Ultimately, full-featured PCs could sell for as little as US$199 each, he said.
The developing world is the new frontier for high-tech companies. North Americans and Europeans are already swimming in PCs. Intel, among other companies, is seeing its strongest growth in China and similar regions. But most of these PCs are being sold to an urban middle class, not the people living in the rural hinterlands, said Bill Siu, vice president and general manager of the desktop platforms group at Intel.
Taiwan's Via Technologies sells most of its inexpensive processors in the developing market. Advanced Micro Devices, meanwhile, recently resurrected its budget Duron line for the Chinese market.
"So you don't sell it for US$350," said Peter Glaskowsky, editor in chief of the Microprocessor Report, an industry newsletter.
Some manufacturers are currently selling US$199 PCs, but often they lack features found in standard PCs. Generally, they also do not come with Windows, Siu said. "Software is a big piece of it," he said.
The main question facing the company now is how to take the cost out of building a desktop. Historically, semiconductor manufacturers have cut costs by combining two or three parts onto a single piece of silicon.
"Integration has traditionally been a strong ally," Siu said. Integrated components, however, take substantially longer to develop, so manufacturers run the danger of missing a window of opportunity or coming to market with a new processor that is slower than the competition.
Predicting technological trends in advance can also be difficult. In the late 1990s, Intel was developing an inexpensive processor code-named Timna. Timna contained a memory controller that allowed it to be used effectively only with memory based on designs from Rambus. When Rambus memory proved to be expensive and unpopular, Timna was killed.
"We placed a bet on the wrong memory," Otellini said.
These $199 currently exist. There are many people that want a simple inexpense computer. Internet browsing, word processing, and simple spread sheets is more than they are ready for. The question is can these computers be designed for easy upgrade so the user does not have to purchase a whole new computer as their computer skills improve?
Right now most of the cost cutting has been by not including software, using the cheapest componets possable, and putting everything on the motherboard. The built in video uses system ram. So a 64mb or 128mb computer drives windows nuts trying to deal with the 16mb lost for video.