IDF: Pentium 4 fails to light a spark

Analysts say the Pentium 4 has been much slower to gain market share than any of its predecessors - and only the forthcoming 845 chipset is likely to change matters
Written by Matthew Broersma, Contributor

Despite Intel putting its marketing muscle behind the new 2GHz Pentium 4 processor, launched on Monday, computer manufacturers and buyers are unlikely to be in any special hurry to place orders, say industry experts at the Intel Developer Forum.

At the launch of the new chip, Louis Burns, vice president and general manager for Intel's desktop products group, suggested that the launch of Windows XP, along with ever-faster Pentiums, would light a fire under the stagnant PC market. Analysts say that the Pentium 4 has been surprisingly slow to gain market share from older processors such as the Pentium III, and Burns urged the audience of engineers and executives to make the switch to the new architecture. "It's important that you buy the performance, because it protects your investment," he said.

But businesses are not likely to rush to buy systems based on the new chip, which is only 100MHz faster than the previous Pentium 4. And they are unlikely to be impressed by the range of applications Intel demonstrated taking advantage of Pentium 4's faster architecture, according to Gartner analyst Brian Gammage. "Technology does not drive the market, and it has not done for the past couple of years," he said.

In the next two weeks, however, Intel will launch the 845 chipset, which will for the first time allow the Pentium 4 to use standard SDRAM memory. Until now Pentium 4 has only been compatible with Rambus-owned RDRAM memory, which is considerably more expensive.

Gammage said the new chipset could give a real boost to Pentium 4 sales, since businesses have probably been holding off purchasing the RDRAM-based systems. The RDRAM-based 850 chipset was "a reason to delay buying, and in a recession you look for reasons to delay," Gammage said.

At Intel's Developer Forum in San Jose this week, Intel demonstrated applications such as 3D modelling, remote collaboration, video editing and medical database processing on the Pentium 4, but pundits are not convinced that such applications will give consumers and businesses what Burns called "a reason to buy".

"The fact that they couldn't say exactly what applications you would need a Pentium 4 for two years from now was telling," said analyst Peter N. Glaskowsky of MicroDesign Resources. "They could only say 'who knows what you'll be doing'."

The launch comes at a time when PC sales are flat or dropping, and few observers can see the market picking up anytime soon. Analysts said that even the release of Windows XP, and the advent of handheld computing, broadband and wireless networking are unlikely to add up to strong demand, in a market where the US and Europe seem to be approaching saturation.

In hindsight, analysts say that the Internet hype of the late 1990s, combined with the drive to update corporate systems ahead of the millennium, gave the PC market a vibrancy that could not be sustained. In 2000 PC makers sought to keep up the pace of growth by cutting prices and making special offiers for the consumer market, but only ended up cannibalising the following year's demand, according to Gartner's Gammage.

Instead of returning to stellar growth, some observers see the market becoming more like the automobile industry, where the underlying technology is more or less a commodity, and demand is driven by factors like style and practicality.

"The market will fragment, and as that happens it's less and less likely that you have a single application driving the market," said Gammage.

ZDNet UK's Matt Broersma reported from San Jose.

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