Intel has put millions of dollars behind its campaign to support its Centrino notebook technology, but the message isn't reaching the U.S. retail market, and may miss the pivotal fourth-quarter holiday shopping season, analysts say.
The Centrino package combines the Pentium M processor, the 855 chip set family, and the Intel Pro/Wireless 2100 chip for connecting users to 802.11b networks. Introduced in March, the technology has received very positive performance reviews from hardware enthusiasts and corporate notebook users, but retail buyers have spent their dollars on other technologies, says Stephen Baker, director of industry analysis at NPD Techworld in Reston, Virginia.
Only 4.7 percent of all notebooks sold at retail during August came with the Centrino package, according to research from NPD Techworld.
Second-Guessing Consumers
The corporate market has traditionally represented the bulk of the notebook market. However, U.S. consumer interest in multimedia desktop-replacement notebooks has driven much of the growth this year, and brought the percentage of consumer notebook purchasers more in line with corporate buyers, says Matt Sargent, an analyst with ARS in La Jolla, California.
Consumers have snapped up bulky notebooks that offer desktop-like performance with fast processors and large LCD screens on which to view DVDs or play games, Sargent said. This group of buyers doesn't particularly care about mobility or battery life, since they rarely take the notebook out of their homes or unplug it from the wall socket, he says.
"The biggest issue with Centrino at retail is the feature set just didn't match what people are looking for, until the last couple of months," Baker says. Notebook vendors such as Toshiba and Hewlett-Packard have recently introduced Centrino into wide-screen retail notebooks.
The focus of Intel's Centrino marketing has been wireless technology, which hasn't caught on as yet with the retail notebook buyer in the U.S. as a must-have technology, Sargent says. That buyer is more concerned with price and perceived performance, two areas where Centrino has an upward battle, he says.
New Architecture
The Pentium M processor combines architectural features of Intel's older mobile processors with performance features found in chips such as its Pentium 4 processor. By most accounts, it outperforms Intel's older mobile processors, even though it runs at slower clock rates.
But Intel has failed to communicate that performance difference to retail buyers, who compare a 1.6-GHz Pentium M processor with a 2.4-GHz Mobile Intel Pentium 4-M processor, and think the 2.4-GHz label denotes the higher performing chip, Sargent says. And when those buyers look at the notebook's price tag, and discover the Pentium M notebook costs a few hundred dollars more, they are opting for the Mobile Intel Pentium 4-M notebook, he adds.
Intel admits that retail buyers have not received as much attention in the first six months of Centrino's life, says Barbara Grimes, an Intel spokesperson. The company focused its initial marketing campaign on corporate buyers and road warriors looking for lightweight and wireless notebooks as their primary targets, she says.
Consumers in other parts of the world, such as Asia, are more keen on thinner and lighter notebooks than their U.S. counterparts, Grimes and Sargent say. Centrino notebooks have done better at retail in Asia and Europe than they have in the U.S., they note.
But corporate sales remain sluggish, although in better shape than recent quarters, according to recent data from IDC and Gartner.
More Price Drops?
In order to stimulate demand among retail notebook buyers, Intel needs to either cut the price of the Centrino technology, or focus on the performance benefits of the Centrino technology in addition to the wireless capabilities, Sargent says.
Intel cut prices on both the Centrino package and the Pentium M processor earlier in October. Trimming the high-end chips by up to 30 percent should encourage PC vendors to adopt Centrino in less expensive notebooks, Grimes says.
The company has focused on the mobility segment of the overall notebook market, which will grow as corporations start to replace older desktop PCs with mobile units, according to Anand Chandrasekher, vice president and general manager of Intel's Mobile Platforms Group.
Going forward, wireless technologies will capture the attention of more consumers, Baker says. But the consumers who have already embraced wireless are choosing a standard for which Intel has yet to offer a product, he adds.
By the end of the year, consumers will favor wireless networking equipment based on the 802.11g standard over the 802.11b standard, Baker says. Devices based on the 802.11g standard can exchange wireless data much faster than 802.11b networks allow, but Intel has yet to release an 802.11g chip.
Intel has said it will release a 802.11g chip in the fourth quarter, but if a product isn't ready right now, it won't be ready for any notebooks sold during the holiday season, NPD Techworld's Baker says.
