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Intel to push Centrino in 2004

The chipmaker, which began advertising the notebook-chip bundle to consumers earlier this year, plans to step up its efforts with new ads and an onslaught of new products in the new year.

Intel is making a resolution to convince consumers that Centrino notebooks will be the thing to have in 2004.

The chipmaker, which began advertising the notebook-chip bundle to consumers earlier this year, plans to step up its efforts with new ads and an onslaught of new products in 2004.

Dothan, a faster, higher-performance version of the Pentium M chip, and a dual-band Wi-Fi module offering 802.11g, are both expected to be available in Centrino notebooks during the first quarter of 2004. New print and television ads are also in the works, executives at the chipmaker said.

Between the new chips and its stepped-up marketing effort, Intel aims to broaden Centrino's presence in the consumer notebook market. Intel hopes to help PC makers improve the mobility of their consumer-oriented notebooks with thinner, lighter, more wireless-friendly models.

Over time, the chipmaker is also expected to launch new Celeron processors that will help lower the price of thinner, lighter notebooks to be closer to what consumers pay now for popular Pentium 4-powered desktop-replacement systems.

News.context

What's new:
The chipmaker wants to sell consumers on the virtues of Centrino notebook computers with a high-performance Pentium M chip and a dual-band Wi-Fi module.

Bottom line:
These laptops should be thin, light, wireless-friendly and have long battery life, but Intel may have trouble selling consumers on them. Notebooks with more powerful processors cost the same or less, and buyers are used to thinking bigger and faster mean better.

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"We are going to expand our messaging to consumers...over 2004," said Karen Regis, director of marketing programs for Intel's mobile products group.

Although Intel will put engineering and marketing resources into the transition, PC makers say Centrino will face several challenges along the way. One challenge will be shifting people away from the "bigger is better" mentality. That includes moving some consumers away from purchasing larger, desktop-replacement notebooks and also encouraging them not to base buying decisions purely on processor clock speeds.

Finding a niche
Unlike the Pentium 4, which rapidly took over as Intel's main mobile processor in 2002, the Centrino bundle is taking aim at a much more stratified market, where notebooks break down into several categories. They include systems for price-sensitive buyers, usually based on Celeron or AMD's Athlon XP-M, and high-performance and large-screen desktop replacements with Pentium 4 processors. Lightweight models designed for mobility, where Centrino currently resides, fit into the middle.

Low-price and desktop replacement notebooks dominate the market, PC makers and analyst say, while Centrino has mainly made inroads with consumers who are on their second or third notebook.

Centrino made up nearly 8 percent of notebook sales at retail in the United States during October, said Steve Baker, analyst with the NPD Group. The chip bundle had only 3.5 percent of sales in May. During October, the Pentium 4 accounted for almost 42 percent of sales, while Intel's Celeron and AMD's Athlon XP came in at almost 21 percent and nearly 25 percent of sales, respectively.

Dell, which delivers about a fifth of its Inspiron consumer notebooks with either a Pentium M or the Centrino bundle, believes the chips have had a "pretty nice ramp (increase) over the course of the last six months," said Jay Parker, senior worldwide marketing manager for Dell notebooks.

For Gateway, Centrino and Pentium M sales have been about a fourth of sales, while Hewlett-Packard has seen sales reach about a third of consumer notebooks, executives from the two companies said.

Tough sell
Consumers, many of whom expect the performance and the screen sizes of their notebooks to be on par with desktops, may not move rapidly from relatively inexpensive Pentium 4-powered laptops to Centrino and Pentium M systems, PC makers say.

"In 2005 and beyond, I think it will become more of a Pentium M mobile market than we have today. But it will be a very slow" process, Parker said.

Some said that Intel will have to work with PC makers and retailers to raise the perception of the Centrino bundle as something other than a slower processor created as a wireless tool.

"Consumers have been trained to associate performance with higher frequency. How do you communicate (Centrino's attributes) to consumers such that they believe it and they understand it? That takes time," said Brett Faulk, director of consumer notebook product marketing at HP.

Clock speed, long relied on by Intel, PC makers and retailers to help market PCs, is not the Pentium M's strong suit. The chip's maximum clock speed right now is 1.7GHz. Many notebooks available at retail run at 1.4GHz or 1.5GHz.

The clock speed is expected to increase to 1.8GHz and more with the release of Dothan, but Pentium 4 notebooks will continue to be available at speeds of 3GHz or more. Prescott, the next desktop Pentium, will offer even faster clock speed when it shows up on PCs in early 2004.

Some consumers will simply balk at spending the same or more on a notebook with a slower chip, the PC makers say.

When bigger isn't better
"'Bigger numbers are better' has been pounded into the consumer (mind) for 15 years. You're not going to change that (sentiment) in six or eight months," Faulk said. "Why would a customer buy a 1.5GHz Pentium M or Centrino versus a Pentium 4 2.6GHz? That is a challenge."

But there's no reason a Pentium M couldn't power a desktop-replacement notebook with a large screen and, in doing so, serve all but the most demanding buyers when it comes to touching up digital photos or watching videos, Faulk said.

Indeed, "the product is probably, in the long run, best positioned in the middle," Baker said. "But the way the market works, you're going to (see PC makers) scale it up and down, depending on what they want to do. I think there's still some room to make it a high-end processor, too. That means you'll see it at $1,000 and also at the top of the market in desktop-replacement systems as well."


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But getting to the point where buyers can be convinced to choose a Centrino system with a 1.8GHz Pentium M over another notebook with a 2.8GHz Pentium 4 will require Intel, HP and retailers to change the way they explain the attributes of a Centrino machine. The Centrino system should perform nearly as, get longer battery life and weigh less--all facts that will have to be spelled out clearly, PC makers say.

What's the use?
Intel intends its new ads to be more specific about what Centrino offers, the company said.

"When we first launched Centrino, we knew we were going to have some problems with the megahertz question," Regis said.

Intel will use other marketing methods instead. It will host events that allow people to test out a Centrino in person, for example. Intel has also created one-page brochures that highlight the benchmark performance of Centrino system versus one with a higher clock speed Pentium 4-M chip for distribution to consumers in the U.S.

"We're not going to try to transition the market to mobility (meaning, in this case, Centrino) within a year. The idea is to have a family of products that serve the mobility buyer," Regis said.

Intel will continue to serve up Pentium 4 chips for desktop-replacement notebooks. But, over time, the chipmaker said it believes that low-price and desktop-replacement buyers will shift to Centrino after discovering the limitations of the two types of machines, which generally weigh more, have shorter battery run times and, in the case of low-price models, don't performance as well as Centrino notebooks. Low-price notebooks are also less likely to come with wireless capabilities.

"A lot of people that are moving to mobile for the first time are following desktop behaviors" and buying low-price or Pentium 4 systems, said Ajay Gupta, vice president of notebooks at Gateway. But "once we start talking (with them) about their usage model, we're finding some of those people are converting over to Centrino."

Over the next year or so PC makers expect consumers to begin asking for Centrino and its accompanying attributes, such as greater mobility, more often.

But "nothing is going to act like a light switch that causes a massive switch from Pentium 4 to Pentium M," Parker said.

Ultimately, even if most consumers shift to more portable notebooks--machines that can also handle multimedia and play games--some people will always prefer systems with the largest screens and fastest processors available in order to replace desktop PCs. Even Intel admits that.