PCs and Chips in 2006

Vendors in the PC and chip industries moved boldly in 2006, changing the marketplace map through mergers, recalls, layoffs and lawsuits. Oh, and they launched some impressive new products too, keeping Moore’s Law moving as they built smaller, faster chips and cooler, more efficient computers. Here, in chronological order, we share a sampling of the biggest events of the past year.

Apple releases Macs that run on Intel chips

Apple Computer in January sells its first Mac PCs that run on chips from Intel instead of IBM and Motorola chips, fulfilling a promise made in June 2005. Apple substitutes Intel’s Core Duo chip for the PowerPC and G4 chips in its iMac and 15-inch MacBook Pro, soon followed by the Mac mini and 13-inch MacBook. The move also lets Apple expand from its own operating system. In April, Apple launches its Boot Camp software, enabling Intel-based Macs to run their choice of Apple’s OS X or Microsoft’s Windows XP.

AMD announces ATI acquisition

Advanced Micro Devices (AMD) announces a plan in July to buy Canadian graphics chip vendor ATI Technologies for US$5.4 billion. Integrating its processors with ATI’s chipsets would allow AMD to sell platforms of integrated technologies, competitive with Intel bundles like Centrino, Viiv and VPro, analysts say. Another effect of the merger is to leave Nvidia as the only independent graphics chip vendor in the market. By November, Nvidia also says it will expand, paying $357 million to buy PortalPlayer, a maker of semiconductors for digital music players.

Battery recall begins

Dell recalls 4.1 million notebook PC batteries in August as a growing number of customers report they could short-circuit, causing some to overheat and catch fire. Within days, other vendors join the recall, leading to 8.1 million recalls of the lithium ion cells manufactured by Sony. Other PC vendors affected by the largest recall in consumer electronics history include Apple, Fujitsu, Hitachi, Lenovo Group and Toshiba.

Intel reorganizes, lays off thousands

In September, Intel lays off 10,500 workers—about 10 percent of the workforce—as Chief Executive Paul Otellini enacts a promised reorganization that has already included the sale of its media and signaling business, the firing of 1,000 executives, and the sale of its XScale smart-phone chip division. Otellini blames slowing growth in the PC market when he predicts Intel’s annual profits will reach only $9.3 billion for 2006, down from $12.1 billion in 2005. Analysts point out that Intel had also lost revenue by slashing prices on its chips in an effort to slow gains in market share by rival AMD.

DOJ investigates SRAM market

The U.S. Department of Justice (DoJ) launches a probe in October of sales practices in the static RAM memory chip market, serving subpoenas to Cypress Semiconductor, Mitsubishi Electric, Samsung Electronics, Sony Electronics and Toshiba. The investigation comes shortly after the DoJ wins convictions and multimillion-dollar fines for price fixing in the closely related dynamic RAM industry. By December, the DoJ also turns its focus to graphics chips makers, demanding documents from AMD and Nvidia as part of an antitrust investigation. Meanwhile, AMD continues another antitrust fight, continuing its long-running suit against Intel over accusations that the much larger chip maker intimidated vendors from using AMD chips. That case is scheduled to come before a judge in April 2009.

HP tops Dell as world’s largest PC vendor

Hewlett-Packard overtakes Dell in October as the world’s largest PC vendor, capping a year when Dell had reported a series of sagging profits and the start of an accounting investigation by the U.S. Securities and Exchange Commission (SEC). HP has its own problems, coping with a spying scandal on its board of directors that leads to criminal investigations and the resignation of board Chairwoman Patricia Dunn. But Dell is unable to stop its loss of market share even when the company ends its longtime allegiance to Intel and begins selling PCs powered by chips from AMD as well. Dell Chief Executive Kevin Rollins says the company was also hurt by slashing prices in order to bolster market share, and pledges to spend $100 million to hire more sales and call-center workers.

Intel launches quad-core processors for mainstream computers

Intel launches the first quad-core processors for mainstream desktops and servers, continuing its effort to rebound from a loss of sales to AMD. The new chips include the Core 2 Extreme QX6700 for gamers and Xeon 5300 for servers, coming just a few months after Intel launches a new family of dual-core chips including the “Conroe” Core 2 Duo for desktops and “Woodcrest” Xeon 5100 for servers. Still, the arms race continues, as AMD emphasizes its advantage in power efficiency and pledges to launch its own quad-core processor by the second quarter of 2007, the “Barcelona” quad-core Opteron 8000 for servers.

-Ben Ames, IDG News Service (Boston Bureau)

Related Links:

• HP Overtakes Dell in Global PC Space

• Mitsubishi SRAM Sales Probed by DoJ

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.