The PC Changes ShapeThe PC Changes Shape

During the next few years, the guts of personal computers will change significantly as Intel introduces major new architectures. The chipmaker leads a consortium of vendors building PC components around a high-speed interconnect technology known as 3GIO, or PCI Express. The technology will replace PCI as the standard way to connect peripherals to a computing device. Why the switch? CPU speeds exceeding 10 GHz, faster memory speeds, and 10-Gigabit Ethernet networking, all coming in the years ahead, demand significantly faster internal bandwidth. Intel rival Advanced Micro Devices Inc. is pushing its own high-speed input/output around a technology known as HyperTransport. PCI Express and HyperTransport are incompatible for chip-to-chip connections, which can only mean bad news and confusion for buyers. "It could take a few years to sort this out, which means users can expect an ugly standards battle," says Linley Gwennap, an analyst at Linley Group.

On the desktop, one of the biggest changes next year will occur when Intel brings its Hyper-Threading technology, now used in servers, to desktop chips. Hyper-Threading "tricks" applications into believing two processors are present on a single-processor machine, effectively doubling performance in some cases. To realize such gains, apps must be written specifically to use Hyper-Threading.

Another priority: building security directly into chips. Intel is developing a hardwired security chip known as LaGrande, which provides a secure holding area for data that's inaccessible to remote applications, so even if the data is decrypted it remains unreachable. In addition to protecting sensitive data, LaGrande can work in conjunction with Microsoft's forthcoming digital-rights management software, known as Palladium. LaGrande "will be the core hardware technology to enable protected execution, memory, and storage," Lehman Bros. analyst Dan Niles says.

While Microsoft and Intel will dominate the business PC market for the foreseeable future, there are alternatives brewing. Lindows.com Inc., the software maker that markets a desktop version of the Linux open-source operating system, recently revealed version 2.0. The upgrade includes enhanced networking features for connecting with Windows-powered PCs, support for more than 800 printer models, and a Windows-style graphical user interface. The new version also has enhanced support for notebook PCs, including power-management features and tools for configuring wireless networking cards.

The time may be right for a Linux alternative on the desktop, as businesses continue to penny-pinch when it comes to spending on new PCs. Merrill Lynch recently cut its forecast for growth in the PC market in 2003 from 15% to 10% "in light of the continued weakness in global IT spending," says Steve Fortuna, an analyst at the firm.

As PC vendors drive prices lower and lower in an effort to gain market share, avoiding licensing fees to Microsoft may become more attractive. Low-cost leader Dell hasn't gone that far, but CEO Michael Dell isn't likely to let up on the price wars he started earlier this year. Says Dell, "Our strategy to profitably gain market share continues to work well."