The personal computer industry is hoping to celebrate Christmas early this year. At the center of the celebration under the virtual Christmas tree is a drab little box called Pentium II.
A 3-inch-by-5-inch device about the size of a very fat chocolate bar, Pentium II is poised to become the Tickle Me Elmo of cyberspace seven months from now as computer stores attempt to log a better season than last year's semi-dud.
In an industry of superlatives, Pentium II enters the marketplace as the most superlative yet, with chip speeds blazing well above today's 200 megahertz high-end Pentium MMX standard and with built-in features that let it perform stunning video displays and other seeming wonders.
Underscoring the importance of the new chip in the fast-paced marketplace was the furor that flared briefly in the wake of discovery of a computational error in the first of the Pentium II chips.
Meanwhile, Intel Corp. executives emphasized that the Pentium II will be a watershed for its Pentium chip line. For example, the 3-by-5-inch case means that the chip will not fit into the upgrade slots for today's line of Pentiums. Until now, it had been possible to upgrade to a faster Pentium by removing one chip and inserting a new one in what is called a Zero Insertion Force socket.
The new design, called Slot 1 in the Pentium II, offers such "under-the-hood" features as graphics accelerators and a doubling of how fast the chip puts out data to the rest of the computer.
The chip will allow creation of "visually connected PCs" that treat full-screen video as though it were just another word processing document or spreadsheet, said Intel's Paul Otellini while introducing the chip at a New York news conference.
At Gateway 2000 Inc., in North Sioux City, S.D., marketing chief David Berger noted that during the 1996 holiday season, computer sellers found themselves without a hot new "must-have" product to dangle before consumers.
"This [Pentium II] is the best answer we've ever seen for the needs of computer users of all types," Berger said.
He said Gateway 2000 expects that machines based on the extremely fast chips will dominate the company's products aimed at businesses and affluent consumers by year's end.
Gateway 2000 already is running ads offering Pentium II machines at a low end of $2,500 and a high end of $5,000.
Meanwhile, regular Pentiums should continue as a major force well into 1998 for lower-scale buyers, according to Berger and others.
The industry had no such standout product last year, and computer sales, while still growing, failed to grow at the accustomed annual rate of nearly 30 percent. The trade journal Computer Reseller News estimated U.S. sales of computer merchandise grew to $28.2 billion in 1996 from $23.4 billion a year earlier.
Sales during the blockbuster 1995 had been fueled by the introduction of Microsoft Corp.'s Windows 95, which logged nearly 30 million unit sales in the first year.
American computer-makers have come to rely on such booming "Christmas quarter" sales to generate most annual revenues.
The stage for this has been set over nearly a decade with the steady advance of new products and new technologies from the core giants of Microsoft Corp., Intel, Apple Computer Inc. and International Business Machines Inc. Such products as Windows Windows 3.11, Windows 95, the Intel 386, the 486, the Pentium, Macintosh System 7.0, and the Power Macintosh all boosted holiday quarter revenue.
"Producing much better products for the world to buy is what we do here," said Intel's chief spokesman, Howard High. "We think we've done a pretty good job at that with Pentium II as well as earlier products."
He also indicated that the company will work quickly to make the Pentium II machines dominant. He said, for example, that Intel has relatively modest plans for increasing the speeds of ordinary Pentiums much above today's 200 megahertz level.
By year's end, High said, the Pentium IIs are expected to be logging speeds of 400 megahertz or higher.
But is Pentium II a must-have?
"Pentium II is going to be a very high-priced, high-end product all the way into 1998 and the [regular] Pentiums now selling so well will continue to do that for at least the next year," said Craig Conrad, vice president in charge of marketing at Massachusetts-based Nexar Technologies Inc.
Nexar, which went public in April, is focusing on what has become a huge market for lower-cost computers even as Pentium IIs sweep the high end.
The Nexar machines, for example, feature doors on the side of the case that can be swung open to allow ordinary users to simply extract an older chip, such as a Pentium, and replace it with another chip, including newer Pentiums (but not Pentium IIs) or chips made by Intel's competitors, Cyrix Semiconductor Inc. and Advanced Micro Devices Inc.
This model, Conrad noted, allows customers to configure machines to their needs, such as ordinary e-mail, rudimentary World Wide Web use and routine tasks, without big outlays for the latest multimedia bells and whistles.
Likewise, giants such as Packard Bell/NEC Inc. and Compaq Computer Corp. have started enjoying strong sales with
machines in the $1,000 neighborhood even as the new Pentium IIs move in to the $2,500 and above niche.
"I think you will see a long, long life span for [the] Pentiums we have now, even as we and other companies move to produce products based on Pentium II as well," Nexar's Conrad said.
Pub Date: 6/02/97