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February 18, 1997updated 05 Sep 2016 12:01pm

INTEL’S STRATEGY TO KEEP RIVALS OUTSIDE

By CBR Staff Writer

From Computer Business Review, a sister publication.

Sound, camera, action: Intel’s Pentium MMX shakes up the multimedia PC sector. When executives from semiconductor manufacturer Intel first started showing its partners details of its new MMX chip, they fully expected some of them to hit the roof.

By adding MMXs multimedia extensions to the Pentium microprocessor, Intel was marching into territory that has been dominated by specialist graphics and sound board makers like Creative Technology and Media Logic. In fact, for half a decade, these companies have been instrumental in making the Intel PC an attractive home computer, allowing education and entertainment software to run on the deaf, dumb and blind Intel 486 chip and the subsequent Pentium processors. So not surprisingly, We really expected them to be pretty bitter, says Intel vice president Steve Poole. The company was right to feel apprehensive. In one fell swoop, MMX takes away the raison d’etre of many multimedia board makers, forcing them to seek more specialist niches. But the move by Intel is just the latest in the companys attempts to lock up more and more of what goes inside the casing of a modern personal computer. Back in 1995, Intel sent another group of board makers into a spin after announcing it would start making complete PC processor boards – or motherboards – that harness all the electronics that drive a PC in a single unit. Although its initial rate of expansion into the motherboard market was scaled back during 1996 because of oversupply in the sector, Intel, in that short period alone, has built a 15% share in the motherboard market. Furthermore, it is expected to ship 10 million boards in 1997 – the same number of machines that Compaq, the leading personal computer vendor, sold last year. MMX takes that strategy a step further, allowing PC buyers to dispense with the need to slot in further cards in order to run sound, complex graphics or video. According to Intel, Pentium with MMX will improve the performance of current multimedia applications by 10% to 20%, but applications that have been re-written to take advantage of the 57 additions to the Pentium instruction set, will see at least a four-fold increase in performance over vanilla Pentiums running with a standard sound or graphics card. Intel expects 100 plus MMX-optimized software titles to be shipping by the end of 1997.

ENTERTAINMENT

The initial target market for MMX has been clearly defined. MMX will be pitched as entertainment technology for the home user and also as a platform for mobile sales staff, allowing them to run snazzy product demonstrations. Both groups will also be encouraged to use their MMX machines as communications devices – the new technology allows video conferencing, albeit monochrome, jerky and poorly lipsynched, over standard telephone lines with a 28.8 kps modem. The incremental cost of MMX is not great either. When sold to PC makers, the initial MMX chips running at 200Mhz will cost just $41 more than the $550 paid today for a standard Pentium. This is the most significant enhancement to the Intel PC architecture since the 386 was introduced, says Ian Wilson, a technology manager at Intel. But Pentium MMXs home user focus is just the prelude to a wider agenda. Mid-year when Intel ships an MMX-enhanced version of Pentium Pro, codenamed Klamath, the company plans to start pitching MMX into the business end of visual computing. Initially, business users will be buying some of the Pentium with MMX machines for content developers, in certain communications applications where people are using video conferencing, and in the mobile area where people want the best presentation vehicle they can get, says Poole. But for the broad stream desktop, they will buy Pentium Pro because it provides all the managability capability and its targeted for 32-bit software.MMX on the Pentium Pro will signal the arrival of business applications that use multimedia, says Poole, for training, video-on-the-LAN and Internet services. And next year, Intel suggests Pentium Pro with MMX will begin to be able to handle the kinds of complex graphics that engineering workstation users require – but again, without the need for the add-on boards that are an essential part of that technology today. The next generation beyond, which you will see appear in 1998, will subsume a lot more of the graphics card capability into the CPU (central processing unit) and into the general motherboard, says Poole.

FINDING A NICHE

Meanwhile, the brunt of Intel’s current attack – the multimedia board makers – are putting on a brave face. Sim Wong Hoo, chief executive officer of Singapore-headquartered Creative Technology, says there is little fear that MMX will make Creatives best- selling SoundBlaster card redundant. MMX will still require add- on boards to deliver comprehensive sound and video, the company maintains. In fact, Creative, which had $1.3 billion in revenues last year, intends to boost production of its SoundBlaster to 10,000 cards a month by year end. And, according to Intel, there are opportunities for adding value – for example in the area of video conferencing, where MMX does not yet have comprehensive capabilities. Even so, these companies know that they now need to re-establish their value-add. SoundBlasters future does not lie in continuing to do sound cards, thats been absorbed into the PC and software, says Intel’s Poole.

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MMX PREVAILS

In the Christmas [home PC] selling season of 1997, you will not be able to sell a non-MMX machine, predicts Poole. He estimates that between 30% and 40% of PC sales will be for MMX machines. To Intel, the sound and graphics board industry is another toppled domino in its strategy to expand its influence beyond the microprocessor. In his book, Only the Paranoid Survive, Intel’s CEO Andy Grove describes how the companys Intel Inside campaign was all about trying to establish in PC buyers minds the idea that the microprocessor is the computer. With its motherboard and Pentium extension strategy now impacting whole swathes of the personal computer industry, the marketing message is quickly becoming a reality. Intel is taking more and more control of what’s inside.

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