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SCMP Reporter

THE 486 PC is dead; long live the Pentium PC! That's Intel's battle cry for 1996. But whether sales of Pentium desktop PCs will actually surpass 486s in Asia depends very much on which country you're in.

  'In emerging markets in Asia and South America, the 486 is still selling like crazy,' said Stephen Tsang, general manager for Intel's competitor Advanced Micro Devices (AMD) for China and Hong Kong.

  In the first nine months of 1995, eight out of 10 PCs sold in China were 486s, according to estimates by International Data Corporation (IDC).

  In Hong Kong, seven out of 10 PCs sold were 486s, with Pentiums making up only 20 per cent. And 386-based PCs still comprised more than a third of PCs bought in India.

  Of course, those figures don't include the last three months of last year, during which, according to preliminary US statistics, sales of multimedia Pentium PCs rocketed in America.

  Nevertheless, the Pentium PC will dominate the 486 only in markets where home demand outstrips business, like Korea and Australia.

  'The 486 isn't dead, but 1996 will be Pentium's year,' said Dane Anderson, senior PC analyst for IDC in Hong Kong.

  He estimated that 80 to 85 per cent of PCs purchased in Asia this year will be Pentium-based.

  While the booming home market, spurred on by power-hungry multimedia and Internet applications, will drive Pentium demand, the 486 will continue to draw many business customers, Mr Anderson said.

  'The 486 is adequate for many business functions, including word processing and cc:mail,' Mr Anderson said.

  He added that offices, which typically buy large quantities, respond more to price discounting.

  Intel says it is aggressively phasing out production of its 486 chip this year and switching capacity over to Pentium microprocessors.

  The Santa Clara, California, based firm says it will continue to sell 486 chips - not for PC use, but for 'smart' appliances and cars with 'embedded' microprocessors.

  Meanwhile, Intel's competitors like AMD, Cyrix, and Texas Instruments are still picking up strong demand for 486 chips.

  AMD's Mr Tsang said the firm, which is to finally approve its merger with rival NexGen today, will earn most of its revenue this year from the 486.

  Mr Tsang said Intel's aggressive price-cutting of its low-end Pentium chips is driving down their profit margins for the 486 chip.

  And for some vendors, Intel is also pricing its remaining inventory of 486 chips below its rivals.

  Acer's product manager in Hong Kong, William Yeung, said Intel was selling 486 chips to original equipment manufacturers (OEMs) such as Acer cheaper than AMD.

  Mr Yeung said this pitched price warfare 'is good for the end users'.

  For most of last year, technical delays prevented Cyrix, AMD and NexGen from shipping any significant volume of Pentium-equivalent chips.

  Nipping at Intel's heels, these companies are hoping that the Pentium's top position will prove vulnerable.

  Last week, Intel was embarrassed when it acknowledged that speed ratings for its new Pentium 150 and 166 MHz chips had been overestimated by about 10 per cent.

  Meanwhile, Mr Tsang said AMD's K-5 100 MHz chip was as fast as Intel's Pentium 133 MHz, but would cost 10 per cent less. The K-5 chip started shipping in small quantities this month and will be widely available in PCs by May or June, he said.

  Compaq, which has publicly tussled with its main supplier Intel, as well as IBM, Epson, Hewlett-Packard, Digital, and NEC are some of the PC makers who will use AMD's K-5, Mr Anderson said.

  Meanwhile, Acer has already adopted Cyrix's M-1 chip for its notebooks introduced last month. Many customers are choosing the M-1-equipped machines because they are as fast and cheaper than the Pentium notebooks, said Mr Yeung.

  Both AMD and Cyrix claim their chips offer performance somewhere between Intel's Pentium and Pentium Pro.

  But Intel did not become a US$2-billion company without having countermeasures ready.

  'Intel will leverage the Pentium to the greatest extent possible,' Mr Anderson said. 'It will introduce a Pentium 180-MHz chip this year.'   Mr Anderson also believes that Intel will also introduce a multimedia version of the Pentium chip later this year to bolster itself against AMD and Cyrix, who will both have 586-equivalent chips on the market.

  The so-called 'P55C chip' will have special instructions which will execute faster sound, video and graphics-intensive programs.

   Such functions on-board the chip would make peripherals like add-on sound and graphics cards redundant.

  And with Microsoft and Sony both entering the PC hardware business - Microsoft's PC built by Packard-Bell will arrive near the end of this year - will Intel finally start selling its own branded computer?   Some of the pieces are already in place. Intel already puts together finished PCs for OEMs like Toshiba, Mr Anderson said.

  Intel is also one of the largest motherboard manufacturers. And it's built tremendous brand awareness with its 'Intel Inside' advertisements and logos.

     Intel has stated clearly that it did not intend to expand out of the high-profit margin chip manufacturing business.

  But that begs the question: what does Intel have in the research pipeline?   Intel won't say, but rumours persist. Future versions of the Pentium Pro, which Intel introduced last October for workstations and low-end enterprise servers, may also have multimedia instructions.

  By 1998, Intel ought to have a few more chips ready for the market. There are two possibilities in development, reported the San Jose Mercury News. One is a 64-bit chip which some dub the 'P7a'.

   It continues the x86 architecture developed by Intel that began with the 8086 chip used in the first IBM PC in 1981.

  Another entirely new RISC chip, dubbed the P7b, is believed to be the collaboration between Intel and Hewlett-Packard.

   The Mercury News reported that the RISC technology used here has been dubbed 'very long instruction word' and can handle up to 20 different instructions simultaneously.

  To put that into perspective, Intel's Pentium Pro can only process three different instructions per clock cycle.

  Meanwhile, the PowerPC chip, used in Macintosh, certain IBM, and workstation computers, is unlikely to gain much popularity in Asia, where the x86 chip reigns supreme, Mr Anderson said.

  The PowerPC offers more advanced RISC functions, and can run many different operating systems, including Windows 3.1, 95 and NT, Macintosh, OS/2, and UNIX.



Pentium leads Intel's march on PC market