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New chip to energize Intel
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January 8, 1997: 2:11 p.m. ET
Marketing blitz marks launch of advanced video device
From Correspondent Carmine Gallo
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NEW YORK (CNNfn) -- It's Christmas in January for computer buyers waiting for the next big thing, and Intel Corp. wants to play Santa Claus.
The company launches its new multimedia chip Wednesday, and designers promise the new MMX chip will dramatically improve the video graphics and audio on computers.
Analysts predict Intel could sell 30 million to 45 million of the chips this year. (QuickTime movie, 1.6 MB)
"It's important for Intel in the sense that it should accelerate their overall revenue and earnings growth," Salomon Brothers analyst Erika Klauer said. "It's important for the semiconductor industry because its introduction is likely to spur additional PC demand."
Demand for PCs dropped sharply in the fourth quarter of 1996, hurting holiday retail sales and holding the industry below projected growth levels.
Now PC makers are banking on Intel's new chip.
"It brings the consumer back into the market," Dean Witter technology analyst Gene Glazer said. "In 1996, the consumer really wasn't buying. In 1997, with these new capabilities, we think the consumer can be a big buyer of PCs again."
This week, Compaq Computer Corp. leads the pack of computer makers will begin rolling out MMX systems. IBM Corp., Dell Computer Corp. and Gateway 2000 Inc. follow shortly.
Computers with the new chips are expected to cost anywhere from $1,500 to $3,000. But consumers who want to buy a computer without the new chip could spot some bargains soon.
"The other Pentium computers just this week will lower prices by several hundred dollars each," said Gene Derose, a research analyst at Jupiter Communications. "And there's some inventory left over from a rather dismal holiday performance. You're going to see those sell fairly well."
Intel's new chip will have its most immediate impact on the home PC market. Although only about 20 software titles have been written to take advantage of the new chip, up to 100 titles are expected out by the end of the year.
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