USS Clueless              Voyages of a restless mind

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Stardate 20010606.1817 (On Screen): Intel is in deep trouble in its core processor market. The new P4 is a dog in its current form, and AMD is about to kick major ass. The Thunderbird processor is still going strong and AMD has turned the speed crank on it yet another step to 1.4 GHz, yielding a system which is capable of turning out considerably more computing than Intel's fastest P4 at 1.7 GHz. That in itself is very bad news, but what's much worse is that a computer built around that P4 will cost considerably more. There are two particularly good reasons for this: it needs a custom power supply which pours out a veritable river of amperes, and it needs RDRAM, which runs two to three times as expensive per megabyte as AMD's preferred DDR-SDRAM. When someone is hunting for a top-end system, why pay more to get less? Well, because it says "1.7 GHz" instead of "1.4 GHz", or maybe because it says "Intel Inside". Apparently it's not working, though. And Intel has been forced into a price-cutting war with AMD that they are bound to lose, because the P4 is simply more expensive to make. So at current prices, AMD's making money, Intel isn't, AMD's processor is faster, and an AMD system still costs less. Not exactly what the Intel board wants to hear, you must admit. So Intel is in trouble in the prestige (and influential) top-end hobbyist market.

In the mid-range volume market the picture is just as grim. The largest volume in PCs now is in the range of $900-$1200. The PIII has done very well in that market but Intel wants to stop making PIII's and shift everyone to the P4. The only way a P4 can compete at this price range is to use a very slow one (i.e. 1.3 GHz) and saddle it with miserable PC600 RDRAM, resulting in a system whose performance is underwhelming. In competition with this, AMD offers the legendary Duron (which puts the Celeron to shame), and again performance is better with a lower price.

Still, there's the workstation and small server business, right? Nope! AMD has now entered that market and yet again hit a home run, yet again offering better value for smaller bucks. The much anticipated AMD 760MP chipset, which supports dual Athlons, and the imminent release of the "Athlon MP" (Palomino) represents a disaster in the making for Intel in this business, too. AMD is confident that their sales will grow this year even in the face of an industry down-turn, and it's easy to see why.

Intel is in deep trouble and it's going to get worse before it gets better. The first thing they have to do is to forget all plans of shutting down the PIII. It's not competitive against the Athlon but it is at least still competitive against the Duron. Intel's original plan was to cease all PIII production by the end of 2001. That's going to have to wait at least a year. Second, the "Northwood" P4 can't come too soon. The version of the P4 being sold now has one of the largest dies of any microprocessor ever sold, and to make it that size they had to cut things out which crippled it. The Northwood will involve a geometry shrink, permitting them to simultaneously add circuitry and to shrink the die. It will also allow Intel to crank the speed again.

Third and perhaps most important, RDRAM is an anchor around the P4's neck which will continue to hold it down. Computers based on the P4 will not be price competitive until they can switch to using DDR-SDRAM as is used in the fastest Athlon systems.

Unfortunately, Northwood won't be here for months (and it remains to be seen whether Intel will fix its glaring flaws running legacy code), and Intel is contractually forbidden to use DDR-SDRAM until 2003. 2001's going to be a good year for AMD. (So will 2002.) (discuss)