http://www.businessweek.com/technology/content/dec2005/tc20051222_242937.htm


A top exec boasts that the new Cell processor is "as good as the
Pentium, if not better." But topping Intel is a tall order



Nearly anyone who owns a PC is familiar with the "Intel Inside"
sticker. The blue-and-white logo has been a potent symbol of Intel's
virtual lock on the market in PC processors over the past decade.
Despite their best efforts, Advanced Micro Devices, Samsung, Texas
Instruments, and other chipmakers have failed to knock Intel from the
No.1 spot. Advertisement

Now, Sony is winding up for a swing at the champ. On Dec. 14, Kenshi
Manabe, its semiconductor chief, told a gathering of financial analysts
that he expects the next-generation Cell processor to become the
industry standard for all kinds of multimedia consumer electronics.
"The Cell chip is as good as the Pentium, if not better," Manabe said,
according to several people who attended the meeting.

BEYOND GAMING.  Not so fast. The Cell won't be on the market until next
spring, when Sony is slated to launch its PlayStation3 video-game
console. And while analysts believe in the Cell's potential as a
multimedia processor, none of the three companies that shared the
chip's $400 million development costs -- Sony, IBM, and Toshiba -- have
specified what will come after game machines.

"There was a great deal of interest in whether Sony would comment about
the use of the Cell chip in applications other than PS3, but made no
specific references," Goldman Sachs Japan analyst Yuji Fujimori wrote
in a report after the meeting. "The current Cell chip production
capacity will be dedicated entirely to PS3 applications."

You can't blame Manabe for grandstanding a bit. Sony's new chief, Sir
Howard Stringer, badly needs the Cell -- and the next-generation
PlayStation -- to be a hit. The chip's success could signal to the
industry that Sony is back after a series of missteps left it with an
outdated product lineup and mounting losses. For the year ending in
March, the Tokyo-based company forecasts an $86 million net loss,
compared with last year's $1.4 billion profit.

GREAT EXPECTATIONS.  Sony's woes stem largely from its loss-making
electronics division. The unit, which includes semiconductors, accounts
for nearly 70% of revenues but hasn't been profitable for the past two
years. By making its own specialty chips, Sony hopes to give its TVs,
cameras, and cell phones technologies that rivals can't match.

Putting the Cell in a gaming console gives the chip a high-profile
start. Sony's gaming machine, PlayStation2, has been the hottest
console in history, topping 100 million units in November after five
years on the market. Analysts predict the next-generation machine will
do even better. Sony is expected to sell more than 12 million PS3s in
the first year and reach the 200 million mark within five years,
estimates researcher Envisioneering Group.

Those numbers would give Sony the crucial economies of scale needed to
ratchet down the cost of each chip -- estimated in the hundreds of
dollars today. But matching Intel's reach won't be easy. The No. 1
chipmaker has sold hundreds of millions of Pentium microprocessors in
PCs over the years. "The Pentium chip is unique in its stature, and I
don't ever expect its success to be repeated," says Tom Starnes, an
analyst at market-watcher Gartner.

MULTICORE MIGHT.  As broadband connections make it easier to download
movies, music, and games, tech companies think consumers will want a
single device for all of these applications. But so far, PCs have
offered the best solution because of their ubiquity and easily
expandable storage space. PCs, however, can't handle too many tasks at
once before getting overwhelmed.

Sony has a good shot at getting the Cell into multimedia devices that
are more capable. The chip is what's known as a multicore processor.
Today's standard chips rely on a single processor to juggle tasks such
as e-mail, Net surfing, and word processing. They run hotter, devour
more energy, and can't handle tasks as smoothly as a multicore chip,
which divvies up tasks among two or more processors (the Cell has
between 4 and 16, depending on the configuration).

That would be useful in multimedia machines that manage the digital
entertainment files of an entire household. "If you had one base
station doing all the decoding for games, audio, video, still photos,
and weather information at once, something like the Cell could handle
it," says Starnes.

SLOW DEVELOPMENT.  Others envision even broader uses for the chip.
Mercury Computer Systems, a Chelmsford (Mass.) outfit that specializes
in computers for medical and military imaging, has said it will develop
the chip in CAT and MRI scanners as well as radar and sonar devices.
Charles King, principal analyst at Hayward (Calif.)-based Pund-IT
Research, says he sees the Cell becoming a powerful tool for computer
animation, electronic diagnostic equipment, and 3-D design. "Cell has
the potential to influence any of these areas," says King.

But at this point, nobody besides Sony has any idea what the Cell will
allow the PS3 to do. Game developers say they haven't seen a prototype
that comes close to the blazing processing speeds and life-like
graphics of the commercial-ready console Sony is promising. Though Sony
declines to comment on such complaints, in November it failed to
deliver on a promise to send game creators an upgraded prototype
containing a graphics chip made by Santa Clara (Calif.)-based nVidia

Without the souped-up graphics chip, "the machine we have is 10 times
slower than the PS3 should be," says an exec at a game software maker
who spoke on condition of anonymity. "The graphics chip was supposed to
be ready by November. But we're still waiting."