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Sidney 30th September 2004 03:24

Intel Says: Why Fi?
 
By Seth Jayson (TMF Bent)

In what looks like a good move, champion chip maker Intel (Nasdaq: INTC) recently announced that it would drop the wireless networking capabilities it had promised for its upcoming "Grantsdale" chipsets.

Tech heads -- the kind of people who enjoy the sound of whirring cooler fans and the smell of thermal paste; in other words, nerds like me -- greeted the news with eye-rolling and approving nods. Investors should be pleased as well. This is the final word in the long, sorry saga of onboard WiFi for this chipset. In fact, continual problems dictated that Intel begin shipping it earlier this year without the networking feature.

For those who don't know thermal paste from Preparation H, here's a primer: The chipset is the set of controllers on a motherboard that dictates how information flows between different parts of the computer, like the more familiar CPU, the graphics system, RAM, hard disks, etc. What Intel had hoped to do was make the chipset itself a wireless hub, giving computer buyers no need to go out and purchase a desktop unit from, say, Cisco Systems (Nasdaq: CSCO).

The strategy aimed to put Intel on the path toward becoming the featured player in a line of future home-entertainment PCs. But that's a bit like putting a digital clock in your toaster. Sure, it could be useful, but odds are, you've already got a watch.

In fact, wireless base stations cost next to nothing for those who want them. And external stations provide other important benefits not shared by chips soldered to a motherboard, such as easy replacement should the thing go on the fritz. Finally, with Internet service providers like Comcast (Nasdaq: CMCSA), SBC (NYSE: SBC), and Cox Communications (NYSE: COX) stepping all over each other to attract customers, it won't be long before these are free. (Cox ponied up a free cable modem when we signed on in August.) In the end, it made no sense to include the features in the chip.

Though investors may still be stinging from the recent earnings whiff and other screw-ups that benefited competitor AMD (NYSE: AMD), they should at least be glad that the firm has the guts to drop problematic pet projects and get back to basics. Intel has plenty of other problems to solve.

http://www.fool.com/news/take/2004/t...ce=y&bounce2=y


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