Low price manufacturers hail Intel's Shelton move

INTEL MAY BE dipping a toe in the waters of the ultra-low cost PC market, with its Shelton platform, but existing low-price manufacturers aren't concerned - indeed, some are even welcoming Intel into this rapidly growing market sector.

"Actually, I really believe this is positive for us. These big companies are helping expand the low-cost market, but we're already there," said an executive, who preferred not to be named, at low-cost chipset-maker, Silicon Integrated Systems (SiS), "We've already got years of experience in integrating key functions, sound and graphics, and so on, into an affordable package. Intel has tried to do this, but I don't think they have been very successful - just take a look at the market, see which chipsets are actually going onto motherboards".

Could Shelton, which embeds a CPU onto a tiny motherboard, encroach into the markets of motherboard and chipset manufacturers?

"The companies already in the [low cost PC] market shouldn't be too concerned about Intel's actions," believes George Wu, a fund manager at Invesco Taiwan, "Taiwanese companies really have a supply chain advantage here, because they've already moved a lot of their manufacturing to China. They can lower costs - and because the factories are so close, that includes inventory costs. Intel doesn't have this level of integration. Taiwan's other great strength is its ability to quickly build up capacity and to mass produce cheaply."

With some 300 million new PC users expected to enter the market in developing nations during the next five years, prominent motherboard makers, like Asus, MSI and Gigabyte have established 'second brand' subsidiaries to build and sell cheaper products in China, Russia, India and other price-conscious markets.

Motherboards from Asus subsidiary, Asrock, for example, are used as the basis of PCs costing $200 to $300 - these are near-complete systems, lacking only a monitor and operating system. There is, as yet, no reliable pricing information for Intel's Shelton, but traditionally, the company's products have been better-known for reliability than cut-throat pricing.

Even in Intel's core market, CPUs, it has been beaten to the punch, said Wu.

"For Intel, growth into the very low cost market is a problem. In China, for example, AMD got to the low cost [CPU] market first, and their ASP there is about one third of Intel's. It's not easy for Intel to get in, and, even though they are taking a look, I don't think it makes much sense for them right now." µ