Intel moves inside out with Centrino

Strategic inflection points can be caused by technological change but they are more than technological change… They build up force so insidiously that you may have a hard time even putting a finger on what has changed, yet you know that something has. When the way business is being conducted changes, it creates opportunities for players who are adept at operating in the new way.

Andy Grove, CEO Intel

n a lackluster year when the PC market registered one per cent growth, Intel, which holds 80 per cent of the PC microprocessor market, is betting on sealing its dominance in the computing space through an all-out exorbitant $350 million advertising blitzkrieg for its new Centrino Technology. CEO Andy Grove admits the high-pitched international campaign behind Centrino; a group of chips designed specifically for mobile computing is second only to the introduction of the Pentium in terms of its importance. The strategic inflection point driving Intel - the Wi-fi market which, according to the META group, is expected to grow at an annual compound rate of 30 per cent. Centrino aims to make Intel synonymous with ubiquitous, fast, and easy connectivity. Today, most users who want to connect to, say, a wireless network at Wi-fi hotspots have to buy special wireless cards to put into their computers. But a wireless chip like one that's part of Centrino functions as an embedded wireless card -- essentially making any notebook wireless-ready. The no-holds barred promotion also coincides with the beginning of the four-year replacement cycle characteristic of the personal computing sector. The last corporate replacement cycle was in 1999 and Gartner predicts that hardware upgradation would be an economic and technical necessity by the end of this year, leading to a surge in sales by 2004. Analysts such as Think Equity Partners also calculate that Mobile PC growth would continue to outpace the desktop PC segment with 50 per cent of corporate users in the next two years tapping on laptops, up from 20 per cent today.

The silicon wizard is not piggybacking on radically new technology in making the crucial shift to Intel Anywhere and Everywhere. Intel's first mobile-PC effort is not the latest in a long series of processors, but rather a set of three components bundled together on a single platform. One, the new Pentium-M processor, formerly code-named Banias, at the heart of the Centrino package and has been designed specifically for portable computers. (Previous Intel notebook processors were desktop processors tweaked for mobile use.) The Pentium M processor contains 77 million transistors that would begin with clock speeds up to 1.6 GHz. The processor also boasts of an impressive 1 MB of L2 cache Second, the Intel 855 chipset. The final constituent of the Centrino kit is the integrated wireless connectivity by way of a mini-PCI card. The Intel Pro Wireless 2100 network connection offers the ability to connect to 802.11b Wi-Fi networks and offers automatic switching between wired and wireless LAN. From a technological standpoint, however, Centrino most notable advancement is not speed but longer battery life. Intel claims that the processor consumes an average of less than one watt of power. Instead of simply running more rapidly, says Intel, its new laptop chip will result in better overall performance in real-world applications. The processor through a range of methods maintains power efficiency. For instance, the system bus remains powered down until it senses incoming data from the chipset.

The overall success of the Centrino is dependent on Intel's strategy to globally proselytise WLAN. As part of the long-term campaign to dominate the mobile computing market, the chip-giant is investing in popularising Wi-fi. Last year Intel partnered with IBM and AT&T to form Cometa Networks, a company that plans to build 20,000 hot spots by 2004 aimed primarily at business customers. Intel is sending scores of technicians worldwide to such venues as Borders, McDonald's and Starbucks outlets to certify that Wi-Fi connections in those locations work flawlessly and reliably with Centrino. The company's venture capital arm, in addition, is pouring money in wireless companies. Intel has earmarked $150 million for investment in wireless companies. For instance Credant Technologies working on security management platform for laptops, tablets, personal digital assistants and smart phones to protect business information in the device have received investment from Intel Capital for an undisclosed sum. The investment is part of Intel's strategy to foster the development of devices using its Centrino mobile technology. To stave competition from traditional rivals such as AMD only vendors who incorporate all three elements of the Centrino notebook strategy would be able to take advantage of the millions of marketing dollars Intel will offer for branding notebooks with the dart flight/kite mark. Although not yet a major factor in driving shipments, Gartner believes that the launch of the Centrino is drawing much more attention to mobile PCs.

Intel is in a tight spot with its new strategy to mass-market the product. Since many specialty companies offer more advanced individual products PC manufacturers may not succumb to Intel's generous offerings as it might rob them of the flexibility to choose different vendors for different components compared to Centrino. Business Week reports that Toshiba has opted to use Atheros chips over Centrino. The wireless chips included in Centrino will initially support the older 802.11b Wireless standard even though other makers already offer chips the newer, faster 802.11a. By pushing a slower chip Intel is reversing its traditional marketing formula that ingrained processor speed equaled greater efficiency. Analysts are of the opinion that Centrino is clearly something to be excited about as it brings about extended battery life, better performance, and instant wireless connectivity at any hotspots and noticeable reduction in the size of notebook computers. But the big question: Would consumers accept this logic and adopt a notebook running at slower speeds?

Intel's decision to bare it marketing muscle to drive a strategic inflection point for the PC market is already beginning to show results. Gateway, Acer, IBM and other major manufacturers are already outfitting their notebooks with Centrino. Within a year, most notebooks will ship with Centrino as standard. Watch this space!

(With Inputs from Avinash. Avinash is a freelance writer, who has contributed to various publications.)

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