Noted Analyst Calls For New PC Classification to Protect Buyers From Disappointing Purchases.

Business Editors/High-Tech Writers

TIBURON, Calif.--(BUSINESS WIRE)--June 23, 2003

Merchants and Consumers Win When Consumers Can Distinguish

Between Two Types of Low-end Computers

Citing Intel's successful classification of integrated graphics parts based on "good enough" graphics for office computing, Dr. Jon Peddie of Jon Peddie Research, the Tiburon, Calif.-based leading multimedia and graphics market research firm, says there is a need to re-classify the PC in a way that will help consumers understand what kind of computer they are buying and what the capabilities of that computer are.

Peddie recommends that the PC industry create two classes of Entry-Level PCs, Corporate Entry-Level PCs for business; and Entry-Level Entertainment PCs (EEPCs) for gaming, DVD, video editing, and music. For gamers, the difference between the two means "good enough" for office computing or great for game play. Better yet, the step up to hot game play graphics can cost the consumer as little as $50 more, a price most would be happy to pay to be sure and get a machine that matches their expectations.

Microsoft agrees. General Manager for Windows Graphics and Gaming at Microsoft, Dean Lester, said, "I believe there is a lot more we as an industry can and should be doing in order to assist consumers in making smart choices with their hardware and software purchasing decisions."

The confusion started when the PC industry established a "Value PC" segment comprising PCs that typically sell for less than $1,000 and use integrated graphics parts to keep the manufacturing cost down. These parts are either integrated graphics controllers (IGCs) or integrated graphics processors (IGPs), an entirely new category of chipset. The integrated graphics controllers (IGCs) offered by Intel, VIA and XGI (formerly SIS) cannot run newer Microsoft DirectX8 level graphics-rich games and other multimedia applications. The new category of high performance integrated parts using integrated graphics processors (IGPs), on the other hand, can run applications based on DirectX8.

But pity the consumer who enters a retail outlet, sees an active demo of a high-end PC running a fantastic game or multimedia applications such as a DVD movie, music mixing, photo editing, etc. but recoils at the system price -- typically $1,500. Not wanting to lose a sale, eager salespeople direct the buyer to a lower priced value PC but neglect to reveal that those low-end machines with an IGC are not designed to play the kind of games or multimedia applications that consumer saw demonstrated on the high end system. Many times the salesperson isn't aware of the difference either. But, once consumers bring the IGC-based system home, they're liable to be frustrated and the retail outlet typically has to take back the system from the disappointed customer. The solution is to define the Value PC segment as containing chipsets designed for the corporate user or for entertainment applications.

"With a simple designation that distinguishes between an entry level corporate PC designed for office productivity or an entry-level entertainment PC designed to play the new games being introduced as well as video, compressed audio, and streaming media, salespeople can clearly explain to the consumer what to expect," said Dr. Jon Peddie. "A PC with an integrated graphics processor may cost $50 more, and consumers will gladly pay the higher price, knowing they'll get the performance they expect. It's a win-win for everyone."

Peddie says that by creating these new classifications, IGP suppliers such as ATI and Nvidia will get a higher ASP (average selling price), the box builders get more, and the retailer gets more. And best of all, the consumer's expectations are met by an affordable system designed to play today's and tomorrow's games.

EDITORS PLEASE NOTE: A white paper providing further details about the proposed classification and the difference between IGCs and IGPs may be obtained by contacting Jon Peddie Research.