Economy be Damned, Here Comes Intel’s i7

The economy is in tatters. Retail outlets are crying red tears. Intel just slashed its fourth quarter projections, and desktop sales are flatlined.

Is this any time to launch a high-end desktop chip?

As they say in Alaska, you betcha. Intel has let Nehalem, formally branded the Core i7, out of the gate to retail, with parts available from retail outlets like and new systems from Gateway, Dell and HP.

Falcon Northwest, a specialty high-end system builder for hardcore gamers, has had a busy morning now that it can take orders for systems. Reviews have been on the Internet for weeks, and it left the performance-happy gamer community chomping at the bit.

“People have been holding their breath on this CPU because it’s not just a CPU, it changes the entire platform,” said Kelt Reeves, president of Falcon Northwest. Reeves said he’s noticed business is down, but only in recent weeks. “So we’re not sure if there’s not sure that’s because there is so much buzz about this processor,” he told

Tony Massimini, chief of technology for Semico Research, also isn’t surprised. He has a teenage son who is as obsessed with performance as the typical Falcon customer. “Hotrodders don’t care [about the economy], they want the speed,” he said. “You can introduce the stuff to that market because those are the customers who are willing to pay the price for it. Then you can establish it and then spread it out to other price points.”

Intel is launching its new processor architecture with three models: the 3.2-GHz Core i7 965 Extreme Edition is priced at $999 in lots of 1,000; the 2.93-GHz Core i7 940 is $562 and 2.66-GHz Core i7 920 is $284.

From there, Massimini said, Intel can work its way down into more affordable desktops and laptops, and into the server market as well. Intel’s roadmap does call for Core i7 products in budget PCs, notebooks and servers, all in 2009.

Lots of risk

It’s an ambitious roadmap given how much change Intel is introducing. Core i7 finally eliminates the frontside bus, a chip that stood between the CPU and memory. The memory controller is now on the CPU, which will lend to much faster CPU-memory communication.

AMD (NYSE: AMD) did away with this in 2003 when it introduced the Athlon 64. Intel disregarded the change while AMD hammered away at it, Intel regularly pointing out that it met or beat AMD in many benchmarks with the FSB.

Another significant change, and one less marketing point for AMD, is that Nehalem launches with a native quad core design. Intel’s quad core products up to now have simply been two dual core CPUs on one die. Now it’s native quad-core with hyperthreading, for two threads per core.

AMD got in trouble by introducing so much change at once with Barcelona, but Massmini thinks Intel avoided that trap. “Intel is actually very careful and adds only one major variable at a time. That’s their tick-tock model. They will come out with a new architecture on an established process design, or it comes out with a new process design on an established architecture.”

Intel has been working on Nehalem for years, and has been running Nehalem machines internally for at least a year. Then there’s all the testing, no doubt done with the very customers it hopes buys many servers full of Core i7 CPUs.

“They have kept their major customers in the loop for quite a long time,” said Massimini. “So it’s not like a big surprise. Who else have they been doing the beta testing with? I think more than anything customers are looking forward to getting this. You’re talking about a more streamlined designed.”

But Intel is selling into a market that is bad and getting worse. Massimini said he has not heard anything on customer views regarding Nehalem-based servers. “The IT guys have got to decide. If they need that kind of performance to get the job done, will they cut it out all together or delay a purchase? I don’t know,” he said.

Reeves, however, is having a very busy Monday morning selling computers that start at $2,500 and go up to $8,000. As much as gamers want the speed, he said it has other practical uses as well. “We’re not seeing a huge increase in performance on games but we are seeing it on multimedia. It’s absolutely amazing what this can do on multimedia apps,” he said.

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