| The chip war between Intel (INTC)
and Advanced Micro Devices (AMD) rages on -- even as processor speed
becomes less significant in the marketplace. While there's no sign that
the race to build the fastest chip will subside anytime in the near
future, both companies are discovering that the battle must move beyond
the gigahertz.
With the announcement last
Monday of its 2-gigahertz Pentium 4 chip, Intel slashed the prices of
its older chips by as much as 54 percent. AMD is expected to follow with
price cuts of its own.
"Speed has become a
lower priority, particularly in the last year," says Matt Sargent,
senior analyst at ARS. "In past years, the jumps in speed were much
more significant. Now a jump of 200 megahertz doesn't push people into a
buying frenzy that we saw three or four years ago." With corporate
buyers, in particular, processor speed is not a factor. "They're
almost looking at cycling down from the cutting edge to cut costs,"
Sargent says.
Both companies realize this
and are beginning to tout their new or upcoming chips for features other
than sheer speed. Intel announced recently that it is looking beyond
processor speed to focus on products targeted toward specific market
segments and computing models.
"While this focus on raw
processor speed is important, it's not sufficient to drive the levels of
growth and innovation that will allow the industry to prosper,"
Paul Otellini, Intel's executive vice president, said at a developers'
conference.
The stakes are higher, of
course, for AMD, since the company is struggling financially. Last
Wednesday one company executive said AMD's third-quarter revenue would
drop 15 percent from second-quarter levels. Its second-quarter profits
had declined more than 86 percent from the same period last year.
The one factor that AMD has
always had on its side is price. While cost savings have helped it chip
away at Intel's market share, the company still lags far behind.
Therefore, anything that separates its offerings from Intel's is a plus.
AMD's Mobile Athlon, for example, is noted for its power management
features, in which the chip sets its clock speed based on the
applications running on a PC.
"Things like that are
very key in the market," Sargent says. "Going forward, as
chips become more commodified, any differentiation they can place on
their systems is going to be the key."  |
