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Intel's entry means big changes

The industry's current pecking order could be razed by the microprocessor giant.

The graphics chip industry is notoriously difficult, and it will only get worse now that Intel has moved in.

Intel is making a frontal assault on the graphics Terror in the graphics world industry this year. Not only will the Santa Clara, California, company release its first 3D graphics chip today (see related story), but also the acquisition of Chips and Technologies and increasing collaboration with outside graphics vendors such as 3Dlabs will lead to more Intel-branded, or at least Intel-centric, products.

In addition, the company's microprocessors and chip sets are being steadily optimized for graphical computing.

"3D graphics is the next frontier" for Intel, posited Michael Slater, founder of MicroDesign Resources. "Even if they never

Michael Slater
Michael Slater
make any money on their graphics chips, if PC graphics advances more quickly, they are going to sell more processors."

In the end, the effort will likely lead to better computing visuals at a lower cost, a welcome trend for everyone but independent manufacturers. (Intel is an investor in CNET: the Computer Network).

"Intel's entry into the market and the move toward the sub-$1,000 PC makes this a very competitive market," said Arun Veerappan, semiconductor analyst with BancAmerica Roberston Stephens.

"Intel is not going to take away the entire market, but they will be a significant player," added Slater. "For the others, it is a question of how long they can last and how much market share they can hold on to."

Intel's graphics effort can be roughly divided into two segments. First, the company is working on its own and with partners to develop 3D chips. The second wing of the effort centers around improving the graphical features of PCs, workstations, peripherals, and applications to boost demand for more powerful processors.

Intel-branded graphics accelerators will make their debut in the form of the Intel740--formerly code-named i740--a 3D graphics processor for mainstream desktops. The chip was developed in conjunction with Real 3D, an independent company partly owned by Intel and Lockheed Martin.

The chip will likely take off like a shot. Between 5 and 10 million units should ship in the first year, predicted Peter Glaskowsky of MicroDesign Resources. "That's about as many as they can make," he said.

The Intel740 will first appear on separate add-on circuit boards--which plug into the "slots" inside of a PC--from manufacturers such as Diamond Multimedia and STB Systems. Later in the year, the chip will come complete in high-end consumer systems, Glaskowsky said.

The chip will officially sell for $34.50 in quantities, but likely go for less.

For the most part, the Intel740 will be a chip for the masses. Initially, the chip is not expected to surpass cutting-edge graphics chips from Nvidia, NeoMagic, or 3Dfx in performance, said many. Nonetheless, performance by most accounts will be fairly strong; when combined with low prices and high availability, the card will create competitive pressure.

The companies that could be challenged the most, said many, are the more-established graphic chip players.

"S3 could be the big loser here," Glaskowsky told CNET earlier. "S3 doesn't sell to the performance market. Intel has the resources to beat S3 on those terms and they have the performance."

In addition to the Intel740, Intel is collaborating with 3Dlabs in developing a graphics processor to complement its upcoming 64-bit "Merced" chip. The 3Dlabs/Intel chip will be released roughly within the same time frame as Merced, according to Raj Singh, vice president of sales at 3Dlabs. Samples will come out by the end of the year with sales beginning in 1999.

The acquisition of notebook graphics maker Chips and Technologies, which was approved by the Federal Trade Commission in January, will lead to further chips.

The second part of the strategy--adding graphics features to other Intel chips--is also clearly under way. A number of Intel executives have said that future generations of Pentium II processors will be enhanced for visual computing.

Additional MMX instructions will appear in the "Katmai" generation of Pentium II processors, which are due in 1999, said Richard Dracott, marketing manager for the processor division at Intel. Dracott surmised that Katmai processors may even obviate the need for a separate graphics chip in low-cost PCs.

Intel will also make speed improvements for memory chips as well as to its Accelerated Graphic Port (AGP) technology, which is designed to speed the flow of graphics data.

"Anything in the visual computer space will improve," Dracott asserted.

Furthermore, Intel is expected to integrate graphics chip features into its chipsets for low-cost PCs, according to another Intel executive. Chipsets are the companion chips which, along with the main microprocessor, form the core electronics of a PC.

Outside the company, Intel is working to encourage software and hardware vendors to concentrate on graphics. As part of the Katmai Pentium II, Intel is seeding partners with development dollars and technical assistance, admitted Dracott. On other fronts, the company has been trying to coalesce consumer interest around pixel-heavy applications such as digital photography.

This effort, however, will also serve to help the other manufacturers.

"We took quite a bit of market share in 1997," said Michael Vara, director of strategic marketing at Nvidia. Most of it, he added, came from the release of Intel's AGP technology.  end of story

Go to: 3D board makers join Intel bandwagon