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Intel touts low-cost chip strategy

Next year the chipmaking giant will release a series of processors each optimized for a different class of computing device, including low-cost Pentium and Pentium II processors.

Intel fleshed out more details of plans disclosed earlier to fit chips into as many boxes and markets as possible, including Pentium II processors aimed at sub-$1,000 personal computers.

Speaking to financial analysts at the company's biannual analyst's meeting, top Intel executives, including CEO Andy Grove and COO Craig Barrett, said that Intel would next year release a series of processors each optimized for a different class of computing device. (See related story)

For instance, the Santa Clara, California, company will make Pentium-class chips for "dumb" terminal devices--stripped down devices with no hard drive--which will cost $500. The company will also release Pentium II processors for sub-$1,000 PCs.

Pentium IIs for high-end server computers that can be bundled into powerful eight-processor systems and sell for several thousand dollars will also appear.

Under this strategy, the venerable Pentium chip will find its way into low-end terminal devices supporting a variety of operating systems, Intel said, including Java, Unix, and Windows NT, Dataquest semiconductor analyst Nathan Brookwood reported.

Design features for terminal computer processors may come from Intel's "embedded" chip group, the reverse of Intel's usual practice.

The Pentium II processor will appear in myriad forms in a wide variety of computers, but the basic internal chip architecture won't vary, said Brookwood. Instead, Intel will vary the size of both the on-board memory, called "cache," and the packaging of the Pentium II. Intel will also modify the chip set, the group of companion chips which work with the processor.

For server computers, the new versions of the Pentium II will have two megabytes of cache. This memory will communicate with the processor at the same speed that the processor runs internally.

Currently, Pentium II cache memory talks to the processor at half speed and tops out at one megabyte. Generally, the more cache and the faster the cache, the better overall system performance is.

On the low end, Intel will market a cacheless Pentium II for sub-$1,000 computers.

Architectural nuances will exist between consumer machines optimized for the home and machines made for the second time buyer. Certain chip sets, Intel said, will incorporate graphics and audio features and be coupled accordingly.

Pentium II processor speeds will also run up to 450 MHz, said Intel officials, who have discussed many of these details before. Grove, in fact, has referred to the process of selling the same core technology into different markets as "multiple bifurcation." Today's event cemented most of the details.

Intel will also follow through with plans to develop a "cartridge" for slim notebooks, similar in function but different in size than the current mobile module.

Although the strategy means that Intel will be making processor for lower-priced computers and devices than in the past, the company plans to make up the difference by selling more processors into the server and the workstation space.

"In order to maintain that $200 ASP [average selling price], they are going to be selling more processors for servers," he said. Brookwood indicated it would not be surprising to see high-end Pentium IIs for servers selling for $2,000 to $4,000 in 1998.

While Intel discussed incorporating more graphics and audio functionality into its chip sets, the company specifically stated it would not follow the "system on a chip" strategy pioneered by Cyrix, in which graphics and other functions are hardwired to the main processor.

Intel said it doesn't like the strategy because processor advancements happen at a different pace than advancements in graphics, which in turn forces all segments to follow the lowest common denominator.

"They specifically went out of their way to say they would not do system on a chip," said Brookwood.