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Low-end PCs interest Intel

Intel may develop a low-cost architecture centered on chips which accompany the processor, according to an Intel executive.

Intel (INTC) is eyeing the sub-$1,000 PC market, an interest that may spawn a new architecture centered on chips which accompany the processor, according to an Intel executive.

Intel has yet to bring out special chip designs for the sub-$1,000 PC market. Its strategy to date has been to sell lower-performance Pentium chips while cutting prices enough to drive these chips into low-cost PCs, according to Intel officials. Typically Pentium processors priced below $135 are used in sub-$1,200 and sub-$1,000 PCs.

But Intel is facing stiff competition in this growing market since companies like Cyrix and Integrated Device Technology (IDT) subsidiary Centaur Technology are coming out with hot new chips specifically for the type of low-cost PCs that consumers are snapping up.

Intel is watching this carefully. "It?s not like Intel to ignore a growing market," quipped an Intel spokesperson yesterday.

More specifically, Fred Pollack, an Intel Fellow and director of processor planning for Intel?s Microprocessor Products Group, says that Intel may come out with specially architected chip designs targeted at this segment. Pollack says that cost saving and integration would be centered on the chipset, not the processor. The chipset is a group of chips which allow the processor to talk to the PC and offer performance-enhancing features.

Pollack said this might include integrating a graphics chip into the chipset. Typically, the graphics chip is offered as a separate component by independent graphics chip vendors such as S3 or ATI Technologies. Interestingly, this strategy could fit well with Intel?s plans to bring out its own graphics chip later this year or next year.

Cyrix?s GX processors already integrate features such as graphics directly onto the processor, and it sells the chips as a "system-on-a-chip" to PC vendors such as Compaq, which uses Cyrix GX chips in Presario consumer PCs. Cyrix GX chips are typically priced below $100.

Separately, Centaur Technology is offering its C6 processor running at 180 MHz and 200 MHz for $90 and $135, respectively. This is targeted specifically at sub-$1,000 PCs, according to Centaur?s president, Glenn Henry. Centaur also plans to up the ante next year to 300 MHz and add other performance-enhancing features such as MMX, while maintaining low cost.

Market research firm Computer Intelligence said last week that that sales of sub-$1,000 PCs accounted for 40 percent of all U.S retail computer sales in August.

Such sales continue to grow at a faster rate than the overall market for PCs, and some companies riding on this wave of growth are experiencing market share gains as a result. Traditionally, PCs sold at retail have been priced well over $1,000 and typically in the $2,000-to-$3,000 range.

For Intel, a hypothetical price point target would be a $799 PC, according to Pollack. But he was quick to point out that costs are also very dependent on pricing for other components such as hard disk drives and CD-ROM drives, components that Intel has no control over.