentation of the PC market, this only makes sense," said Ashok Kumar, semiconductor analyst with Loewenbaum & Company.

"They tend to break things out when there is a need for focus," said Nathan Brookwood, semiconductor analyst Dataquest "It suggests that they see a big opporutunity there."

Indeed, Intel has already begun its foray into digital imaging. The world's largest chip maker is offering a kit that will allow manufacturers to make $300 digital cameras. Unlike current digital cameras, cameras built using these kits will function more like computer peripherals, Intel said.

This follows an October announcement by nine companies (including Intel, Kodak, Hewlett-Packard, Canon, Fuji Photo Film, and IBM) of an initiative to work together to ensure that vendors of digital cameras, photo-editing software, and other equipment will use the same technology standards.

The companies said the digital photography industry is expected to grow to about $150 billion by 2000.

Intel will promote its Pentium II processors, and later its own graphics chips, for processing this multimedia-rich data. Intel is also pushing its RISC processors, such as the venerable i960, for printers that can generate photo-quality images, the spokesperson said.

Another major new area of focus for the chip giant is the consumer PC market. Here, Intel has added a new product focus, the set-top box, a category which it scoffed at as little as year ago as being too marginal. These home computing devices can be connected to a TV screen to enable electronic mail, Web surfing, and basic word processing.

Intel, however, will not jump into this market headlong since it is still waiting for standards to be established, according to the company spokesperson. Moreover, companies such as WebTV are struggling in this market segment, indicating that demand has yet to materialize.

Intel will likely target its Pentium processor for this lowest of the low-cost home computing markets--typically devices are priced at $300 or less--in 1998 and then move inexpensive Pentium II processors into this segment, possibly in 1999, according to Intel. The intention is to have a Pentium II processor in every type of device--including a range of sub-$1,000 PCs--covering all product categories by 1999.

The network computer, a low-cost business computer, is also on the Intel radar screen--marking still another change of heart. Intel had shown negligible interest in this market last year.

But this year there was a discernible rethink as Intel began to bolster its presence here by supplying building blocks for Oracle-sponsored prototype NCs and the servers that power them.

Intel executives have recently stated on various occasions that new chip technology may be in the offing for low-cost computing devices such as NCs or home computers. Specifically, Intel may build low-cost chip architectures where more of the core PC features are integrated into the chipset, said Fred Pollack, an Intel Fellow and director of processor planning for Intel?s Microprocessor Products Group, in a previous interview with CNET's NEWS.COM.

A chipset is a group of chips which work in tandem with the processor.

Vice president Mike Aymar will head the new Consumer Products Group, and Pat Gelsinger will head Business Platform Group. The reorganization essentially splits Intel's former Desktop Products Group into these two groups.

The consumer group will focus on consumer desktop PCs, TV set-top computing devices, and automobile PCs. The business side will concentrate on all business computers, including PCs, network computers (NCs), Net PCs, and workstations.

Intel is an investor in CNET: The Computer Network.