Although the Santa Clara, Calif.-based chipmaker garners most of its revenue and profits from such well-known processors as the Pentium 4 or the Xeon, it's unsung heroes like the US$40 915G Express chipset, released earlier this year, that have let Intel become the largest and fastest-growing graphics chip designers on the planet.
The 915 family incorporates a variety of technological enhancements, including faster memory, higher-performance graphics and audio, and the option for a built-in wireless access point. The chipset family will also give the company an opportunity to erode some of TiVo's dominance in digital video recorders and to once again become a dominant force in home Wi-Fi access points.
"There will definitely be a threat to Linksys and those companies if the desktop becomes an access point," said Kenn Furer, an analyst with IDC. "If anything, (Intel) becomes a threat because there's less need for the access point in addition to the desktop."
By making its own brand of wireless cards readily available, Intel "makes it tougher for someone like Broadcom or Atheros to be as automatic of a choice," Furer said.
Price and pervasiveness are what make Intel chipsets -- a collection of chips that assist in shuttling data to and from the processor and controlling input/output -- such a looming danger.
Adding graphics functionality by way of one of Intel's new chipsets tacks on only about $3 to the base price of making a PC. Standalone graphics chips can cost $15 to $30. On the wireless side, Intel's wireless bundle, which includes Wi-Fi chips along with the chipset, will cost $50, about the same as a standalone wireless router now. That price, though, can likely be cut, because the Intel bundle doesn't need a separate box -- it's simply part of the computer.
Intel has about 60 percent of the chipset market. And licensees that make compatible chipsets, such as SiS and ALI, integrate similar functionality, putting further pressure on existing equipment makers.
Even before Intel came into the market, Wi-Fi manufacturers were caught in a price spiral, one that prompted Microsoft to bow out of the Wi-Fi router market in June. Still, whether Intel was the direct cause or simply the straw that broke the camel's back, its entry into many of these markets, including graphics, was followed by turmoil before a few dominant players emerged -- including Intel.
The company is unapologetic. CEO Craig Barrett has said that Intel's job is to "innovate and integrate." And Sunil Kumar, director of marketing and planning for chipsets and software in Intel's desktop PC group, would seem to agree.
"We want to get every home connected," Kumar said, "and we want to facilitate that" with the built-in access point technology.
Integrate and dominate?
The morphing of Intel's chipsets is not unlike the evolution of Microsoft's Windows operating system, which has also absorbed numerous features over the years. The addition of more features has generally benefited consumers by helping PC makers cut prices on machines. Low-price desktop models, for example, use integrated graphics chipsets to eliminate the cost of a graphics card.
Microsoft, though, has seen that bundling can lead to legal problems. The software giant ran into trouble in 1997, for instance, when the US Department of Justice accused it of violating a 1995 court ruling that barred it from imposing anti-competitive licensing terms on PC makers. The licensing terms for Windows 95 had required manufacturers to also license and distribute Microsoft's Internet Explorer Web browser. The case went to trial, and an eventual settlement caused Microsoft to change its licensing terms and the way it paired products.
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