Transmeta (Semiconductor) (TMTA)

[DewDiligence]

From CNET: apropos to the Business Week article posted by Bird:

[Note the part about Dell not going along with Centrino hook, line, and sinker. By gosh, they really do have a mind of their own.]

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Intel in a mobile marketing muddle?

By John G. Spooner and Michael Kanellos
Staff Writer, CNET News.com
February 27, 2003

http://news.com.com/2100-1005-986320.html

Notebook buyers will have to wade through multiple marketing messages to find the wireless combination they want when portables containing Intel's next generation of mobile chips make their debut next month.

The first notebooks using the Pentium-M, a new energy-efficient processor formerly code-named Banias, will emerge March 12. Intel will launch the chip and the new Centrino brand name that day at an event in New York attended by Intel Chief Executive Craig Barrett and high-level executives from Dell Computer, Toshiba and others.

After the debut, however, potential customers will be forced to choose between two brand names representing the same basic hardware inside these new notebooks.

Some notebooks will be affixed with Intel's Centrino badge, a logo that looks like a flying dart. The Centrino badge signifies that the notebook uses Intel's entire family of new chips including the Pentium-M, a supporting 855 chipset and the Intel Pro Wireless network connection via a mini PCI 802.11b radio module.

Other notebooks will come only with a Pentium-M badge.

The difference between the machines will be the wireless networking modules they contain. In some cases, PC makers will use all three components--the Pentium-M, the chipset and the Intel Pro Wireless module. In other cases, manufacturers will integrate the Pentium-M chip and chipset but use a wireless module from another manufacturer.

The distinction--and thus the different labeling--comes from the guidelines set by Intel for manufacturers. Those that do not use all three chips forfeit their ability to brand their machine as a Centrino. Even if their machines use the Pentium-M and 855 chipset, Intel won't allow manufacturers to use the Centrino label unless they also use the Intel wireless module.

The guidelines create a marketing dilemma for manufacturers. Most manufacturers want to give customers a choice between Intel's module and an alternative, such as an 802.11a module. But some sources say that manufacturers that don't opt to use Centrino could also lose out on some of the co-marketing funds that Intel grants to partners. Intel will spend about $300 million to market Centrino.

But a company representative said that while Intel offers co-marketing funds to PC makers to help fund advertising, it allows those companies to choose where to use those funds and doesn't offer more money to a PC maker using Centrino than for one just using Pentium-M.

Customer choice

"We will have Centrino products, and we will have other notebooks that will not be Centrino" but include the Pentium-M, said Jim McDonnell, vice president of marketing in the personal systems group at Hewlett-Packard. HP's goal is to let customers decide what they want, he said.

Sources familiar with Dell's plans said the company intends to focus its marketing on the Pentium-M and its attributes, which include longer battery life than the Pentium III-M or Pentium 4-M chip.

Intel asserts that notebooks using the Pentium-M chip, which will debut at clock speeds between 900MHz and 1.6GHz, will run for up to six hours on a single charge of their internal batteries. The current norm is three hours to four hours.

Dell plans to give customers the choice of whether to use Intel's module or one of its own Dell TrueMobile 802.11b modules--thus forfeiting its ability to use Centrino as an overall brand.

Toshiba, which already has its own dual 802.11a and 802.11b module, will also give customers a choice of Intel's or other wireless modules, sources familiar with its plans said.

For its part, IBM plans to sell Centrino-branded notebooks, said sources close to the company. However, the company will offer an upgrade to include 802.11a. That upgrade cannot be labeled a Centrino.

Analysts say that the mixed messaging could confuse some potential customers at first.

"This is really a commercial product. I don't think it's that big of an issue to commercial IT buyers," said Alan Promisel, notebook analyst with IDC. "It's going to confuse consumers, however, because Intel isn't marketing Pentium-M as heavily as it is the Centrino brand. That is a risk for OEMs," or original equipment manufacturers.

But Promisel asserts that most consumers who buy notebooks are not nearly as concerned with mobility and features like wireless networking as are business users at the moment. Instead, many consumers are buying larger, heavier and less expensive "desknote" machines that incorporate desktop Pentium 4 chips and 15-inch or larger screens.

"If anything, all the marketing is going to raise awareness and get consumers to start thinking about wireless connectivity and real mobility, not just portability. That's the crux behind Centrino's value proposition," Promisel said.

PC makers are also partially responsible for accurately explaining the differences between Pentium-M and Centrino notebooks, he added. "I do expect wireless demand to increase in the consumer segment based on the publicity that the Centrino launch is going to drum up," he said.

Timing is everything

The root of Intel's Centrino dichotomy lies in the delay of its first wireless module. Initially, Intel planned to include a module that offered both 802.11a and 802.11b with its Centrino family. Bundling has often been a way for Intel to enter new markets, such as chipsets and PC graphics chips.

But in December, the company delayed the dual-band module until later in the first half of 2003. In its place, Intel will insert a module that uses an 802.11b chip from Philips in the first wave of Centrino notebooks.

Until Intel's module is released, manufacturers will have to go outside the Centrino family to add 802.11a or dual-band modules.

"Anything else does not qualify because it hasn't gone through Intel's testing process," said Shannon Johnson, an Intel representative. "Centrino represents the best in class from Intel because it has been designed to work together and tested. We want to ensure a great user experience. Anything else that's been kind of put together--we can't ensure it's been tested to the fullest." [LOL -- Dew]

PC makers that don't use the Intel module could also stand to see higher development costs than those that do. Intel has performed thousands of hours of testing on its module, so it can ensure that a Centrino-branded notebook will work properly, the company said.

The testing was meant to ensure compatibility among the module, the Pentium-M, the chipset and existing wireless services, said Mooly Eden, general manager of Intel's Israel design center, where the Pentium-M was designed.

"We have developed (test and verification) chips whose only aim in life was to torture the rest of the system," Eden said.

Meanwhile, the Pentium-M will become the predominant notebook chip for Intel by the end of the year, various Intel executives have said.

The company will still supply its mobile Pentium 4 chips for notebooks, but they are likely to appear only in the consumer market, and even then in the cheaper models.
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