Recovering from a slow first quarter, and reaping the benefits of its Alpha technology acquisition, Intel took the lead last quarter in networking-on-motherboard cards, according to a new study from In-Stat.
LAN-on-motherboard (LOM) refers to networking chipsets integrated directly onto the PC motherboard--the main PC circuit board--a less expensive networking solution than separate network connection boards. PC makers such as Dell and Compaq have begun offering this as an option on build-to-order systems.
"LAN-on-motherboard is growing as a part of overall network connections to the desktop," said Shannon Pleasant of In-Stat, who explained that many companies who previously used separate network connection cards are now more amenable to putting network chips on the motherboard as the technology has improved and been standardized. For the first half of 1998, these chips represented about one-quarter of the total networking card market, she added.
"Originally, (information technology) managers were putting in separate, additional networking cards (even if LAN cards were already on the motherboard)," Pleasant said. "We're starting to see (LAN-on-motherboard) as a primary connection instead of a duplicate."
Intel saw its share of this market grow to 44 percent in the second quarter of 1998, while revenues grew 40 percent, quarter-to-quarter. Intel's strong quarter is partly due to recovery from a bad first quarter, Pleasant cautioned, and a boost from its acquisition of Digital Equipment's semiconductor manufacturing operations.
"Digital ships between 100,000 and 250,000 (LAN-on-motherboard chips) per quarter," Pleasant said. "That business was combined with Intel's existing business, which helped boost their shipments for the quarter."
Intel and 3Com, which accounted for 32 percent of the market last quarter, also picked up market share from Texas Instruments, In-Stat analyst Michael Wolf said. "TI basically is pulling out, and everyone may be picking up market share from them," he said. "They decided that it's not a strategic market for them anymore."
TI and AMD each accounted for about 10 percent of the market this quarter, with TI down from 19 percent the previous quarter.
Although last quarter was a fair picture of the market, Pleasant noted that LAN-on-motherboard sales should really be looked at on an annual, not quarterly basis.
"LAN-on-motherboard shipments come in as orders from PC makers. The market should be looked at on an annual basis, tempering quarterly results with the understanding that it's a cyclical industry."
Backing that assertion in a statement, Intel attributed its quarterly success to a key design win with PC maker Dell.
(Intel is an investor in CNET: The Computer Network.)