Intel’s Pentium Dual-Core CPU Regains Share Losses to AMD in February

March 28, 2007 - Intel’s latest processor addition, the Pentium Dual-Core T2060, which slipped into retail models during the first part of 2007 appears to be regaining CPU share lost to AMD during the month following the Windows Vista launch. The T2060 processor, currently available in only one configuration, a 1.6GHZ version, has gained a foothold in the lower end of both manufacturers’ CPU options including the Intel Celeron M and the AMD Turion 64.

Current Analysis Perspective

► Current Analysis takes a positive stance on the introduction and growth in share observed by Intel’s latest mid-level processor. Intel lost significant share to rival AMD during the first month following Windows Vista’s release, as AMD increased its share to 34%. Performance in February 2007 displayed an overall increase for AMD of 10 points over January 2007, giving the manufacturer its strongest share of unit sales since October 2006.

► Intel’s latest gains with the Pentium Dual-Core processor appear to be relegating AMD’s processor share to a single CPU line, the Turion-64 X2. This CPU, with 64-bit computing and dual-core processing power, has begun comprising a very large share of the manufacturer’s March sales.

► The latest Pentium Dual-Core processor from Intel is coming on strong in the retail space. This offering, when combined with the Celeron and Core Duo products, creates three CPU lines with ASPs besting AMD’s Turion-64 X2 lines. AMD should place close attention to the strategy utilized in the Intel’s latest processor release to see if one CPU brand will serve its purpose to combat Intel in the low-end and high-end spaces, while growing its unit share back to previous levels.

Verizon Begins Deploying Gigabit PON Technology to Boost FiOS Speeds by Four to Eight Times

On March 27th Verizon annouced that it would soon begin deploying Gigabit passive optical network (GPON) technology that increases the aggregate speeds on FTTP systems by four times downstream to the customer, and by eight times upstream, to support future enhancements to FiOS Internet Services and FiOS TV.

Recommended Competitive Responses

► AT&T needs to show some real progress this year in turning up its Fiber-to-the-Node based U-verse services to significant numbers of homes. The company should aim not for tens of thousands, but for hundreds of thousands of customers by the end of 2007, since Verizon already had sold FiOS services to 675,000 customers at the end of 2006.

► Cable MSOs will begin to see not just broadband losses but also video customer losses to FiOS going forward. Since it will take Verizon and AT&T several years to grow their subscriber count into the millions, the cable companies need to invest in and deploy the needed technology and capacity increases to support more HD channels that are becoming demanded by growing number of consumers that have purchased flat screen HD quality (720p or 1080i) TV.

AT&T Offers Broadband and Wireless Customers Free Napster (Not Yahoo!) Online Music Service

On March 26th AT&T and Napster announced a new promotion that grants new and existing AT&T broadband and wireless customers a free one year membership to Napster To Go, which comes with unlimited access to over 3 million digital music song titles.

Recommended Competitive Responses

► Apple may hold off any notable competition for its share of online music content by offering customers the alternative of a subscription model like Napster’s. A weakness that Apple has today relative to its competition surrounds the concept of music discovery. Subscription-based services allow customers to listen to “try” new music without having to buy it. Apple limits customers to 30 second samples of songs.

► Yahoo! needs to offer its Verizon and AT&T DSL customers more services and free content to engage them and keep them loyal to its brand. There are many similar Web services available outside the Yahoo! umbrella. Yahoo! should provide an exclusive promotional rate for AT&T and Verizon DSL customers for its premium pay services, such as Yahoo! Music Unlimited, Yahoo! Mail Plus and Yahoo! Photo.

► Comcast should retool its long-time unchanged partnership with Rhapsody and its online music service. The provider should offer stronger promotions for cable customers to trial the music service with the incentive of free months of Rhapsody’s full access service for customers who agree to upgrade their bundles of broadband, digital cable and VoIP services. Instead, Comcast currently just offers a less attractive promotion of free radio streaming and a few free music downloads a month.

Recommended End User / Customer Actions

► AT&T customers who are music lovers will at first be enthralled by the prospect of one year free of Napster To Go, but these AT&T customers need to read the fine print and see if upgrading their AT&T wireless and broadband service makes good financial and practical sense. A one-year subscription to free unlimited music worth $180 may be a terrific value, but might not be worth it to AT&T customers who don’t have the need for an expensive cell phone or faster broadband connection.

► Music fans looking for a way to buy digital music should look at the monthly subscription models offered by Napster, RealNetworks and Yahoo! as cheap methods to access millions of songs for a low monthly fee. Prospective buyers need to make sure their portable music device is compatible with the subscription service first. They also need to realize that when they let their subscription lapse, they will lose access to all the music they downloaded.

► Apple iPod users are forced for the most part to use its iTunes Music Store to search and download new music. The most popular monthly subscription sites like Napster, Yahoo! Music Unlimited and Rhapsody do not work with Apple's popular iPod devices.

Dell to Its Competition: “Tera-Byte Me”

March 15, 2007 - Dell recently announced the availability of 1-terabyte single hard drive options in select Dell-branded and Alienware subsidiary configure-to-order desktop PCs. The hard drive, manufactured by Hitachi, marks the first appearance of a 1-terabyte single hard drive as such an option.

Current Analysis Perspective

► Current Analysis takes a positive stance on Dell’s latest first-to-market technology win. Many years ago Dell was able to woo consumers with such wins, which helped to bolster its brand among early adopters and the affluent. In some cases, months would pass before retail computers featured the same technology that Dell brought first to the market, giving the direct giant a sharp differentiator at certain peak volume times, such as the holiday season. Today, things have changed, and technology is incorporated into retail desktops much faster than before. Nevertheless, Dell appears to be returning to its roots while lending prestige to its premium XPS series. The hard drive component is an excellent choice given its fair amount of traction in the past year, including as an external component.

► Dell’s first-to-market 1-terabyte hard drive effort is a solid step forward if its intentions are to reestablish itself as a technology leader and regain mindshare among consumer PC buyers. Dell has at times become sluggish in regards to the bleeding-edge technology releases that originally helped build its reputation. Although it will take much more to polish the vendor’s tarnished image, the 1-terabyte hard drive initiative is a good first move.