The notebook market is worth an estimated $65 billion worldwide and is growing 15 per cent faster than the overall PC market, according to Adalio Sanchez, worldwide general manager of IBM's PC business.
That makes it an attractive prize for any vendor and is increasing the determination with which leaders IBM, Compaq and Toshiba are slogging it out to gain share. Now the introduction of Intel's Celeron processor this week is helping to change the rules again.
But the notebook market also has spectacularly short product lifecycles, thanks to rapid technological innovation and because vendors leapfrog each other in a bid to offer larger colour screens, bigger hard drives, smaller and lighter form factors and better keyboards.
However, there is another influence on notebook lifecycles, which also dictates the speed with which one model replaces another, and that is chip technology.
Last month, Intel announced its PII/mobile processor (formerly codenamed Celeron), a credit card-sized chip that runs using a Pentium Pro, 32-bit core. This marks a sea change for vendors. Before the introduction of the PII mobile, top end notebook models used Intel's slower Tillamook processor - a chip with a Pentium 16-bit core.
Over the course of this year, Intel is widely expected to introduce faster PII/mobile processors and it is inevitable that Tillamook notebooks, like 486 machines before them, will be relegated to the museum of PC history.
But the story does not end here, because next year Intel introduces its so-called Geyserville technology. This, according to sources and Intel roadmaps seen by the 'VNU Newswire', is an attempt by Intel to unify the mobile and desktop markets.
Geyserville, slated for next year, will use additional MMX instructions from Intel's Katmai technology and run at dual speeds, depending on whether it is running off the mains or using battery technology. According to some reports, it will allow notebooks to run at 450MHz when connected, and at speeds of around 350MHz when using a notebook's battery.
Notebooks will also have access to the 100BX chipset but the goal of the Geyserville design is to create high end, high priced machines, which will provide good margins to the vendors as they see those margins cut by the introduction of low end, entry level desktop PCs.
But Geyserville is also likely to mean compromises in design. Because of the higher clock rate of the PII mobile, there will have to be additional heat-sink technology and most end users prefer a lighter than a heavier machine. It will be up to the OEMs to design systems which allow better heat dissipation without making notebooks any heavier - a tricky proposition.
There is another element to the introduction of Pentium II technology to notebooks which will also have repercussions for end users. The PII, at its core, uses Pentium Pro, 32-bit technology and when Intel designed the Pro, it optimised it for 32-bit operating systems. At the time, three years ago, Intel was clearly unhappy that Windows 95 had quite so much of 16-bit Dos at its core.
Benchmarks, at the time, showed that Windows 95 actually ran slower on Pentium Pro technology than on Pentium machines, embarrassing for the chip giant, since its technology was inherently faster on the Pro than on the Pentium.
When Microsoft releases Windows 98, towards the end of June, that situation will be marginally improved. There are now more 32-bit drivers for the Windows 95/98 operating system, which means that notebooks using the PII/mobile will be able to take advantage of these.
But, on the other hand, Microsoft is understood to have made only minor changes to the operating environment itself. A notebook using Tillamook, 16-bit Pentium technology, is likely to run Windows 95/98 as fast, or in some cases faster, than a PII/mobile.
However, the introduction of the PII/mobile means that end users will need to make the choice between operating systems. Running Windows NT on a notebook will take full advantage of the instruction set of the PII/mobile, meaning that top end systems will perform better, and also command a price premium.
These considerations led a representative from IBM last week to signal that benchmarks it had performed showed that Tillamook notebooks benchmarked against PIIs, presumably using Win95 led to very little performance gain.
But according to an Intel representative, there are other factors involved in the benchmarks. He said: "People are looking at integer performance rather than a proper benchmark which takes into account floating point performance and other tests." Windows 98, he said, showed a performance boost, even when it was running on Tillamook.
"It [Win98] runs intrinsically faster because it's better optimised and you can see a clear difference," he claimed.
But Geyserville, apart from offering desktop/notebook integration using a 32-bit OS, is also also seen by the vendors as a clear differentiation between high end mobiles and relatively low cost systems running cutdown applications on the Windows CE system. That will draw a line between personal digital assistants, which will allow end users to collect their email and do some Internet browsing, and expensive, high end systems that will still have limited battery lives but offer full desktop and mobile functionality.
The fear for vendors must be that the CE market will begin to erode sales of midrange and high end Geyserville-style mobiles. Battery life on CE machines is far better than on any fully fledged notebook and would-be road warriors are likely to prefer to carry a bunch of AA batteries for their CE machines rather than spare batteries for a notebook.
Although lithium polymer batteries promise more flexible form factors and longer battery life for traditional notebooks, according to Catherine Sharp, Thinkpad product manager for IBM UK, there are still obstacles to its adoption in traditional notebooks.
And if devices like CE machines begin to take off in big numbers, 1999 could see the end of the 15 per cent growth that currently makes Sanchez so happy. And that will have major implications for Intel too.
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