Intel's Chipsets -- The Roots Of Monopoly

I've been surprised to see so many analysts and board posters criticize AMD's purchase of ATI. Every time I've read this I've wondered what other option they thought would have been better. But, not one article by any these supposedly knowledgeable analysts has included any real alternative. My eventual conclusion was that most people, analysts included, don't understand the historical or current importance of chipsets. Intel's chipsets have everything to do with its current position as both a horizontal and nearly vertical monopoly.

Before 1995, Compaq and IBM were the top PC vendors. These two were essentially the Cadillacs of the PC business with models commanding higher prices but being seen as higher quality. This quality wasn't hard to see when comparing a Compaq with a Packard Bell. Compaq and IBM had had a technological advantage because they were capable of designing their own motherboards and putting together their own chipsets. However, this advantage was lost in 1995. Intel had been dabbling with chipsets as far back as the 80486 and had gotten more serious about this with the Pentium. But, this all came together for Intel in 1995 with the release of the 440 chipset for Pentium II along with Intel's new ATX motherboard standard. In one fell swoop Intel had leveled the playing field between Compaq, IBM, and other vendors. By 1997, ATX and the 440/450 chipsets had become firmly established and IBM and Compaq's position had eroded. Just four years later, the talk was about Compaq's being bought by another company and the following year it was acquired by HP. IBM had deeper pockets so it held out longer but it is difficult to understate the fact that the company that invented the PC; the XT, Baby AT, and AT motherboard standards; PS/2 ports; and VGA graphics finally had to divest of its own PC line.

The significant point is that when Intel became a genuine force as a chipset and motherboard supplier it took away both brand value and money from Compaq and IBM. The brand value and money shifted, naturally, to Intel. Intel deserved this success because ATX was what vendors needed. The ATX standard moved the processor out from under the expansion cards where taller heatsinks and fans were becoming a problem. The ATX standard replaced the XT, Baby AT, and AT standards which had been created by IBM; but ATX was close to the Baby AT standard and didn't require much modification to be used with these cases. ATX has since evolved into smaller form factors like mini, micro, and flex ATX.

So, it was something of a shock when Intel departed significantly from the idea of giving vendors what they needed when it tried to force the four incompatible BTX (BTX, micro, nano, and pico BTX) standards back in 2004. According to Intel, BTX was supposed to have better cooling and the two smallest sizes were supposed to reduce costs. However, BTX was not readily compatible with AMD's K8 processor because the northbridge was setting where AMD needed the processor to go. Also, the cost savings were mostly unrealized because BTX had little compatibility with ATX. Whereas transition cases were made that fit both ATX and Baby AT motherboards this was not possible for BTX. ATX is 305mm wide but BTX is narrower at 266mm. This made the nano-BTX at 223 X 266mm about the same size as the existing micro-ATX at 244 X 244mm but a different width. This has led more than one person to suggest that BTX was both Intel's quick fix for the thermal problems of Pentium 4D and an obvious attempt to disenfranchise AMD. Whatever Intel's reasoning (or scheming) may have been, the BTX strategy has essentially failed and ATX remains as the most popular standard. Even Intel has finally come to this realization and has halted any further development of BTX just three years after introduction.

Intel's failure with BTX to provide vendors what they needed left a vacuum into which AMD has recently introduced the DTX and mini-DTX standards. These standards are compatible with existing standards and therefore allow leveraging of experience with existing motherboards. Specifically, the width of the DTX motherboard is the same as micro-ATX at 244mm's. DTX is like a shorter version of Micro-ATX so micro-ATX/DTX transition cases should be fairly easy. However, the significant difference is that only two ATX (or micro-ATX) motherboards can be cut from one standard PCB (printed circuit board) panel while four DTX motherboards can be cut from the same panel. The smaller mini-DTX standard allows six motherboards from one panel. DTX motherboards can also be made with as few as four layers. This provides an immediate and significant cost reduction for DTX motherboards with only a small transition cost from existing micro-ATX motherboards and cases. In contrast, the three largest BTX standards only allow two motherboards from one panel while the smallest of the four BTX standards, pico-BTX allows four. VIA's mini-ITX does allow six motherboards to be cut from one panel but this standard is only used by VIA. It appears that AMD was giving a nod to VIA by making the width of mini-DTX the same 170mm's as mini-ITX. This should mean that both transition micro-ATX/DTX and mini-ITX/mini-DTX cases should appear in short order.

This move by AMD away from ATX is as significant as Athlon's move away from Socket 7. It remains to be seen how Intel will respond. With the failure of BTX, any attempt at yet another incompatible standard would be silly. This only leaves Intel with three choices: they can do nothing and continue with the existing BTX standards for awhile, they can support DTX and micro-DTX, or they could reach for the fig leaf of creating a new form factor with the same widths but with different component placement. However, only pico-BTX can compete with DTX in terms of board cost but without the same case advantages as DTX. So, doing nothing means getting pushed out of the low range by a standard that was designed to be profitable even at a low price. On the other hand, supporting DTX or using the same width puts Intel back on a level playing field with AMD and other chipset makers, and this is where Intel has tried very hard not to be. The bottom line is that AMD has stolen Intel's thunder by choosing to supply what its vendor customers wanted just as Intel did with IBM back in 1995.

Although not quite as important as DTX, AMD is also pushing an extended ATX standard with Quad FX. This standard makes a lot of sense because there currently exists a huge gap between ATX and the massive WTX (workstation motherboard) standard which is roughly twice the size of ATX. Theoretically, extended ATX fits into with the same width as ATX but has greater depth up 13”. The problem is that the volume for extended ATX has been so low that this size has never truly been a standard in the same way that ATX and WTX has been. However, components have gotten smaller making the old WTX standard overkill and unnecessarily expensive. Quad FX should bring some much needed volume to this market and pump up the available cases. This should be good news to companies like Alienware, VoodooPC, and Boxx who can have trouble stuffing all of the high end components into a standard ATX motherboard and case.

With DTX, AMD's decision to buy ATI makes a great deal of sense. I suppose some self styled experts would see it as AMD/ATI = AMD + ATI – (Intel's ATI orders). By this view, the combined company is worth less that the two companies were separately. This, of course, is wrong. Intel's self promotion reached a pinnacle with Centrino as this brand was pushed ahead of all vendor brands. AMD's ability to now deliver not only competitive mobile chipset solutions but all in one desktop solutions makes it a viable alternative to being pushed around by Intel. AMD benefits ATI by bringing both much needed development money and the AMD factory brand name to ATI's chipsets. While this distinction is not so important for discrete graphic cards it will have positive effect on demand for ATI chipsets. Anyone who doubts the importance of chipsets for AMD is clearly forgetting not only 1995 but the fact that without AMD's 760 and 8000 series chipsets, neither K7 nor K8 would have gotten off the ground. ATI's inclusion, however, means that AMD can now pursue the development of strategic areas that have been ignored by chipset vendors looking for nearer term profit. In other words, AMD/ATI not only fills in AMD's product line but breaks Intel's chipset position and makes another Centrino by Intel nearly impossible. The only question remaining is whether Intel has yet realized this fact and will go back to being a good supplier; or, will Intel keep putting its efforts into self promotion and trying to gain additional market leverage?