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Why Intel dropped out of the integrated graphics business

Give "others a chance" plus lack of features for Vista
Mon Oct 03 2005, 14:10
THE MOST spectacular and surprising thing that took place in 2005 is definitely Intel's decision to drop out of the entry level 915G chipset businesses. We heard some juicy details so we kind of know what was going on and what led to that decision.

OK, we have to give Apple credit for announcing its support for Intel chips as well, but graphic wise this is the most important story of the year. When it comes to money, this means that some companies are going to boost significantly and Intel won't lose much because of its decision.

With Centrino, Intel seriously put some additional pressure on its third party vendors. Just for an Intel sticker, it demands some money from the one that puts the notebook on the market, it asks you to buy its CPU, chipset and not so great wireless LAN and it definitely leaves you with ony Hobson's Choice.

As Centrino powered notebooks are the most popular notebook configuration around, you can imagine that companies such as Nvidia, ATI, Broadcome, Via and SIS were not that happy with Centrino and could not get their usual share of the industry cake.

The second key point was the i915G's lack of support for all of the future Longhorn-Vista Aeroglass desktop interface. Intel 915G and its GMA 900 could not get Microsoft's imprimatur on it. You can have an idea that Intel is very nasty in persuading anyone including Microsoft but we learned after hard lobbying it simply could not persuade the Vole, and Microsoft didn't want to lower the bar at any cost. Interestingly enough, Intel's GMA 950 can meet the Aero glass specification and Intel will continue to sell its quite highly priced dual core supporting the i945G chipset.

You can say that Intel is not dropping out of the integrated chipset market it actually just regrouping its troops. We expect that Intel plans to return in the next year or two, and we suspect that it plans to do so big time.

Remember, Intel is a big player with more than fifty per cent of overall graphic shipments, so when such a company decided to drop out of the market segment it completely chances the balances.

Last, but certainly not least, is the fact that profit margins in the chipset market are incredibly low. We learned that sometimes we are talking about less then a dollar, and sometimes even less then a dime. Some companies are actually making a loss on integrated chipsets just to be there and just in order to be able to get some money our of that business on a long terms. So Intel was not that generous after all, as it will leave a bitter piece of bread to all of its followers.

I guess that now its vision is more clear, maybe Aeroglass clear, but as you know it always involves lot of politics. And of course money. µ


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