With Intel poised to release computer chips with a clock speed of 2 GHz this quarter, some analysts say corporate PC users will have access to more computing power than they'll know what to do with. As a result, the chipmaker and its PC-building customers such as Dell Computer and Compaq could have a tough time moving high-end systems in quantity. "Right now it's hard to imagine a general office application that requires anywhere near that kind of horsepower," says Humberto Andrade, a Technology Business Research analyst.

Intel has released its 1.8-GHz Pentium 4 processor, a smidge faster than the 1.7-GHz chip it supercedes. It also introduced a Pentium 4 at 1.6 GHz. But the next major breakthrough for Intel comes when Pentium 4 hits 2 GHz. Meanwhile, Advanced Micro Devices Inc. says it will reach that mark next year with its 64-bit Clawhammer chip. Currently, AMD's fastest chip is the 1.4-GHz Athlon processor.

Andrade says the speed glut, along with the general slump in IT spending, is one reason the PC market this year is expected to suffer its first ever year-over-year sales decline. Chipmakers and their customers who build PCs aren't likely to get much of a boost when Microsoft releases its Windows XP operating system later this year, which Microsoft says should perform just fine on a PC running at 300 MHz. Still, Intel officials are optimistic that next-generation applications like real-time voice and video streaming will boost demand for high-end systems.

"We think the PC will continue to be the center or the digital world, and even the fastest systems are hitting a price point that's palatable for most IT managers," says Intel spokesman George Alfs. Perhaps--but it may get worse before it gets better. According to market watcher International Data Corp., computer makers will ship 6.3% fewer units in the United States this year than last year. The consumer market will take the biggest hit, with sales falling 17.3%, while corporate sales will remain virtually flat.

-- Paul McDougall


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