A new era for the sub-1000 PCs is in. As of last year, PC products with modest prices became the mainstream, signifying a new PC market has come.

Following this trend, many big-name PC manufacturers are scrambling to launch new desktops with modest prices to expand their market shares. According to a survey conducted by Computer Intelligence, in USA desktops priced under US$1,000 in the retail market maintained their market share under 10%. However, after one month, the ration dramatically increased to 20%, which was followed with a huge jump to 40% last August. The PC market share for the sub-1000 PCs remained above 30% at the end of last year.

As family users dominate the majority of buyers in the PC retail market, the dramatic growth of the market share indicates the sub-1000 PC market has emerged. It also revealed the trend that family-user-oriented PCs will become a major PC market segment. A flashback into the sales records of consumer electronics products, like VCRs show sales volumes grew considerably when home appliances were priced under US$1,000. The market share expanded further when the price was lowered down to US$800 or US$600.

Therefore, US$1,000 will probably not be the bottom line for future mainstream sub-1000 PCs. Prices are expected to go down to US$800 or even US$600 for an increased market share.

The trend of sub-1000 PCs has had an impact CPU and system chipset markets. In order to shake off its awesome competitors, such as AMD, Cyrix and IDT, Intel from the second half of last year conducted a new marketing strategy to promote its Pentium II CPU and Slot-1 socket specification. Intel stressed the perfect architecture combinations of DIB, AGP and 100 MHz system bus frequency would act to optimize system performances. To prevent competitors’ infringement, Intel carefully built up a protective net with its patents and highly confidential business plan. This strategy nevertheless would prove ineffective at a time when the sub-1000 PC market was the main stream. The costly cartridge architecture inside Pentium II CPU failed to suit the cost-effective requirement in a sub-1000 PC, and the low product profits are not part of Intel’s marketing policy.

The predicament Intel faced gave Socket 7 manufacturers an opportunity to step in, giving more business opportunities to CPU and system chipset vendors. To capture this opportunity, CPU vendors like AMD, Cyrix and IDT have been scrambling to launch new product lines. The product improvements they have launched claimed to increase the CPU’s operating frequency. The appearances of the enhanced Socket 7 versions have inserted new energy for the mature, low-cost Socket 7 architecture. In the past, the limit of 66 MHz system bus frequency in Socket 7 was regarded as the major drawback in the system performance. To solve the problem, AMD, Cyrix and IDT have in the 2^nd quarter released new products with 100 MHz system bus frequency, providing CPUs with higher system bandwidth and consequently enhancing system efficiency.

In addition, both AMD and IDT plan to integrate Flash ROM into their CPUs by employing the 0.25µm process technology, so that the Flash ROM and CPU will co-exist in one single chip. This approach will enable the L2 Flash ROM to work at the same speed as the CPU. The 100 MHz system bus frequency, plus L2 Flash ROM integration allows Socket 7 to deliver as good a performance as Intel’s Slot 1.

In the past, AMD, Cyrix and IDT all followed Intel’s Instruction Set while designing their CPU lines, stressing its compatibility with Intel’s counterparts. However, in a bid to differentiate their CPU products from Intel’s, these CPU vendors planned to release new versions, each of supporting a 3D Instruction Set of its own. However, chaos in the market resulted because of the three different 3D Instruction Sets. It is, therefore, expected that vendors’ support sources will be split up for operating systems and application software, which may stagnate the entire semiconductor market.

To prevent this market chaos, Microsoft has expressed strong disapproval and done everything possible to coordinate among X86-compatible CPU vendors. CPU vendors finally agreed to compromise and jointly promote the 3D Instruction Set from AMD.

To comply with the sub-1000 PC trend, Intel began to focus its marketing strategy at the sub-1000 PC market. Intel segmented the PC market into three main categories: Professionals, Efficiency and Basics. The Basics category refers to the sub-1000 PC market. Intel released its sub-1000 PC version called Pentium II (Celeron) to demonstrate its ambition to target the Basics market. In the new version, Intel removed the L2 Flash ROM from the CPU cartridge, thereby reducing the cost. This approach has also taken away the performance enhancement feature from the DIB architecture that Pentium II emphasized. The question is who will be the winner in the race of sub-1000 PC market. Will it Socket 7 or Slot 1? We’ll just have to wait and see what the market decides.

The low cost requirement in a sub-1000 PC indicates a future market trend. For instance, the Cryix GX solution has successfully integrated the CPU, chipsets, and graphic and audio functions into two chips. This integration approach has effectively reduced system manufacturing costs.

Moreover, the PC is expected to enter various arenas via different forms, such as communication and consumer electronics products. This is just the XC concept advocated by Stan Shih, the president of Acer Sertek Incorporated, a prominent Taiwan notebook producer. The "X" in the concept term stands for the various aspects or areas that the computers can be used in.

In these applications areas where low cost and specific functions are the basic requirements, the costly CPU built into CISC microprocessor X86 architecture will no longer be favored. More and more users are expected to turn their heads toward the RISC-based CPU, which is a comparatively low-cost, highly efficient and low-power consumption CPU.

Microsoft forsaw that the sub-1000 PC market had great market potential and decided to launch the Windows CE operating system. Microsoft’s wide-application operating platform CE, which stands for Consumer Electronics, shows Microsoft’s great expectation for this operating system. The application areas that Windows CE intends to enter covers a wide array of end products, each with individual design requirements. For the purpose of customized applications, Windows CE will support a wide range of CPUs, including Super H, MIPS, ARM, Power PC and X86. To meet the design needs for various Windows CE applications, Microsoft has also defined the standard platform specifications for each of the applications, including HPC, Auto PC, Palm PC, etc., enlarging the application areas for Windows CE-based platforms.

In addition, Microsoft has established numerous relationships with well-established semiconductor vendors in each field, such as TCI and SONY. It is believed Microsoft’s cooperative approach will enable Windows CE to exert greater influence in the industry, as well as broaden the popularity of Windows CE platforms.

The popularity and wide applications of Windows CE-based platforms have given the semiconductor corporations in Taiwan the opportunity to demonstrate their capabilities in chipset designs and manufacturing. In addition to the various Windows CE applications, platform specifications also have to pair with CPUs that have various functional requirements, which calls for customized designs. Consequently, wide combinations of chip designs are expected in the market. It is expected that Taiwan chipset design houses, which are widely known for their excellent chipset design abilities, will compete to turn out sophisticated and cost-effective chip.

ITE’s engineers are skilled with proven, low-powered, modularized mega cells library designs accumulated over the years, and are ready to face the challenges in the competitive market of Windows CE applications. ITE was the first in Taiwan who dared to tread into the Windows CE market, and provide hardware solutions for standard platforms. Because of ITE’s strengths, the company became and authorized by Microsoft System Integrator in July 1997, for Windows CE-based operating systems. ITE’s SI status enables the company to provide complete hardware and software solutions for OEMs.

Willy Peng, Manager, Sales, Integrated Technology Express, Inc., 15F, No. 376, Jen-Ai Rd., Sec. 4, Taipei, Taiwan 106, R.O.C. Telephone: [886]-(2) 2707-9589 X6078. Fax: [886]-(2)-2708-8389. e-mail:willy.peng@ite.com.tw website:www.ite.com.tw

Integrated Technology Express Inc. was founded in 1995 and is based in Hsin-Chu Science-Based Industrial Park, Taiwan. The company is in the business of designing and selling high-integration chips that allow engineers to design compact and low power products. The company has expertise in the areas of computer core-logic, peripheral, LCD VGA and power management.