A new chipset and aggressive pricing may finally push Intel's Pentium 4 processor--now segregated in high-end PCs--into the computing mainstream.
Pentium 4 sales have lagged behind expectations since the processor was introduced late last year. But analysts say the forthcoming 845 chipset--which will allow the Pentium 4 to work with standard SDRAM memory rather than with expensive Rambus DRAM--combined with further processor price cuts should drive down Pentium 4 PCs to prices that will appeal to average consumers.
Intel "did what it needed to do. The corporate market didn't want Rambus in the mainstream for better or worse," said Mike Feibus, principal analyst at Mercury Research, which recently bumped up its forecast for Pentium 4 shipments this year.
The researcher now forecasts Intel will ship 19.7 million of the processors in 2001, up substantially from its previous forecast of 14 million.
"It is a direct result of the 845 being pulled in," said Feibus, "and also, of course, the new aggressive prices" for Pentium 4 chips.
Since the introduction of the Pentium 4, Intel has tried to move it into the heart of the mainstream PC market, generally defined as machines priced at less than $1,500. High prices, however, have prevented widespread adoption.
But PCs based on the 845 chipset--expected by industry sources to debut in mid-September--are expected at prices of $800 and up, and that may win manufacturers over to the Pentium 4.
Intel said during its second-quarter earnings call that it would begin shipping the 845 earlier than expected. The chipset will also become an important tool in making Pentium 4 the company's top-selling desktop processor before the end of the year. Previously, Intel had targeted late 2001 or early 2002 for the Pentium 4 to eclipse Pentium III.
Consumers have largely stayed away from Pentium 4 because of its higher price, analysts say.
Complicating matters for Intel is that the so-called mainstream PC market has shifted downward of late. Mainstream prices ranged from $1,000 to $1,500 last year; most PCs sold now are priced between $800 and $1,200.
"The $1,500-and-over space has continued to decline," said Stephen Baker, an analyst with NPD Intelect. "The bulk of the business is more and more concentrated in that $800 to $1,200 range.
"It's remarkable what you can get for $800 or $900," he added.
Enter 845. A chipset is a collection of two or more chips inside a PC used to control functions such as data input and output. The chipset is also responsible for providing the data pathway between the processor and system memory.
The 845 will pair the Pentium 4 with SDRAM, the most common type of memory used in current PCs. Originally, the Pentium 4 was available only with the 850 chipset, which required high-speed RDRAM memory based on designs from chip company Rambus.
Though RDRAM offers higher performance, it costs significantly more than SDRAM. Many groups, such as corporate IT managers, have shied away from using it.
The new chipset also will help Intel differentiate markets as it prepares for the release of a 2GHz Pentium 4, expected at the end of August. That chip is likely to be paired with RDRAM and focused at high-end PCs. With its introduction, however, Intel is likely to cut prices on existing Pentium 4's. Combined with cost savings from using SDRAM memory, that should put the older Pentium 4's well within reach of sub-$1,000 PCs.
Intel often uses chipsets to help reduce the cost of PCs. For example, the company launched its 810 chipset in April 1999 to help reduce the cost of low-end PCs based on the Celeron processor. Because the chipset used integrated graphics, the company argued that it would reduce system costs by eliminating a graphics card. PC makers used the 810 widely.
Intel will soon launch an 830 mobile chipset aimed at cutting notebook design costs by allowing manufacturers to use the same chipset for everything from lightweight mini-notebooks to the largest desktop replacement models. Notebook manufacturers currently have to choose from three mobile chipsets.
But Intel's track record with chipsets hasn't always been perfect. The company's 820 chipset, the first to support RDRAM, was delayed once because of production problems with RDRAM and again because of problems with the chipset's third memory slot, which was later eliminated. A version of the chipset created for use with SDRAM was later recalled.
As a result of past problems, Intel insiders say the 845 was closely scrutinized before the company announced it would begin shipping the chipset in volume around July 31.
The main drawback of the 845 is the performance hit PCs will take from using slower SDRAM memory.
But analysts believe that, thanks to a "bigger is better" attitude among most PC buyers, the higher megahertz ratings of newer Pentium 4's and lower prices afforded by 845 will win out over absolute performance.
"What speed it is I don't think they really care," said Kevin Krewell, senior analyst with Instat/MDR (formerly MicroDesign Resources). "They want to know what price is it? How stable is it?"
The 845 also caters to a fundamentally different PC market than when the infamous 820 was shipped.
Though shoppers will find machines with faster processors, larger hard drives, and better graphics cards at prices of $1,500 and above, $800 should buy more than enough performance for today's applications, analysts said.
"When you hit that price point ($800), everything is good enough," Feibus said. "I don't think a couple of points here or there on Winstone (a standard PC performance benchmark) will make much of a difference when you're talking about 1.6GHz."