Intel Corp. Makes a Disappointing Decision

Back in January, microprocessor giant Intel (NASDAQ: INTC) launched its seventh-generation Core processor family, formerly code-named Kaby Lake, for the mainstream desktop personal computer market.

These new processors were socket-compatible with the previous sixth-generation Core processors, meaning that the chips would function properly in motherboards designed for the prior-generation chips.

However, as is typical for Intel, the company released a new chipset -- known as Z270 -- alongside the new seventh-generation Core chips. Z270 was very like the prior generation Z170, with only minor differences separating the two.

This ultimately meant that for individuals buying new systems, it made sense to go with motherboards with the Z270 chipsets. For individuals upgrading from sixth-generation Core processors, though, it wouldn't make sense to buy a new motherboard.

Now, rumor is that Intel is preparing to launch its eighth-generation Core processor family for the desktop personal computer market, code-named Coffee Lake, later this month.

The Coffee Lake chips are based on the same basic architecture as the Kaby Lake processors: The main differences are that the new chips are being built using an enhanced manufacturing technology (14nm++ versus 14nm+ for Kaby Lake) and that they include more processor cores.

Unfortunately, the upcoming Coffee Lake chips apparently won't be socket-compatible with the Z270-based motherboards launched just eight months ago.

ASRock spills the beans

Prominent motherboard manufacturer ASRock recently said on social media, in response to a question, that Coffee Lake chips won't be compatible with  Z270-based motherboards.

That's going to be a real bummer for do-it-yourself personal computer builders who bought into the Z270 platform earlier this year and would've liked to upgrade to the new Coffee Lake chips.

Like any engineering and/or marketing decision, there are pros and cons to providing such backwards compatibility.

One big pro, at least from Intel's perspective, would have been that customers who have Z270-based systems would have been more likely to upgrade to new processors if they could have just dropped them into their machines, rather than being forced to rip and replace motherboards.

So it's very likely that Intel will lose out on some processor sales due to this decision.

The cons aren't trivial, though. Requiring a new chip to be compatible with prior-generation motherboards means forcing Intel's motherboard partners to do substantial work qualifying the new chips on the old boards, and to provide firmware updates as well.

Moreover, Intel would have risked hurting the motherboard makers, since customers who might've upgraded their Z170/Z270-based boards to use a new chip would likely have instead stuck with their prior generation motherboards.

Given that motherboard makers are already operating in a hyper-competitive business environment characterized by fast product cycles and low gross profit margins, they were probably not thrilled with the prospect of lengthening motherboard upgrade cycles within the gaming/enthusiast community.

And, finally, Intel sells a platform controller hub (PCH) chip with each new motherboard sold. Intel also sells Ethernet chips and Wi-Fi/Bluetooth chips into some motherboard models, so to the extent that the motherboard makers sell more product, Intel benefits.

Intel has historically balanced these opposing needs by supporting two generations of product on a given platform. Z270 supports sixth-generation Core and seventh-generation Core, and that's all she wrote. Business as usual.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.