The scoop on chips in 1998

You probably didn't start out 1998 thinking the year would end with $US399 price tags teasing home PC buyers or $10,000 starting prices for four-processor servers. The wave of vendors driving faster systems into lower price ranges won't break in 1999, according to analysts - but there already are signs that PC pricing may be a little less crazy. At the high end, few users are holding their breaths for Intel's 64-bit Merced chip.

You probably didn’t start out 1998 thinking the year would end with $US399 price tags teasing home PC buyers or $10,000 starting prices for four-processor servers.

The wave of vendors driving faster systems into lower price ranges won’t break in 1999, according to analysts — but there already are signs that PC pricing may be a little less crazy.

“Pricing has already stabilised a bit in the last two or three months; the corporate market is likely to see smaller price decreases than the consumer does,” says analyst George Iwanyc at Dataquest in San Jose, California. He says Dataquest expects the sweet spot for corporate PCs to stay in the $1,000 to $1,500 range.

Two directions

PC chip technology is driving in two directions. First, Intel ’s Pentium II line soared to 450-MHz, and Intel plans to offer a 500-MHz, multimedia-oriented chip nicknamed Katmai in early 1999. Iwanyc expects a first-quarter push into the corporate market by rival chip vendors releasing their next-generation chips, such as Advanced Micro Devices’ (AMD) 500-MHz K7 and Cyrix's 600-MHz Jalapeno.

Meanwhile, AMD and Cyrix should continue to have an impact in the consumer market, where Intel responded in 1998 with its Celeron line of value-priced processors. By the end of 1998, consumers were able to buy 300-MHz PCs for $399 after rebates.

On the horizon

A key PC development that CIOs should watch for in 1999 is support for the Rambus memory bus interface offered by Rambus Inc. and Intel. In early 1998, vendors released the first PCs to jump from a 66-MHz bus to 100 MHz. Now Rambus -- with a raw bus speed of 400 MHz -- represents another speed boost, although technical limits won’t allow the full 4-to-1 gain, Iwanyc says.

On the server side, Intel extended its Pentium II family with the Xeon line of processors, while bumping delivery of the 64-bit Merced architecture further into 2000.

Yet few people are eagerly awaiting the 64-bit chip. “Merced hype is just that -- hype,” says Jon Oltsik, an analyst at Forrester Research Inc. in Cambridge, Massachusetts. With corporate buyers living in three-year time frames for their server purchases, Unix servers will continue to handle heavy-duty corporate applications, he says.

In 1999, Oltsik expects still more clock-speed boosts for Xeon; greater support for I2O input/output technology; and a move toward server hybrids, which will allow CIOs to partition multiprocessor servers to support multiple operating systems.

But the speed boosts for Intel servers won’t help if CIOs still must wrestle with the limitations of Microsoft's Windows NT. “The chip is almost secondary. NT is limited in that you can’t run more than one application on one box. So if you bring in one new NT application, you have to bring in a new box. You’ll have people who managed five boxes last year managing 12 boxes this year and 20 a year from now,” Oltsik says.

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