P4, no big bang this

By : |November 22, 2000 0

NEW DELHI: The market response in the country to the launch of the world’s
fastest chip, Intel’s Pentium 4, ranges from lukewarm to being downright
indifferent. Genuine Intel Dealers (GIDs) and manufacturers have brushed aside
the launch as “not of much consequence just now.”

Sure, it will make a difference eventually as “anything from Intel
cannot be ignored,” said Sandeep Nair, Country Manager, Acer Peripherals
India (Pvt) Ltd. All those to whom we spoke agreed on two counts: first, as far
as requirements are concerned, the chip is not a must-have, given the bandwidth
constraints and the lack of applications. To be honest, even the speeds of
Pentium III have not been harnessed to the full extent. Second, the price of P4
is too high to make an impact, given the price-sensitive nature of the market.

Unlike the transition from P2 to P3, the transition from P3 to P4 will take
at least a year as the two architectures are completely different. While the P3
uses SDRAM, the P4 will use RDRAM, which is yet to become an industry standard.
It is also based on Intel’s new 850 chipset. Compare this with the switchover
time from P2 to P3, which warranted only a change in the processor.

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Intel itself acknowledges this when it says that it will make P4 a mainstream
product only by the fourth quarter of 2001. The company has clearly stated that
P4 is currently being positioned to target the power users, multimedia and
animation professionals and of course, computer enthusiasts.

Why then was the need to launch the product now? Was it due to the pressure
to launch a product in response to AMD’s Athlon? According to analysts, the AMD
factor was compelling enough to spur Intel to do a similar launch.

Ajay Kapure, the authorized representative of AMD in India, however, does not
believe P4’s positioning is of any competition to its Athlon chip although he
endorses the stand that Intel’s launch could be in retaliation to Athlon.

Continued…

Observers also state that Intel’s launch was aimed at a two-pronged strategy
to stem the growth of the AMD market. While P4 is expected to compete with
Athlon at the high-end, Intel will undercut P3 prices to an extent which would
enable it to compete with AMD’s competitive pricing.

GIDs and OEMs are not ready to go to the market with the P4 chip just yet.
Said Manish Agrawal, Director (Marketing), Vintron Informatics Ltd, "We do
not expect P4 to generate any demand now. We have no plans in the next two
quarters to launch products based on P4 although we plan to include one in our
product portfolio during the next quarter." Ditto for AK Pandey of Miraj
Marketing, also a GID, who said that he does not expect any demand to come for
P4 but will keep the P4 kit "only because it is a compulsion."

Yet, some vendors are not taking chances. Like HCL Infosystems, which has
launched its Infiniti Challenger workstations with a P4 chip, and RR Systems,
which says it will make CPUs with P4 for the stray customer.

Acer has also launched a product called Veriton 9100, which comes with a P4
chip. "It is not available in the country as yet, but will be shipped in
response to the demand," revealed S Rajendran, GM (Marketing and Product
Management), Acer India. He adds that pricing will not be a holding factor for
professionals who need it.

Speaking about the acceptability of the product, Aditya Pant, Head (Research
Operations), IDC India, said, "We shall see the acceptance of the P4 among
the target customers by next quarter but for it to become a mass product, it
will take at least a couple of quarters."

At the end of the day, it is price and price alone that will determine the
acceptance of P4 in the market. As already stated, as far as requirement goes,
P4 is not a necessity. If Intel slashes prices to a level that is competitive to
P3, the transition will occur much faster. Intel intends to do that by the
fourth quarter of next year.

So let’s check the essentials. Currently, the price of a P3 650 MHz is Rs
9,000; P3 733 MHz is Rs 10,800; P3 800 MHz is Rs 11,800; and P3 850 MHz is Rs
14,000. As against these, the price of the P3 1 GHz is Rs 35,000 and the P4 is
anywhere between Rs 45,000 and Rs 50,000. Going by the market trend, the most
popular chips are the 650 MHz and the 800 MHz. The P4 chips would not achieve
volumes until it comes to the Rs 15,000 price range. Clearly, Intel has a long
way to go in its pricing structure before it hopes to push the P4 into the
mainstream.

Meanwhile, customers are in for a good time as many expect price cuts in P3
that will in turn bring down the prices of computers. As previous Intel
exercises have shown, once new products are released, Intel effects 15 to 20 per
cent price cuts on the older products to phase them out. Simultaneously, the new
product is also positioned as an entry-level product. So, the market expects a
price cut for the Intel P3 chips soon. According to market sources, Intel is
likely to begin slashing the prices of P4 by the second quarter of 2001. By the
subsequent quarter, P4 is expected to become entry-level.

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