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June 15, 1999
Web posted at: 2:45 p.m. EDT (1845 GMT)

In this story: Slim high-end sales K7 and PIII set to square off RELATED STORIES, SITES

by Christian McIntosh

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(IDG) -- Should I stay or go? Should I fish or cut bait? Should I buy six of one or half-dozen of another? Applying these axioms to today's high-performance computing market, the suitable platitude might be, Should I buy the PIII or wait for the Merced?

We know they're coming--revved-up Pentium III chips, Intel's 64-bit Merced CPU, and AMD's supercharged K7 microprocessor. We just don't know whether we should wait to buy them. Will the flavor of the week really be the fastest chip available--and for how long?

Clock speed drives PC sales, and rival chipmakers are spurring one another to dizzying heights. High-performance 600-MHz microprocessors are on the horizon, and the architecture is in place for markedly faster CPUs. Intel plans to ship 700-MHz chips during the first half of 2000.

"There's a lot of room to introduce faster processors if the market wants it," says Kea Grilley, Intel's desktop marketing manager. During the Intel Developer Forum in February, Intel lab technicians publicly demonstrated a 1-GHz PIII chip running on 0.25-micron architecture.

Although the demonstration was aided (the chip was cooled, not running in a computer box), it provides a glimpse into the not-too-distant future. And as Intel migrates to 0.18-micron architecture and smaller geometrics, future processors will have even greater headroom, according to Intel officials.

"0.18-micron is smaller, which means faster and cooler as well," Grilley adds. "0.18 is going to take us to significantly higher speeds."

But are consumers snapping up these bionic machines or waiting in the wings for the clock-speed derby to decelerate?

Slim high-end sales

Domestic sales for systems running on 500-MHz and faster chips topped out at 559,160 PCs for the first quarter of 1999, according to International Data Corporation's Quarterly PC Tracker report. By comparison, U.S. consumers purchased more than 6.5 million computers in the 300-MHz to 499-MHz segment during the same period. The sub-300-MHz segment tallied 578,045 units sold.

While IDC expects 500-MHz and faster systems to sell more than 9 million units during fiscal 2000, sales forecasts for sub-500-MHz machines for the year 2000 exceed 40 million.

IDC analysts predict that sales of systems running Merced, Intel's forthcoming 64-bit chip, will total a scant 116,318 by the end of 2000.

"It's going to get more competitive in the high-performance space," says Bruce Stephen, vice president of worldwide PC research for IDC. "With AMD's K7 chip coming out and Intel wanting to economize the Pentium III, price-band models are going to continue to get compressed."

As competition heats up between Intel and AMD in the high-performance processor space, prices will slacken and sales should increase, Stephen says. But who will be the fastest, and for how long? The short answer, according to Stephen, is that it's too soon to tell.

"Intel could become more aggressive, depending on how much of a competitive threat AMD's K7 poses," Stephen says. "And that could go a long way toward determining who will have bragging rights."

K7 and PIII set to square off

For the first time, Intel has formidable competition in the high-performance processor space, according to Linley Gwennap, senior analyst at the research firm MicroDesign Resources. "It is going to be a dogfight. Whatever AMD does, Intel is going to try to trump it."

AMD's K7 processor, which will launch in 500-, 550-, and 600-MHz versions, will spur Intel to bring accelerated, feature-rich processors to market faster than it normally would, Gwennap says.

"And the K7 design looks pretty solid," Gwennap adds. AMD plans to hit the 1-GHz plateau in 2000. At a dinner sponsored by MicroDesign Resources on Thursday night, AMD's vice president for engineering, Dirk Meyer, discussed the K7 development process and offered a technical review.

According to those in attendance, Meyer claimed that K7 chips deliver approximately 40 percent better performance than PIIIs running at equivalent clock speeds, as measured on the WinBench benchmark.

Those who heard him say Meyer reports that the K7-550 ranges between 106 and 146 percent faster than a 550-MHz PIII Xeon in the vendor's benchmarks.

"But the issue is whether AMD can build it in any kind of volume," Gwennap says. Once AMD starts manufacturing on 0.18-micron architecture, it can dramatically accelerate K7 production, Gwennap says.

The K7-PIII feud will only benefit discriminating high-performance PC consumers, analysts say. And in this instance, patience should pay off in the form of affordable, full-featured systems running at breakneck clock speeds.