Intel's 'Sandy Bridge' Is Set To Revolutionize The PC Chipset Industry

The world's biggest chip maker, Intel, has unveiled its newest chipset; one, that it hopes will shake up the entire PC market. The product, code-named Sandy Bridge, is Intel's first architecture that merges a microprocessor and graphics processor onto a single chip. Despite recently cutting sales forecasts because of weaker than expected PC demand, Intel is betting that this new technology will be a hit with both PC vendors and consumers. The chip, whose pricing for vendors remains uncertain, will likely target low-end desktop computers and laptops and is expected to be ready for production early in 2011. From a design standpoint, Intel believes that putting the two processors together will significantly cut the time it takes to produce images as bottlenecks are removed between the graphics processor and memory. The new chip architecture will also improve battery life and power consumption; variables, that many consumers weight extremely highly while purchasing laptops. While the launch of this new, "revolutionary" chipset is exciting, what remains uncertain is whether Sandy Bridge will live up to the hype and truly cause a market shake-up? Moreover, questions remain regarding the chip's ability to impact Intel's long term profitability, market position, capitalization, and sales? Will consumers and manufacturers flock to the new chip architecture? Will vendors and customers realize cost reductions? And how will competitors react?

From a competitive point of view, many expect Sandy Bridge to cause headaches for Intel's rival Nvidia, the maker of stand-alone graphics chips. Still, despite rough predictions, Nvidia has responded aggressively, noting that they are not worried about the recent changes. In a recent press conference, Nvidia executives dismissed analyst concerns, noting that "Intel has been proclaiming the death of discrete graphics for years. Unfortunately, what we have seen in the market is that real GPUs (graphics processing units) continue to get more important, not less." Additionally, Advanced Micro Devices (AMD) is also expected to feel increase pressure following the launch of Sandy Bridge. It is a well know fact that AMD has been working on its own hybrid chip for a number of years. Unfortunately, many analysts believe that, by not launching before Intel (AMD is planning an early to mid 2011 launch), AMD's market position will suffer. Other questions surround the market's reaction to the product. For example, if Sandy Bridge enables Intel to increase its market share within the low and medium priced PC marketplace, AMD and Nvidia could face legitimate concerns. These concerns stem from the fact that the high end PC market is a very small percentage of the market, and not a segment which a corporate entity could survive sustainably on. On the other hand, if Sandy Bridge does impact Intels' current market share, then the long term financial outlook for both Nvidia and AMD will remain positive.

Outside of Sandy Bridge, one other development that many are watching is Intel's recent decision to spend nearly $7.68bn to acquire McAfee. The deal, the biggest in the company's 42-year history, caught many by surprise. Following the announcement, Intel noted that the acquisition reflected the fact that security had now become a a fundamental component of online computing; one, that will remain crucial as the number of internet connected devices continues to grow. Moreover, the acquisition offers Intel an opportunity to "offer secure capabilities across all Intel connected products". While the move is significant, Intel was quick to point out that its decision to enter the security market was not monopolistic. In fact, Intel executives have repeated numerous times that its security approach does not fully address the billions of new internet-ready devices, including mobile and wireless devices, TVs, cars, medical devices and cash machines that are used around country. Moreover, while their executive team acknowledges that security is becoming a more complex topic as communication devices proliferate, they reiterate that their goal is to change how platforms are secured. Both Intel and McAfee have been collaborating for the last 18-24 months on products. The first chips incorporating new security software are expected to appear next year.