No momentum yet for 64-bit processors
Staff -- Purchasing, 11/18/2004 2:00:00 AM
Until Microsoft introduces its 64-bit operating system—expected early next year—don't wait for any marketplace momentum for 64-bit microprocessors (MPUs).
On the heels of a projected growth in 2004—to $33.8 billion in sales from $27 billion in sales in 2003—the market will decline slightly to $32.4 billion in 2005, says market researcher IC Insights, Scottsdale, Ariz. The biggest market driver: mobile computers, as consumers and businesses increase their purchases of notebooks and laptops instead of desktops.
Only about 3% of that revenue in 2004 will come from 64-bit MPU sales, says Brian Matas, an analyst for IC Insights. And the transition to 64-bit processors will take years because of all the software that is based on 32-bit processors
But with AMD's release of its Athlon 64-bit processor earlier this year and the expected introduction of a 64-bit processor next year by Intel, the transition has begun. As a result, IC Insights projects 64-bit sales will account for 9% market sales in 2005 and grab 32% of the market by 2008.
AMD's early introduction of a 64-bit processor (which is backwardly compatible with 32-bit applications) has given them an advantage over market leader Intel, says Matas. "Athlon 64 is doing well in higher performance applications such as servers and workstations," such as computer systems used by the government and the military for high-end research applications "where cost is not so much an issue [as is] high performance."
"Intel almost seems to be watching to see what AMD is doing and letting them take some of the lumps of introducing the part early," says Matas. "Intel has the resources, manufacturing technology and capacity to bring a part to market when they feel they are ready."
Increased volumes
Matas says he expects 64-bit processors to ship in greater volume next year—especially if Microsoft starts shipping its 64-bit OS to computer companies. "I don't know if it will be a rapid transition where the 64-bit processor is the dominant architectural style on the market, but it will gain enough share so the industry will take notice."
Besides government and research applications, video game enthusiasts or "gamers" will drive 64-bit acceptance because the faster processor will result in more realistic action and improved graphics in computer games.
But he cautions that the transition from 32-bit processors to 64-bit MPUs may be quicker than the transition from 16-bit to 32-bit devices.
Why? Microsoft is expected to introduce its 64-bit OS in 2005 right on the heels of the introduction of the 64-bit processor. By contrast, after Motorola introduced its first 32-bit processor, the 68020, in 1984, and Intel followed in 1985 with its 32-bit device, the 386, most computer systems continued to run 16-bit applications until the 32-bit operating system (OS) became available about 10 years later. The MAC OS was introduced in 1994, and Windows 95 was the first 32-bit OS used in PCs.
In addition, argue analysts, the increasing use of portable computers by both consumers and business will be a big driver for both 32-bit and 64-bit processors. "Rather than having a bigger box at work and at home and a portable for travel, you're getting to one unit that fits all applications," says Matas.
Bahr Mahony, marketing manager mobile PC processors for AMD, agrees with that assessment. "Demand for mobile processors is strong. We are seeing a trend towards the purchasing of notebooks [as opposed to] the purchasing of desktops due to the adoption of wireless computing," he says. Computer buyers like the idea of portability and connecting to the Internet through wireless fidelity (WiFi) technology, with both for thinner and lighter notebooks.
Microsoft is expected to introduce its 64-bit OS in 2005 so the transition to 64-bit computing will likely be quicker than the transition to 32-bit systems was.
Because of increased wireless connectivity, there is growing demand for mobile processors that have security capabilities. "We introduced a feature called cache enhanced virus protection with all mobile Athlon processors that protects against viruses," says Mahony. The feature involves marking a certain area of cache memory in the processor as "no execute." Viruses often get into a certain section of cache memory on a processor and execute from that area.
Pricing and supply
Even though Intel owns about 85% of the processor market and pretty much dictates pricing, buyers should keep an eye on MPU prices and supply because there are some pricing changes occurring.
"Pricing used to be predictable," says Matas. "You could rely on Intel releasing a new microprocessor at a sky high price and dropping it 25 to 30% the next quarter and 20% each quarter after that."
No longer. The competition in the PC industry and between OEMs has made consumers price sensitive. As a result, says Matas, Intel is now releasing new processors at a lower price point than in the past. What's more, to recoup investment costs and to make up for lost margin, he says, Intel is "trying to stretch out the lifecycle of products to milk them a little more than they did in the [past.] Intel might not be as quick to phase them out or bring in the news generation."
Another trend that could affect prices and supply is the transition of the Pentium 4 processors that use so-called Northwood cores to devices that use Prescott cores. The reason? There will likely be shortages for the older Northwood parts, says Jens Buckler, a commodity manager for independent distributor Fusion, Beverly, Mass.
Prescott has a different pin-out than Northwood parts. Northwood's pin-out has 478 pins. Intel found that for a processor to be more efficient it needed to increase the number of pins, he says. However, to increase the pin-out would mean the pins would have to be thinner which would increase the likelihood of them breaking.
That's why Prescott uses socket T, a land grid array (LGA) 775 arrangement, which is actually pinless. "The socket has 775 tiny contacts," says Buckler.
However, while Intel is producing Prescott parts, there is still demand for older Northwood parts. "We will see residual demand for the 478-pin version. We always see shortages on trailing edge parts when Intel moves the bulk of capacity to a new part," he says. And prices for the older parts could rise until the transition to Prescott is complete.
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