In an attempt to check a slide in its market share, Intel said Monday it would deliver a new package of chip technologies later this year to better differentiate its products from those of rival Advanced Micro Devices.
The technologies, dubbed vPro, aim to set Intel-powered PCs apart by introducing a new microprocessor, chipset, and software that can increase computer uptime, better secure PCs from viruses, and cut down on energy consumption while maintaining speed. Intel plans to release the technologies for business PCs during the third quarter.
Power costs and labor for managing PCs have become larger portions of IT budgets in recent years, Intel CEO Paul Otellini said during a press conference in San Francisco. "IT spending has become problematic," Otellini said. Nearly 90% of companies' IT budgets are allocated to support costs rather than new projects, he said. And while notebook PCs have evolved in recent years to include new technologies for power efficiency and wireless communications, "the good old business PC hasn't changed very much," he added.
Intel last week reported first-quarter profits declined by 38% and revenue fell more than 5%, as AMD cut into its market share by selling faster, less power hungry processors. Intel also had excess inventory on hand and last week lowered its revenue forecast for the year.
During the fourth quarter of 2005, Intel's share of the microprocessor market declined to about 77%, from 82% a year ago, while AMD's share rose from 16.6% to 21.4%, according to Mercury Research. The competition has forced Intel to cut prices, hurting its gross profit margin.
Bundling technologies to set its products apart from the competition is similar to Intel's approach in the notebook computer market, where the company has had success with its Centrino packages of hardware and software designed to improve the performance of notebooks with wireless Internet access. Now, Intel is trying the same approach on the desktop, says Rob Enderle, an analyst with The Enderle Group. But while Centrino helped make wireless computing mainstream, the business desktop market lacks such a dramatic problem. "They are trying to play the management card, and that is the best card to play, but really for some time, management has not been that big an issue for the enterprise," he says. "The need is not as great."
Intel also runs the risk of crowding the market with platform brands: Centrino for laptops, Viiv for the consumer PCs, and now vPro for business computers, says Enderle. vPro chips could find greater acceptance in the small and midsized business market than at large companies, since smaller companies tend to rely on their PC makers and software vendors to provide PC security and management.
vPro includes a new version of Intel's Active Management Technology that can help IT support staffs reboot PCs from crashes and update PCs with patches without visiting users' desks. CRN reported that advance last month. The new platform also includes Intel's Virtualization Technology, which divides a PC into two partitions: one for the environment programmable by a user, and the other for running security software. At the press conference, Symantec CEO John Thompson said his company will work with Intel to install on PCs security software that can remove small amounts of malicious code that often go undetected.
Intel general manager Gregory Bryant said the security, management, and power-efficiency technologies in vPro will run on Microsoft's Windows XP operating system, but he positioned vPro as a better choice for running Microsoft's upcoming Windows Vista and Office 2007 productivity software, due early next year. PCs with vPro chips will be able to better run Microsoft Excel and deliver smoother performance of Vista's new graphical user interface, he said.