Intel Introduces Powerful 80486 Chip, But High Price May Limit Initial Sales

By James P. Miller, Staff Reporter
Wall Street Journal.

April 11, 1989

Intel Corp. unveiled a powerful new computer chip, the 80486, expanding its widely popular family of microprocessors for personal computers.

The chip packs 1.2 million transistors on one piece of silicon, compared with some 275,000 on the lucrative 80386 model. Capable of handling 15 million instructions per second, or MIPS, it offers as much as four times the processing power of the 386.

But at $950 each, the 486 is also nearly three times as costly as the 386. While chip prices routinely drop sharply over time, the high initial price tag is expected to limit the near-term 486 market to high-end applications where customers are willing to pay a premium for performance.

What's more, the Santa Clara, Calif., chip maker will be releasing the 486, developed at a cost of $250 million, into a market that has shown increasing interest in an upstart competitive architecture known as reduced instruction set computing, or RISC. The 486 chip, while quick and gifted with a huge installed base of fully compatible software, is seen by some experts as a predictable extension of the company's line that may keep current customers from defecting, but it is considered unlikely to attract additional computer manufacturers to adopt the series.

Intel's 486 has capabilities largely in line with archrival Motorola Inc.'s 68040 device. The Schaumburg, Ill., company recently unveiled a 1.2 million transistor product with a capability of nearly 17-MIPS that will be shipped this year.

Intel wants to sell the chip to makers of high-powered personal computers, workstations, data-storage computers known as file-servers, and even some minicomputers. That marks a change from the 386 and 286, which are used principally in personal computers, including all PCs made by International Business Machines Corp. and most IBM-compatible models.

The device won't be commercially available until the fourth quarter, and analysts doubt its financial effect will be significant in the near term.

In national over-the-counter trading yesterday, Intel shares closed at $26.625, up 12.5 cents.

While the 486 broadens Intel's product line, Drexel Burnham Lambert Inc. analyst Michael Gumport said it is "on the same kind of price-performance curve" as the 386 and doesn't represent the kind of technological watershed the 386 chip was in relation to Intel's earlier 286 model.

"I suspect that the two chips will peacefully co-exist for a number of years, with the 386 taking the bulk of mainstream PC applications" and the new chip used more in workstations and file-servers, said Mr. Gumport. Intel prospects this year and next depend on the success of the 386 and the company's erasable programmable memory devices, not the 486, he said.

IBM said that "the promise of the new 486 is a huge leap forward in performance," and added that "you can be sure that our PS/2s will take full advantage of Intel's latest technology." A host of other computer makers including Hewlett-Packard Co., Wang Laboratories Inc., Compaq Computer Corp. and Zenith Electronics Corp. also plans to use the chip.

The chip's performance has already attracted one maker of larger computer systems, Prime Computer Inc., Natick, Mass. It plans to design processors based on the 486 using a technology called emitter-coupled logic to make the chip run at 120 MIPS by 1992. Such processors would run far faster than the superminicomputers that have been Prime's bread and butter and could replace them.

Introduction of the new chip is part of a two-fold strategy Intel has adopted to extend its dominance in the market for conventional PC microprocessors with the 486, while at the same time hedging its bets with its recently introduced 860 chip, which incorporates the RISC architecture.

Intel said the 486 "offers all the performance" associated with 32-bit RISC microprocessors "yet is 100% compatible" with the 386 architecture.

But in February Intel introduced the 860 RISC chip, an innovative design that isn't compatible with Intel's current product line. Intel's entry into the RISC field is aimed at getting a piece of the relatively small but swelling market for such high-speed microprocessors. Such devices are widely seen as the chip of the future for powering the powerful desktop minicomputers known as workstations.

It is the 860, and not the 486, that represents Intel's "strategic response" to the rise of RISC technology, said Stewart Alsop, publisher of PC Letter.

The 860 RISC chip, which can also work as a co-processor to enhance the performance of slower chips, is currently hindered by an almost total lack of operating software that can make use of its sophisticated architecture. But the 486 will naturally be compatible with a huge base of software previously developed for Intel's family of chips. That ready-made base includes MS/DOS and OS/2, the two principal operating systems for IBM and IBM-compatible systems. Microsoft Corp. said that it will this year introduce OS/2 software that will for the first time fully utilize 386 chips, and by extension the 486.

Intel also introduced a version of its 386 chip that operates at 33 megahertz, up from the 25 Mhz that had been its previously fastest version.