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  Intel's Quarterly Earnings and Roadmap 
  Jul 18, 2001, 09:00am EDT 

Quarterly Earnings

By: Sander Sassen

Intel released its financial results for the second quarter on Tuesday and to some of us these results may have come as quite a surprise. Although no one expected the sales and projections to be rosy considering the current slump in PC sales overall, Intel still managed to pull in roughly $850 million net income for the second quarter. Although down 24 percent in comparison to the second quarter of 2000, this is still better than expected.

According to Craig R. Barret, president and chief executive officer at Intel, Intel's second quarter results have met with their overall expectations as their microprocessor business performed better than expected. By looking at their sales figures it's clear to see that Intel indeed shipped more microprocessors and chipsets in the second quarter of 2001 then in the first. However motherboard and flash memory shipments were actually lower than the first quarter, whereas the same applies to Intel's networking products such as Fast and Gigabit Ethernet.

Craig R. Barret also mentioned that Intel's investments in R&D and manufacturing allowed Intel to introduce industry-leading products across all computing segments and ship their first 0.13-micron-based products ahead of schedule. But did they? Lets take a closer look at the products Intel introduced in the second quarter and what's in store for the next few quarters and 2002/2003/etc.

In April, Intel introduced the Pentium 4 processor at 1.7 GHz, the company's highest performance microprocessor for desktop computers. In July, Intel extended its clockspeed leadership by introducing the Pentium 4 processor at 1.6 GHz and 1.8 GHz.

In May, Intel and Compaq Computer announced joint engineering and marketing efforts to address IT customer requirements for low power consumption, increased density and increased performance in the rapidly growing front-end server market segment. Compaq will use Intel ultra low-voltage (ULV) processors in its forthcoming hyper-dense server architecture, code named QuickBlade, slated for the second half of the year.

In May, Intel announced plans to introduce a family of carrier-grade, Intel-based server products for the telecommunications industry by the end of the year. Intel and Hewlett-Packard also jointly announced an expanded focus to meet the needs of telecommunications companies and service providers.

In May, Intel introduced its first generation of Intel Xeon processors based on the NetBurst microarchitecture of the Pentium 4 processor. The Intel Xeon processors are initially aimed at high-end and mid-range dual-processor enabled workstations and ship at frequencies up to 1.7 GHz.

In May, Intel introduced new mobile processors delivering the industry's lowest power consumption and highest performance to the ultra-portable mobile PC segment. The announcement included the Ultra Low Voltage mobile Pentium III processor at 600 MHz and the Low Voltage mobile Pentium III processor at 750 MHz.

In May, Intel announced that computer manufacturers were preparing to introduce their first Intel Itanium-based servers and workstations beginning in June. The company expects approximately 25 computer manufacturers to offer more than 35 models this year, as hundreds of hardware and software vendors deliver products in support of Itanium-based systems.

In June, Compaq Computer and Intel announced a multi-year agreement to accelerate the availability of next-generation enterprise servers based on the Intel Itanium processor family. Compaq will transfer key enterprise processor technology to Intel and consolidate its entire 64-bit server family on the Itanium architecture.

In June, Intel demonstrated its next-generation mobile processor based on 0.13-micron process technology. To be available in speeds above 1 GHz, the new mobile Pentium III processor-M will provide new power management technologies for thinner, lighter notebooks.

In July, Intel released two new Celeron processors. The desktop Celeron processor at 900 MHz and the mobile Celeron processor at 850 MHz bring higher performance to value-priced PCs.

To summarize things, Intel hasn't really done much in the desktop segment this quarter, we've seen three new speed grades of Pentium 4 being introduced and mobile Pentium III processors with even lower operating voltages. Thus better sales must have come from a good marketing campaign, as they didn’t exactly have a clear performance edge over AMD in the desktop segment. However Intel has moved more aggressively into the workstation market with their launch of the new Pentium Xeon, which is based on the Netburst architecture and is in essence a Pentium 4 capable of SMP.

Furthermore the Itanium has finally moved from a prototype CPU to an actual product, although we have yet to see the benefits of IA-64 without having backwards compatibility with IA-32. The IA-64, 64-bits software only, approach has its merits and drawbacks, we'll just have to see how well the Itanium performs and if the industry accepts yet another platform that’s incompatible with everything else on the market.

However 0.13-micron parts are even harder to come by now than the 1GHz Intel Pentium III was when it was launched about a year ago. We've seen some parts circulate around the web, but we have yet to see an OEM or a large vendor actually put them up for sale or incorporate them in its products. We're hoping Intel can quickly move forward with their 0.13-micron process on the Pentium 4 as that would once again put them in the lead over AMD, not only in clockspeed, but also in performance.

We're just hoping i845, the SDRAM/DDR chipset solution for the Pentium 4, won't be as crippled as the i820 was with the MTH, both in performance and stability. What we've seen until sofar, the i845 doesn't look too promising with SDRAM, but DDR might prove to be a better fit for the Pentium 4, provided the CPU clockspeed is quickly scaled upwards. And quite frankly it has to be good if they want to move forward with their 'acceleration of the Pentium 4 roadmap' they've announced. Basically what they intend to do is push the Pentium 4 from top to bottom, with low-end sub-2GHz i845 SDRAM systems, up to high-end, plus-2GHz i850 RDRAM systems. This means that the Pentium III will be phased out or restricted to use in notebooks with the 0.13-micron Tualatin core. To fill the gap at the really low end they’ll increase the Celeron's clockspeed, up to 1GHz.

The fastest Pentium 4s we're likely going to see with their current 0.18-micron process is 2GHz maybe 2.1GHz, the plus-2GHz range will therefore be out of reach and restricted to 0.13-micron. Thus for Intel to succeed with their accelerated roadmap they’re betting on both the 0.13-micron Pentium 4 being ready and in production on time and the i845, either with SDRAM or DDR, catching on and providing a viable alternative to Pentium 4 with RDRAM or AMD’s Athlon. So the next few months we’ll likely see some stiff competition between AMD’s Athlon/Athlon 4 with either the AMD 760 or Via KT266 Pro chipset, or, if nVidia can pull it off, there’s a third competitor for the performance crown, the nForce chipset.

The next page has a roadmap detailing all of Intel's current and upcoming microprocessor products, including Celeron, Mobile Pentium IIIs and Xeons. This roadmap has been constructed after talking to a large number of Intel representatives, industry contacts and during interviews with Intel execs and we believe it gives a pretty accurate picture of things to come with the accelerated roadmap Intel has announced.

Sander Sassen

1. Quarterly Earnings
2. Intel Roadmap

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