Craig Barrett: Has Intel's Chip Come In?

For Intel CEO Craig Barrett, this could shape up to be an annus horribilis. Weak PC orders and tough competition are pounding chip prices. And the Federal Trade Commission is suing Intel, alleging anticompetitive behavior.

Can anything help? Xeon to the rescue! On June 29, Intel will roll out a blazing new microprocessor aimed at workstations and corporate servers--markets where Intel doesn't rule and margins are far higher than in sub-$1,000 PCs. The first Xeons will cost anywhere from $1,200 to $4,000 and deliver gross margins over 90%, estimates researcher Micro Design Resources. "This will blow away all the alternatives," says Mark Edelstone, an analyst with Morgan Stanley Dean Witter. "It's extremely important for Intel."

Could Xeon turn into the next snafu? A week before the announcement, PC Week reported bugs in the chips that work alongside Xeon. Intel put out word on June 24, however, that there are no serious problems and that the chip will ship on time. Alas, uneasy lies the head that wears the crown.

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