Santa Clara (CA) - Intel today said that it has notified its partners that it has accelerated the roadmap for its quad-core processors. The launch has been pulled from the first half of 2007 into the fourth quarter of this year - in time to compete with AMD's 4x4 platform. Intel also indicated that the Pentium brand will move into the value segment of PCs.
Looking at the plain numbers of Intel's second quarter balance sheet could be an almost scary experience for investors. Not only the negative impact of the season, but unfavorable inventory levels, lower microprocessor sales, lower average selling prices of processors, cut-throat competition and a flash business that continues to lose money are among the main factors that put a substantial dent in the firm's quarter result.
But according to CFO Andy Bryant and CEO Paul Otellini, then the company has used the quarter as a phase of transition and as a launchpad for more promising times: The company has initiated a review of the firm's structure, which already resulted in the sale of its communications processor business to Marvell as well as laying off 1000 managers to create a leaner operation. On the technology side, Intel has launched the Xeon 5100 processor based on the new Core architecture in June and will follow up with the desktop (Conroe) and mobile (Merom) version in the coming weeks. According to chief executive Otellini, Core 2 Duo is "ramping as rapidly as possible" and Intel claims that it already has built a Conroe inventory "that is worth about $200 million."
Going forward, Intel apparently isn't slowing down and will increase the pressure on its rival AMD. On the high-end, Intel intends to extend its current lead in performance desktop computers and said that it will launch its quad-core processors ("Kentsfield" on the desktop and "Clovertown" on the volume server side) already in the fourth quarter of this year. Considering the fact that AMD intends to launch its 4x4 platform, which will enable enthusiast users to run two dual-core Athlon 64 processors on one motherboard, Intel could have 4-core platform available for the holiday season.
Kentsfield, which was publicly demonstrated as a prototype in March of this year, consists of two Conroe cores and should enable Intel to reach fairly high yields by the end of the year. The same applies to Clovertown which is created from two Woodcrest cores.
Chief executive Paul Otellini also addressed upcoming price reductions of Intel microprocessors, which are likely to impact AMD's pricing model of midrange processors. "Core 2 Duo enabled us to reset our processor setup," he said. As a result, the company will drop the prices of Pentium-branded processor "to a level not previously addressed by this brand." Otellini believes that Core 2 Duo provides Intel with a "unique competitive advantage."
The executive revealed very few details about future processor pricing. However, it appears that the Pentium brand will not be replacing the Celeron brand as the only value product at Intel right away. For the first time in its history, Intel is dealing with three desktop processor brands - Core 2 Duo, Pentium D and Celeron D. In the end pricing would "depend on the right mix" of its product offering, Otellini said. That mix may not be an issue in two or there quarters: Roadmaps indicate that Core 2 Duo will be ramping quickly and spread through all desktop markets within a year - and Intel will waste no time preparing the market: "We directed virtually all direct advertising for this year on Core 2 Duo," Otellini said.