||Who Needs Faster
Wednesday, December 15, 1999
03:00 AM ET
Users are going to get speedier
processors, whether or not they need them.
PCs are now so fast that there seems to be no pressing
need to upgrade systems every couple of years. Yet Intel continues
to develop ever faster Pentiums and other processors. Is Intel (INTC)
following an outdated business model?
"No," argues Rob
Enderle, the lead PC analyst at Giga Information Group. "The PC
market is built on churn. Performance is what historically has
driven churn. For a market that's based on churning systems,
performance is critically important. If it was to stall, the
hardware companies quickly would lose much of their market value."
Is Intel following an outdated
Enderle agrees that today's applications don't tax the PC
processor, so there's no need to replace a Pentium II with a Pentium
III to get software to run faster. But he notes that the older
systems now being replaced have other bottlenecks, especially slow
drives and too little RAM, as well as aging analog components such
as drive platters and fans. Even if PC owners aren't motivated to
increase processor speed, they need to upgrade three-year-old
machines. So they end up getting the latest processor even if they
don't need it.
There's no software on the horizon that will make users demand
the faster processors that Intel will nonetheless build. (Windows
2000, for example, should run faster than Windows 98 on systems with
128MB of RAM.) Enderle expects such software to emerge, although
it's not clear what that software will be. Technologies such as
voice recognition, which had been expected to create demand for
faster processors, are now bogged down by hard drive and RAM
limitations, not by processors. Other technologies, such as
on-the-fly background virus scanning and file encryption, have not
been adopted in significant numbers, he says.
Enderle's advice to Intel is to keep developing faster
processors, but "to spend a higher proportion of the budget looking
for software that uses that power." In the meantime, he says, people
are "buying adequate"--and finding that they can more than make do
with less expensive systems.