Will desktops bite the 64-bit bait?

Every new technology faces resistance from the incumbent before it becomes popular. 64-bit on desktops is miles away from being the technology of choice, but will intense investment in R&D and the interest of PC vendors result in market success? Shipra Arora finds out

64-bit computing on the desktop is a classic example of the question that accompanies any new technological innovation: should there first be demand for the technology or should the technology precede demand and create a market of its own? 64-bit computing on the desktop has been clouded in conflict with regard to its relevance much before its arrival on the scene. Its much-touted arrival in the last few months—with the launch of Apple’s Power Mac G5 based on IBM’s G5 processor, followed by the AMD Athlon 64 processor and Windows XP 64-bit Edition—has not helped matters any further in favour of either school of thought. It is as much wrapped in contradiction and conflict today as it was before the high profile launches.

Even though major Indian desktop vendors like HCL, Wipro and Zenith are in the process of rolling out their 64-bit desktops, doubts about takers are galore. With desktop processor market leader Intel refraining from entering the space for the time being, citing lack of market demand, the doubts surely intensify. The average consumer—apart from the odd gaming geek, engineer or video editor—hasn’t really been awaiting these arrivals with bated breath.

Rahul singh expects 3D gaming applications and digital media applications to be the first categories to benefit from 64-bit computing on the desktop

What’s important to realise here that the full potential of even the 32-bit desktop is yet to be realised. It is believed that it could be the end of the decade before mainstream desktops need more than 4 GB of memory, one of the chief reasons to move to 64-bit chips. According to IDC, as of now, the market for 64-bit computing is still nascent, more so in the desktop space. “At least for the next few years there is no mainstream market, either on the consumer or commercial side, for 64-bit desktops. It is on the very high-end side, and there is not much of a market for it presently,” says Aman Munglani, head, computing products, IDC India.

AMD vs Intel

The feasibility of AMD’s venture is being questioned by all quarters, especially considering that AMD has spent quite lot of time and money promoting the idea of the 64-bit desktop, something Intel does not buy.

Intel has a reason for that. According to Shrikant Patil, director, solutions, Intel, South Asia, with just 5 percent of servers using 64-bit memory addressability, there is no need for 64-bit on the desktop today. “Adding 64-bit addressability means little without the necessary software and related tools, utilities and technologies to ensure the PC performs at its best and can work with applications and peripherals. Further, there is a general lack of mainstream applications that require the ability to access that much memory.” At the same time, Intel is smart enough not to let off the competition easily. Its answer to AMD comes in the form of Intel Pentium 4 Extreme Edition, supporting Hyper-Threading (HT) technology, a move calculated to undercut Athlon 64. This high-end 32-bit processor targets the same market as Athlon 64, i.e., high-end gaming and graphics. Intel counters AMD’s 64-bit challenge with advanced features like HT technology, 800 MHz system buses, and dual DDR400 provided to customers at mainstream price points. According to Patil, the Pentium 4 processor with HT technology is specifically designed to allow consumers to quickly edit their digital music, photos and movies, often doing two of these activities simultaneously with improved system responsiveness.

According to shrikant patil, the cost of adding the amount of memory needed to take advantage of 64-bit computing would be between $500-$2,000, fairly costly when compared to the prices of today’s PCs

But the catch here is that even though Intel refuses to enter the 64-bit desktop space, its counter-offering is priced prohibitively higher than AMD’s offering. The Pentium 4 3.2 GHz (Extreme Edition) is priced at $925 for thousand unit quantities, whereas AMD’s Athlon 64-bit processor (Athlon 64 3200+ model) is available for $417 while the Athlon 64 FX (FX-51 series) processor is available at $733 in thousand unit quantities. Thanks to the pricing issue there is the possibility that Intel may lose out if AMD’s 64-bit desktop gamble pays off—AMD might well end up having the early mover advantage in this space.

However, experts believe that AMD’s 64-bit force might not be strong enough to dent Intel’s standing in the market. According to IDC, Intel accounts for around 90 percent of desktop processors in the Indian market, with AMD following far behind at 9 percent. Munglani says that AMD’s 64-bit desktop processor attempt will not have much impact on Intel, which will be able to resist it thanks to its strong marketing and channel set-up. What will also work in Intel’s favour is its original equipment manufacturer (OEM) partner relationships. “We have outstanding working relationships with our OEM partners, and all partner companies have invested incredible amounts in R&D and products based on our building blocks. The key measure of success is sales,” comments Patil.

Indian scenario

64-bit technology has got a push in the Indian market with major Indian desktop brands like HCL, Zenith and Wipro giving it their backing. HCL has launched its enterprise PC, Infiniti Orbital, with the Athlon 64 processor. Zenith has also announced that the Zenith Premium Business PC will support the processor. The company states that starting with the AMD Athlon 64 3200+ processor, the Zenith Premium Business PC will have a strong roadmap for future AMD processors based on the Athlon 64 processor.

However, conspicuous by its absence is HP, which has not yet finalised plans for a 64-bit desktop launch in India. This, when globally HP is partnering AMD for Athlon 64 and plans to ship systems in the fourth quarter of 2003.

Volumes and pricing

India being a price-sensitive market, the major roadblock for the 64-bit desktop will be price, which will be a key factor in dictating volumes. According to IDC, during 2002, the high-end segment (desktops priced more than $1,100 or approximately Rs 51,000) comprised around 8 percent of the total desktop market in India, with the percentage having come down to around 5.5 percent during the current year. Also, it is the less-than-$800 (Rs 37,000) category that currently constitutes the mainstream market in the country with around 73 percent market share. Thus, considering that the high-end Indian desktop market is rather small and not growing, 64-bit desktops might have a difficult time finding mainstream acceptability with average prices starting above Rs 50,000. As long as the 64-bit desktop is priced above this level it will remain only a niche product for the advanced and enthusiast user, points out Harish Keswani, product manager, Zenith Computers. Perhaps that’s the reason why HP is also going slow on launching Athlon 64-based PCs in India.

Zenith’s system based on AMD Athlon 64 3200+ will range between Rs 45,000 and Rs 60,000. HCL’s Infiniti Orbital starts at Rs 50,000. As compared to this, the top-end 32-bit system from Zenith, a 3.2 GHz Intel Pentium 4, costs around Rs 50,000. For HCL, its top-end AMD 32-bit system touches Rs 50,000, with the top-end Intel system going for Rs 60,000 to Rs 65,000.

While at first sight the pricing of the 64-bit systems might seem more attractive than the high-end 32 bit (both Intel and AMD) offerings in the market, one must not lose sight of the fact that the mentioned prices are of the base entry-level systems. At Rs 50,000, HCL’s 64-bit system is a plain vanilla offering. Zenith’s Rs 45,000 model is a basic one offered at a low price in order to attract customers. The base and entry-level models offer very few entry-level configurations in terms of memory, HDD, monitor, etc. Since the customer will usually go in for higher and better configurations to make best use of 64-bit computing power, the total price will automatically shoot up, thereby causing the price difference between a high-end 32-bit and a high-end 64-bit system to widen.

According to Patil, the cost of adding the amount of memory needed to take advantage of 64-bit computing would be between $500-$2,000, depending on the configuration—fairly costly when compared to the pricing of today’s PCs. However, at its entry level, the 64-bit desktop might offer tough competition to the high-end 32-bit desktop owing to the availability of a larger number of applications at a smaller price differential.

According to Rishi Ghai, analyst, computing products and channels research group, IDC India, customers keen on technology are known to go for newer and faster microprocessors despite their not having a genuine requirement for high computing power; this is especially true of the home segment. “But for volumes to take off, the premium on the new technology would need to come down, and users would have to be educated—which would take some time.” According to Frost & Sullivan estimates, it will take another two to three years before 64-bit architecture on desktop will become mainline.

Vendor strategies

The players are not banking on volumes right away. According to Karthik Padmanabhan, senior marketing manager, Microsoft India, the company is not really looking at volumes right now for the 64-bit edition of Windows XP; he expects 3-5 years to pass before mainstream consumer adoption takes place. Even AMD, the biggest exponent of the 64-bit desktop, expects initial adoption to be restricted to gaming, scientific research, animation, graphics, 3-D modelling, digital audio and video, which, as of today, are nice applications. The focus of players in this scenario will not be as much on adding to revenues as it will be on preparing themselves for the opportunity when the niche market finally turns into mass adoption of the technology by the mainstream consumer as well as commercial user. “We have to give time to the market to develop, and we are ready with our offering as soon as the consumer wants to lap it up,” says Zenith’s Keswani.

Possible applications

If one sees the market on the whole then the 80/20 rule applies, i.e., 80 percent of users do not use more than 20 percent of existing 32-bit computing power, while the remaining 20 percent use almost 80 percent of the CPU’s processing power. It is this 20 percent of the population—mostly gaming enthusiasts, advanced graphic artists, video editors, and digital content creators—who will be the early target for the vendors. This apart, the technology will find its way into environments such as scientific research, military applications and telecom, which typically involve processor-intensive computations. Rahul Singh, senior marketing specialist, AMD Far East (India), expects 3D gaming applications and digital media applications to be the first categories to benefit from 64-bit computing on the desktop. Graphic intensive enterprise applications and CAD/CAM applications will also get a definite fillip from 64-bit. Speech applications could also benefit, with the 64-bit architecture on desktop providing both accuracy and speed. Some of the other emerging applications include entertainment-on-demand and video-on-demand which provide a high-end, rich multimedia experience.

Microsoft for one is betting heavily on the technology to strengthen its position in industry verticals and the gaming community. According to Padmanabhan, applications like engineering, CAD/CAM, scientific, data modelling, high-end analysis and data crunching in verticals like discrete manufacturing, banking and finance, and professional services are a potential target. The company also foresees gaming as an emerging mainstream application on 64-bit desktops. Microsoft is working with some gaming titles and coming out with some gaming solutions that are 64-bit enabled.

Future hope

According to experts, technology markets follow the now-familiar ‘S’ curve of adoption. The initial response from adopters is invariably lukewarm, but as innovators realise the benefits, positive word-of-mouth support ensures wider adoption. The same trajectory is envisaged for 64-bit desktop computing. They point out that the technology is likely to achieve a price-performance parity in the next two years as prices move down, which in turn will trigger demand.

Equally important will be the availability of applications that leverage 64-bit architecture. Actual growth of the segment will happen only after software is on the shelf. While Windows XP 64-bit version is already there, others will soon follow. It will be the availability of applications that are relevant to the mainstream that will determine mass scale adoption of 64-bit desktops. And of course, the applications—both consumer and commercial—will have to be memory- and compute-intensive for them to utilise the full potential of 64-bit on desktops. For consumer applications to reach this high level of performance is still unimaginable. A lot will also depend on how office productivity applications leverage 64-bit computing to come up with enhanced functionality.

The bottom line is, at least for the time being, 64-bit remains niche.

Factors that will drive demand for 64-bit desktops

Fall in prices. Data-intensive applications that demand more processing power and greater addressable memory—real-time enterprise, digital audio/video/photography, transactional and biometric security, high-performance computing, database server consolidation. Expanding standard memory configurations—a result of rapidly falling memory prices. Rapidly expanding volumes of data and complex datasets—the outcome of pervasive computing devices. Availability of adequate software.

Available on store shelves

Processors—AMD Athlon 64 processor, IBM’s G5 processor Operating System—Microsoft Windows XP 64-bit Edition Desktops—HCL Infosystems (AMD), Wipro Infotech (AMD), Zenith Computers (AMD), Apple Power Mac G5 (IBM G5)

shipra@expresscomputeronline.com