Year in Review 2008
Shrinking chips, shrinking revenue
By Brooke Crothers
Published: December 31, 2008, 4:00 AM PST
The year began with a bang. Atomic in scale.
Intel rolled out the tiny Atom processor, launching the Netbook phenomenon. This is not your father's PC processor: it's very small and not particularly fast, but it's very power-efficient. The mini notebooks, known as Netbooks, typically weigh less than three pounds and have screens under 11 inches diagonally.
Netbooks also signaled the arrival of the solid-state drive--faster, quieter, and cooler than the longstanding staple of PC storage, the hard disk drive. This also brought some extra scrutiny about the reliability of SSDs. The first high-profile use of a solid-state drive was the MacBook Air, launched in January.
Expanding on the "smaller is better" theme, Intel introduced its Centrino 2 brand, built on a 45-nanometer Penryn process with improved power efficiency.
While Advanced Micro Devices shrank chip geometries, it also focused on reducing the size of the company because of missteps and the consequent financial shortfalls. Emblematic of growing financial strains, AMD was losing the processor war to Intel. But not all was lost. Its ATI unit made gains on rival Nvidia in graphics chips.
Nvidia, not known for making small chips (but known for making very fast ones), wanted to ensure its graphics chip message was getting out and the chief executive launched into a diatribe against Intel. He alleged, in effect, that Intel makes lousy graphics silicon. But Nvidia was also on the receiving end of scathing criticism when it finally came clean about a longstanding graphics-chip defect. Hewlett-Packard, Dell, and Apple all issued warnings and fixes for laptops with the potentially defective graphics processors.
Intel, never one to shrink from competition, announced that it would enter, by 2010, the market for high-end graphics chips. The chip, code-named Larrabee, would give Nvidia and AMD something to think about. And that's about all they could do since the chip--at least initially--was merely a paper tiger.
In October, serious revenue shrinkage began, starting with the memory chip industry. Micron Technology, the largest U.S. memory chipmaker, posted a $1.6 billion loss, and struggling SanDisk was targeted by Samsung for a buyout.
After persistent rumors, AMD finally split in two. AMD became a designer of chips, while the Foundry Company became the manufacturing arm. Abu Dhabi-based Mubadala Development Co. was slated to invest billions in the manufacturing operations.
The U.S. financial-crisis tsunami hit Silicon Valley, and its impact was felt in Asia as well. Intel saw the writing on the wall and inserted a heavy dose of caution about future revenue and the impact of the financial crisis into its third-quarter earnings statement. The fourth quarter, Intel said, could see consumers and businesses deferring purchases.
Meanwhile, Taiwan Semiconductor Manufacturing Co., the world's largest contract manufacturer of chips, chimed in and said chip demand from PC makers was crashing.
One bright spot was an insatiable industry appetite for the Atom processor as the Netbook market grew beyond Intel forecasts.
There was a brief respite from the bad news when Intel announced its new Nehalem chip architecture in the form of the Core i7 processor. Gamers were ecstatic.
The year ended with a bang, too--as in, implosion. Chip companies will see two years of sales declines, predicts market researcher Gartner.
LG adds direct Internet link to a line of HDTVs
By The New York Times
Those who want to bring the wide world of Web video to their television screens usually need a separate device--a video-game console, DVD player or set-top box with Internet access.
Now they will be able to take a more direct route. LG Electronics, the third-largest television manufacturer in terms of United States sales, will announce on Monday a line of televisions that can directly receive Internet video in addition to satellite and cable signals.
LG's line of LCD and plasma televisions will be called Broadband HDTVs and are expected to cost around $300 more than comparable models without Internet access, said Tim Alessi, director of product development at LG Electronics.
Owners of the televisions will not be able to browse the Web freely--the TVs' processors and memory chips are not up to that task. But the Broadband HDTVs will have access to a variety of specific video sites, and on Monday, LG will announce one in particular: Netflix.
The televisions will be able to stream any of the 12,000 films and television shows in Netflix's Watch Instantly library, many of which are provided by Starz, the premium cable television service.
"It's hugely symbolic," said Netflix's chief executive, Reed Hastings. "The holy grail has always been to give the TV an Internet jack in addition to the cable jack. It's an early glimpse of the long-term future."
Hastings, who runs the lucrative Netflix DVD-by-mail business, does not think the revolution will happen soon. People keep their televisions for a decade or longer on average, he said, so it will take years for broadband-capable TVs to filter into most American homes. Buying a video-game console or Blu-ray disc player with Internet capabilities may still be a better short-term solution for many people.
Regardless, more television makers like Samsung and Panasonic are sure to introduce similar devices, perhaps even at the Consumer Electronics Show this week. Sony's Bravia televisions can use the Internet with the addition of a separate module, but analysts expect the company to build this capability into its sets.
For its part, Netflix, based in Los Gatos, Calif., is continuing to expand its Watch Instantly offerings. Also on Monday, the company will announce that it will add several Showtime programs to its library of streaming video, including the season premieres of United States of Tara, The L Word, and Secret Diary of a Call Girl.
