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Great news for consumers: Intel getting some competition

Last month's introduction of the Compaq Presario 2000 computer, a reasonably powerful PC costing about $1,000, was noteworthy _ but only partly because of the price.

What makes this product interesting is its central processor, or central brains. And that's because Cyrix Corp., not Intel Corp., made the chip.

For the first time in several years, Intel seems to be facing more than token competition. Not only are several established competitors hitting the market with high-powered chips that can challenge Intel's best, but a bevy of new chip ventures also is hovering just over the horizon.

Intel isn't exactly sweating over any of this. Barring some revolution that's almost impossible to imagine, Intel will hold on to its huge majority of personal-computer microprocessor sales, and the overwhelming majority of the profits in the business.

But knowledgeable industry watchers say Intel's market share seems likely to dwindle a bit in the next couple of years. That's healthy for competition, and ultimately excellent news for consumers.

The chip Compaq chose for its new Presario PC was Cyrix's "MediaGX," a remarkable Pentium-class processor that adds graphics capabilities and other useful functions. Soon, Cyrix will introduce chips that compete with Intel's Pentium MMX, Pentium Pro and upcoming Pentium II. So will Advanced Micro Devices Inc., which has improved its AMD-K5 Pentium competitor and will launch its AMD-K6 MMX processor next month.

In addition, says Michael Slater, a respected industry watcher and editorial director of MicroDesign Resources, at least a half-dozen small start-up companies are eyeing pieces of the market Intel has so thoroughly dominated in recent years.

"Intel is doing $20-billion in revenues and $5-billion in profits," Slater points out, and carving off even a tiny slice of that market represents real money.

Of course, Intel remains institutionally paranoid, as its management style dictates. The latest example is a lawsuit against AMD and Cyrix, trying to keep them from using the letters MMX. The company also is raising the bar by changing the way the Pentium II chip, scheduled for release this spring, is mounted inside the PC, effectively forcing competitors to stay with the current design or risk yet more legal action. Intel says the new, proprietary design is solely about enhancing performance. Uh-huh.

With its wealth and clout, Intel could almost certainly boost its market share near 100 percent. But as Slater notes, Intel has good reason to allow some competitors to live. For one thing, Intel doesn't mind losing sales of the lower-end chips as long as it can maintain high-end profits. For another, the presence of competition effectively inoculates the company against the danger of antitrust action _ a remote possibility under any circumstances, given the current Justice Department's indifference to the even more pervasive Microsoft monopoly.

As new PCs hit the market this year, Slater expects to see more models that don't say "Intel Inside." They're likely to be cheaper than equivalently equipped Intel-powered machines, or more powerful for the same price. (I don't recommend the Compaq with the Cyrix chip, by the way, because it's almost impossible to upgrade and Compaq's customer support isn't particularly consumer-friendly.)

The bottom line: You'll get serious computing juice for the best prices ever. Thank competition for that.

_ Write to Dan Gillmor at the Mercury News, 750 Ridder Park Drive, San Jose, CA 95190; (408) 920-5016; fax (408) 920-5917; e-mail: dgillmorsjmercury.com

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