Intel looks to shrink its chips, foray in entertainment

Updated: Jan 2 2006, 05:30am hrs
Intel, the world's biggest chip maker, is at last breaking away from its longstanding love affair with pure computing power to remake itself as a consumer-friendly brand that will let Intel-based products dominate the digital home.

Intel's strategy, based on a new generation of multimedia platforms and chips, will be unveiled this week at the Consumer Electronics Show in Las Vegas. For consumers, the technology shift will mean computers with longer battery life and a new generation of living room computers that will become digital entertainment hubs.

When Paul S. Otellini, Intel chief executive, takes the stage at the show, he is expected to present a new Intel focused on selling a digital lifestyle rather than hardware.

Instead of bits and bytes, Otellini, the first nonengineer to run Intel, is expected to spend much of his time talking about cool new music and video features that will be made possible by the new home entertainment platform, called Viiv, and Core, a low-powered chip that will eclipse the Pentium M chip for portable computers.

The transformation of Intel will, in part, be defined by its new alliance with Apple Computer, which has come to dominate the digital music business and is entering the nascent digital video market with its iPod players.

Under the guidance of Eric B. Kim, Intel's senior vice president and former marketing guru for Samsung Electronics, the company is poised to recast itself as a warm and fuzzy consumer company.

Kim, who was responsible in part for Samsung's transformation into a global consumer brand before joining Intel in September, is leading the company's rebranding effort, which will change the "Intel Inside" logo and introducing the new slogan "Leap Ahead" to tie together the company's many different platforms.

Yet despite the softer image, which will be presented in a wave of advertising next year, industry analysts said Intel's fortunes will still hinge on the ability of its chip designers to recapture some of the company's once unchallenged lead in the microprocessor business.

In fact, the development of the new Core microprocessor, which will be announced at the electronics show, was the work of a team of Israeli chip designers, who are more emblematic of the old Intel than the new one.

Core, code-named Yonah, is a 32-bit microprocessor chip with two separate processing cores and the ability to conserve power and run cooler than previous Intel chips. The development of Core chips is the first in a series of bet-the-company moves that Otellini is making to stave off the challenge posed by Intel's rival, Advanced Micro Devices.

If Intel succeeds in its new strategy, it will largely be because it shifted away from its obsession with processing speed, a move that was dictated by the Israeli engineers who put the company on a path to building low-power chips beginning in 2000.

Core chips will make possible portable computers with longer battery life. Even more important, Core will be the microprocessor inside of the Viiv multimedia platform for the living room, which Intel executives say will be the key to the company's future.

"With Yonah you will see super small consumer machines," said Sean Maloney, Intel's executive vice president and general manager of its mobile computer business. "This will be one of the defining Intel strategies next year. We needed a technology like Yonah for the PC to succeed in the living room."

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