Intel seeks lift from Centrino follow-on

The new laptop technology, sometimes referred to by its code name Sonoma, pairs a handful of slightly faster Pentium M processors with the Intel Mobile Express 915 chipset, a group of supporting chips code-named Alviso that incorporates a number of performance enhancements, including a faster bus and higher-performance graphics, as well as a Wi-Fi module. One of two modules, a dual-band 802.11b/g module or a triband module that allows a notebook to operate on 802.11a, 802.11b or 802.11g networks, are required for a machine to be sold under the Centrino brand.

Those features are bound to tempt a new wave of laptop buyers, according to PC manufacturers.

"You're going to see a lot of people who were buying value notebooks one or two years ago who are going to step up, and they're going to be extremely happy with the overall performance jump they're getting," said Will Diehl, senior director of mobile products at Gateway.

Intel and Centrino won't be the only driving forces behind the continuing mobile migration, he said. Prices on key components such as LCD panels have been falling as of late, helping PC makers lower their prices or offer models with larger screens.

"A lot of those trends, together with some of the performance (from Centrino)...are going to drive great growth rates in notebooks and will potentially start to cannibalise a lot of the desktop growth," Diehl said.

In the fourth quarter, PC shipments worldwide jumped a healthy 13.7 percent, according to market researcher IDC.

Notebooks have been especially popular with consumers recently, with unit retail sales growing at double-digit rates in the United States. During the 2004 holiday season, between Thanksgiving and Christmas, notebook sales jumped by 26 percent at US retail outlets, according to preliminary figures from The NPD Group.

Gartner, meanwhile, predicts that during 2005, notebook shipments will rise 16 percent to 54.5 million units. Consumer notebooks, it said, will total just more than 20 million units, up almost 20 percent from 2004.

But Intel can't count on hogging the market. Rival Advanced Micro Devices recently began talking up its Centrino challenger, Turion, and expects to release the lightweight-laptop chips in the first half of this year.

Weighing on their minds
Many of the more popular consumer notebooks lately have been larger, less-expensive machines, sometimes called desktop replacements. Intel has set out to change that with the new Centrino, which it aims to use to boost the performance of lightweight notebooks and thus make them more mainstream, at the same time that it captures a larger piece of the notebook market with the Pentium M bundle.

Although consumers have been able to purchase 5- or 6-pound notebooks for years, buyers typically had to make compromises to purchase those systems. A given 5-pound machine's performance is usually lower or its price higher than a heftier 7- or 8-pound model, which might have a higher-performance processor, a larger hard drive or a bigger screen for a better price. Enter Sonoma.

The first systems out of the gate from major manufacturers will sell for a premium, falling into the US$1,300 to US$1,500 range, somewhat more expensive than today's Centrino systems, which start at about US$1,000 to US$1,200 when sold direct, and around US$1,300 to US$1,400 at retail. Over time, prices on Sonoma systems are expected to come down, making them more enticing to consumers. So far, "I haven't seen a lot of Centrino notebooks that bust the US$1,300 (notebook) average selling price," said Steve Baker, an analyst with The NPD Group, which tracks retail sales in the United States.

During December, preliminary numbers from NPD show that Centrino and Pentium M processor notebooks represented just short of 22 percent of notebooks sold at retail in the United States (a strong position compared with a year ago), but less than Celeron M systems, which were about 27 percent of sales, and Pentium 4 systems, which were almost 26 percent of sales. AMD processor notebooks, including those based on the Athlon XP, Athlon 64 and Sempron, made up nearly 20 percent of sales.

"If they want to have more (Centrino unit sales) volume, yes -- prices will have to come down," Baker said. "Without question there's a huge amount of value below the average price line" of about US$1,300.

Dell's latest Inspiron 6000, announced on Wednesday, starts at about US$1,300 with a Pentium M and 15.4-inch screen. With a triband Intel wireless module, 512MB of RAM, a 60GB hard drive and a CD burner, it costs about US$1,600. Toshiba is also offering several models, including the Satellite S45-S331, which starts at about US$1,500 with a Pentium M and a 15.4-inch screen.

IBM has also added the new chips to its ThinkPad line. It will offer a ThinkPad T43 model, which incorporates the chips along with IBM tools such as Rescue and Recovery 2.0 for recovering from viruses or retrieving lost data. The T43, which IBM says will begin shipping next month, offers a range of Pentium M processors, Intel wireless modules and hard drives up to 80GB for a price starting at US$1,499, the company said in a statement.

Gateway's first Intel Mobile Express 915-based notebook will arrive for businesses in February, the company said. It did not offer any details on the machine. Hewlett-Packard is also expected to come out with machines based on the new chips at a later date.

Higher prices or not, Intel believes the notebook market is moving toward Centrino. Executives at the company have said that consumers, many of whom are second- or third-time PC owners, as shown by NPD data that reveals notebook buyers average 2.7 computers per household, are growing more sophisticated when it comes to choosing notebook models.

Thus, the chipmaker believes people who purchased inexpensive but hefty desktop replacements in the last few years will opt for lighter weight and longer battery life the next time around.

Many PC executives agree.

"Our customers are definitely cognisant of the benefits of mobility," said Gretchen Miller, director of product marketing for the Inspiron line at Dell. "There is a greater range of choices available today than ever before. Customers can choose from the (Dell Inspiron) 700M, something that's basically a replacement for a portable DVD player with computer capabilities, on up to full desktop replacement notebooks."

However, weight and design are becoming more and more important to customers, she said.

At some point the notebook phenomenon will run out of steam and growth rates will slow, Baker said.

But "if the goal is to make PC household penetration and ownership look a lot more like television ownership -- there are one or two communal products in the house and everybody else gets one for themselves -- if that's the case, then there remains a pretty big opportunity for people to add more PCs to their home," he said. "If that's what they're really doing, there isn't any question the best product for that is the notebook, along with the Mac Mini."