Intel serves the enterprise, but will IT bite?

Intel serves the enterprise, but will IT bite?

Scrambling to keep a trickle of bad financial news from becoming a monsoonal drenching, Intel last week broadened its portfolio of CPUs with both high-end and low-cost chips, and unveiled a new buzzterm -- constant computing -- to convince network managers they need to keep buying ever-more-powerful PCs.

But Intel will need fancy footwork to convince these notoriously conservative managers that their users need processors outside today's mainstream of performance and price.

Constant computing is driving the need for high-performance CPUs such as the 350MHz and 400MHz Pentium II processor Intel introduced, said Will Swope, vice president of Intel's Business Products Group. Higher-performance processors help both the user and the system administrator, he said.

For the network manager, more horsepower means platform services that enhance the PC infrastructure and user services, such as e-mail and push, work in the background, letting the user concentrate on "real work", according to Swope.

"It allows me to be more creative," he said.

On the network side, more-capable clients will, for example, allow servers to send data to clients in compressed form without an inordinate delay in decompressing files.

"We are really close to being able to decompress in real time," Swope said.

By reducing the data moving through the network, network managers "get better use of their infrastructure", he said.

Swope also noted that the entire computer industry is based on substituting ever-improving CPUs for activities that take too long manually. "It's not an Intel phenomenon," he said, adding that, "it would be great for us if people buy faster processors."

The market

"Who is Intel targeting with these chips?" asked Kharim Hogan, president and CEO of Canadian organisation N-Dimensions. She likened Intel's proliferation of CPUs and core-logic chips to Apple's profusion of systems, a thicket Apple trimmed with the introduction of G3 systems.

Although Intel is segmenting its products to specific applications, its latest products do not meet the needs of enterprise applications, Hogan said.

He also noted that the Celeron chip does not have a price or performance advantage compared to available Pentium MMX processors. And its Slot-1 interface means new motherboards cannot be repaired using spares from existing Socket7 systems.

The Celeron CPU also "doesn't seem to have any particular application except killing off the Pentium MMX", said Peter Glaskowsky, a senior analyst at MicroDesign Resources. He predicts that Intel's upcoming Mendocino processor, with on-chip cache to improve performance, is more useful.

"Mendocino will be a good part," Glaskowsky said. And along with its desktop applications, "it should be very good for notebooks".

Glaskowsky also said that at the high end, "the hardware exceeds what the applications need". CPUs, hard drives and memory "are cheap enough that they're not the problem anymore".

However, applications such as full-motion video will require the kind of performance delivered by Intel's latest processors, according to Glaskowsky. As performance demands increase, PC prices will inch up, too, he said. "The market for $US2500 PCs will re-establish itself."

Advances in optical storage drives will enable this shift, said Tim Bajarin, president of Creative Strategies in the US. Drives with capacities approaching 5GB will enable multimedia publishing, with features such as animations embedded in e-mail, he said.

But for the moment, "How do you justify buying a 400MHz PC?" Bajarin asked. "The reason you need it isn't here yet."

Meanwhile, OEMs will adopt the Celeron processor to offer a low-cost system with an "Intel Inside" label, Bajarin said. "Intel now has a serious offering for the under-$US1000 market."

"Some of the sub-$US1000 PCs may be fine today, but who knows in the future -- will it still be viable three years from now?" asked Brian Jaffe, director of network and client services at Bantam Doubleday Dell.

"We are still staying towards the upper end and spending a fixed amount on each PC," Jaffe said. "As prices change and new technology comes out, we are finding that we get more horsepower for the same price."

However, Jaffe still questions the need for 350MHz and 400MHz Pentium II chips.

"There is no one application that is driving processor speeds," he said. "It's more the OS -- a lot of the software vendors say Ôhardware is cheap' and it's easier to throw more hardware at a problem than to redesign products to be more efficient."

Some buyers prefer to gain performance, not take advantage of lower prices.

"There are two scenarios now," said Tim Harris, vice president of Compaq's US desktop division. "The higher-end systems will last longer, but the Celeron systems will cost less initially and, depending on what applications you're using them for, not last as long."

N-Dimensions' Hogan disagreed. Budgets tend to fall as upper-management questions the need for the latest, highest-performance hardware. So she would rather take advantage of falling prices.

"Your budget's been cut anyway," Hogan said.

If there is money left in the budget, it is better spent on increasing training, Hogan said. This can greatly reduce the total cost of ownership, she added.

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