Vista Demand Weak, Intel Must Scramble

Intel faces a glut of CPUs and a weak corporate demand for new computers. Intel CEO Paul Otellini told analysts theyire working hard to remain profitable and will return to their old design philosophy, according to ITWorld on Wednesday.

"Thereis clearly more capacity to build microprocessors than there is demand in 2007, and probably in 2008," Mr. Otellini told financial analysts at the Morgan Stanley Technology Conference in San Francisco.

Intel announced that they will be doing product refreshes every two years, upgrading the architecture in one year and shrinking the transistor geometry in the other. The latest reduction in process size is to 45 nanometers (nm), and Intel expects the resulting chip, Penryn, to be available in 2007. Penryn is expected to consume considerably less power than its predecessors.

Rik Myslewski expects this new Penryn CPU to show up in Macs before the end of the year.

The glut of CPUs is forcing prices down, and Intel needs to convince buyers that it has a compelling new chip.

In fact, TMO notes, the push by Intel to regain its dominant market share, remain profitable, and advance the technology can only be good signs for Apple. If there were any worries that Apple needed to compete for CPUs, at least in 2007 as Vista languishes, they appear to be unfounded.