INTEL to suffer severely from Osborne effect

Tech companies try to avoid pre-announcing products as much as possible, especially if current products will be end of lifed when the new ones come out. The Osborne effect gave a good lesson, purchases of current products may stop cold as customers wait for the next generation.

INTEL is hyping its Pentium-III based NGMA CPUs, including Merom mobile chip, Conroe desktop chip and Woodcrest server chip like crazy. What we have learnt so far:

*) The NGMA chips are designed for high performance and low power consumption instead of clockspeed

*) The NGMA chips perform 50% better than current IA32 chips (Pentium 4, Xeon, Core Duo)

*) The NGMA chips consumes maximum of 60 watts instead of the current 130 watts.

*) The NGMA chips are AMD64 and Windows Vista compatible, unlike the current IA32 chips

*) The NGMA chips require new chipsets and even new VRMs, they will not be compatible with current motherboards

*) The NGMA chips run at bus frequency of up to 1333MHZ, current IA32 CPUs can't run on NGMA motherboards

*) Current IA32 CPUs already hit the frequency ceiling, there won't be any upgrade path for current chips.

*) NGMA chips are expected in 3Q06, July 2006 the earliest, only 4 months away.

*) INTEL plans to convert 20% of its CPU production to NGMA by the end of 2006.

Needlessly to say, an informed INTEL customer will incline to hold off purchases as long as possible for the super duper NGMA, consequently, in the next four months before NGMA shows up in store, INTEL sales will definitely suffer a slow down.

Then at the time when NGMA arrives in stores, we run into an even bigger problem: because of limited availability, INTEL can't meet the demand, but nobody wants IA32 chips any more. It's just like Microsoft shipped a handful of Xbox360s ahead of PS3, then the thing quickly ran out of stock, and few want to buy the old Xbox with a Celeron inside. Microsoft doesn't care, because Xbox wasn't making money any way. But for INTEL, the situation is quite different.

Another major problem is that AMD has already prepared the next round of frags for INTEL. I bet both INTEL and AMD showed its roadmaps and next generation chips, yet Google decided to go AMD, that confirms my point that INTEL's NGMA is over promising. So when people can't get hold of NGMA due to availability, they will have no choice but choose AMD's Rev F.

AMD platform choices provide stability and continuity. Socket 754, 939, 940, AM2 platforms can all be upgraded, AMD keeps providing core revisions and clockspeed upgrades. For now, there is no motivation to wait for Socket AM2, as the Tomshardware tests showed that Socket AM2 version of the Athlon 64 X2 4800+ had identical performance as current Socket 939 ones -- AMD is careful to avoid the Osborne effect.

Once AMD and Intel move to quad-core in 1Q07, any enhancement made by Intel at the dual core level will be wiped out in a flash. Four Conroe cores sharing a 1333MHZ FSB will be worse than two Presler cores sharing a 800MHZ FSB. The 1333MHZ bus (10.6 GB/s) is not even fast enough to handle dual channel 800MHZ DDR2 (12.8GB/s), while the Rev F AM2 has a dedicated memory interface for 800MHZ DDR2 plus up to 3 hypertransport links with 8GB/s each. Furthermore, I expect AMD to increase AM2's clockspeed to up to 4GHZ using stress technology, leading to another round of GHZ war in 2007.

It will be deja vu all over again.