P4 will not have any immediate impact on mass market

Market response in the country to the launch of the world's fastest chip Intel's P4 has varied from lukewarm to being indifferent. GIDs and manufacturers have brushed off the launch of the chip as "not of much consequence just now."

But sure it will make a difference eventually as "anything from Intel cannot be ignored," said Sandeep Nair, Country Manager, Acer Peripherals India (Pvt) Ltd. All those to whom we spoke expressed unanimity on two counts: first, as far as requirements are concerned, the chip is not a necessity given the bandwidth constraints and the lack of applications consequently. To be honest even the speeds of PIII have not been harnessed to its full extent. Second, the price of P4 is too high to make an impact in the country yet, given the fact that it is a very price-sensitive market.

Unlike the transition from P2 to P3, the transition from P3 to P4 will take at least a year to be effected. The major reason for this is that the architecture of P4 is completely different from P3. While the P3 uses the SDRAM, the P4 will use the RDRAM which is yet to become an industry standard. It is also based on Intel's new 850 chipset. As against this, the transition from P2 to P3 involved only the change in the processor which in effect was only an

upgradation.

But that is hardly surprising since Intel has also stated its intention to make it a mainstream product only by the Q4 of 2001. The company has clearly stated that P4 has currently being positioned to target the power users, multimedia and animation professionals and of course, the computer enthusiasts.

Why then was the need to launch the product now? Was it due to the pressure to launch a product in response to AMD's Athlon? According to analysts, the AMD factor was compelling enough to spur Intel to do a similar launch.

Ajay Kapure, Authorized Representative in India of AMD, however, does not believe P4's positioning is of any competition to its Athlon chip although he endorses the stand that Intel's launch could be in retaliation to

Athlon.

Observers also state that Intel's launch was aimed at a two-pronged strategy to stem the growth of the AMD market. While P4 is expected to compete with Athlon at the high-end, Intel will undercut P3 prices to an extent which would enable it to compete with AMD's competitive pricing.

GIDs and OEMs are not ready to go to the market with the P4 chip. Said Manish Agrawal, Director (Marketing), Vintron Informatics Ltd, "We do not expect P4 to generate any demand now. We have no plans in the next two quarters to launch products based on P4 although we plan to include one in our product portfolio during the next quarter." Ditto for AK Pandey of Miraj Marketing, also a GID, who said that he does not expect any demand to come for P4 but will keep the P4 kit "only because it is a compulsion."

Yet, some vendors are not taking chances. Like HCL Infosystems Ltd which has launched its Infiniti Challenger workstations with a P4 chip and Nehru Place-based GID RR Systems, who says it will make CPUs with P4 for the stray customer.

Acer has also launched a product called Veriton 9100 which comes with a P4 chip. "It is not available in the country as yet, but will be shipped into the country as per the demand," revealed S Rajendran, GM (Marketing and Product Management), Acer India (P) Ltd, adding that pricing will not be a holding factor for professionals who need it.

Speaking about the acceptability of the product, Aditya Pant, Head (Research Operations), IDC India, said, "We shall see the acceptance of the P4 among the target customers by next quarter but for it to become a mass product will take at least a couple of quarters."

At the end of the day, it is price and price alone that will determine the acceptance of P4 in the market. As already stated, as far as requirement goes, P4 is not necessary. Therefore if Intel slashes prices to a level which is competitive to P3, the transition will occur and as already stated, Intel intends to do that by Q4 of next year.

So let's check the essentials. Currently the price of a P3 650 MHz is Rs 9,000; P3 733 MHz is Rs 10,800; P3 800 MHz is Rs 11,800; and P3 850 MHz is Rs 14,000. As against, the price of the P3 1 GHz is Rs 35,000 and the P4 stands at Rs 45 to 50,000. Going by the market trend, the most popular chips are 650 MHz and 800 MHz processors and the P4 chips would not achieve volumes till it comes to the Rs 15,000 price range. Clearly, Intel has a long way to go in its pricing structure before it hopes to push the P4 into the mainstream.

Meanwhile, customers are in for a good time as many expect price cuts in P3 that will in turn bring down the prices of computers. As previous Intel exercises have shown, with the launch of new products, the company effects 15 to 20 percent price cuts on the older products to phase them out. Simultaneously the new product is also positioned to make it an entry-level product. So the market expects a price cut to be announced in Intel P3 chips soon. According to market feedback, Intel is likely to begin slashing prices of P4 by the Q2 of 2001 and by Q3 of 2001, the product is expected to become entry-level.

(CNS)