Intel’s Thunderbolt Could Shock the Computing Market

Intel Corp. (Nasdaq: INTC) has released the Thunderbolt connector technology, with Apple Inc. (Nasdaq: AAPL) the first OEM to implement it. Originally codenamed Light Peak, this latest technology is designed for faster media transfer and simplified connections between devices.

Thunderbolt combines both optical and electrical technology. It consists of controllers, one at each end (PC and peripheral device), a common connector, and a Thunderbolt cable. Devices can be daisy-chain connected by electrical or optical cables.

The first product to hit the market with Thunderbolt is Apple's new line of MacBook Pro notebook PCs. It should be made very clear that Thunderbolt is not exclusive to Apple; Thunderbolt is a new PC technology developed by Intel, and in the future it is expected to be deployed by other OEMs.

According to an Intel spokesperson, the current version of Thunderbolt connector technology will be licensed broadly to the industry. This will enable products using Intel’s Thunderbolt controllers. At first, Intel is focused on enabling targeted products. However, deployment will broaden as the technology ramps.

Thunderbolt combines high-speed data and HD video connections together onto a single cable. There are two communication methods or protocols -- PCI Express for data transfer and DisplayPort for displays. The transfer rate for media files is 10 Gbit/s.

Thunderbolt holds great potential for simplifying connections for many PC users. The initial target application is for HD audio/video. This is what will grab the attention of many PC users. Social media are driving the enormous number of photos and videos that are created and uploaded to Websites. However, the potential for Thunderbolt goes further. The high transfer rate Thunderbolt offers makes it very attractive for backing up huge files, either with external mass storage for individual users or in datacenters. Cloud computing is small but growing quickly, and the amount of data we are creating and moving around is growing exponentially.

Intel has been simplifying connections and cables since it first introduced USB in 1996. That enabled the PC market to make slimmer notebooks and other mobile devices. It has also made life easier for PC users by reducing the number and types of cables one needs.

How long will it take for Thunderbolt to become mainstream? As of this writing, Intel has not stated any pricing for the controller. One assumes the first shipments are relatively expensive, given the first product that features Thunderbolt. Over time, though, the technology will come down in price with increasing volume.

USB was widely licensed, and an industry organization has grown up around it. If Intel goes down the same path with Thunderbolt, the technology has a very good chance at being widely adopted.

Will Thunderbolt go the way of FireWire (IEEE1394), which was introduced about the same time as USB? FireWire was developed by Apple, and its first implementation had a speed up to 400 Mbit/s compared to USB 1.0 at 1.5 Mbit/s. Since that time USB 2.0 has reached 480 Mbit/s. The full IEEE 1394b specification supports data rates up to 3200 Mbit/s over beta-mode or optical connections up to 100 meters in length. A future version of FireWire, P1394d, is expected to reach 6.4 Gbit/s. FireWire has not had the widespread adoption that USB has seen, due to the higher price and few peripherals that could justify it.

USB 3.0 was just introduced in January 2011. This is rated at 5 Gbit/s. Thus it already surpasses FireWire and is not that much slower than the future P1394d. Thunderbolt is starting at 10 Gbit/s. Intel is more likely to be successful in widely licensing and proliferating Thunderbolt than Apple could with FireWire 15 years ago since it is a supplier to the overall ecosystem. During this time frame the data transfer rates have increased dramatically. The demand for high-resolution monitors, HD, and large external mass storage is much higher today than it was in 1995. Another product announcement from Intel is the introduction of the Intel SSD 510 with a 6 Gbit/s SATA interface. A user can justify the cost of Thunderbolt.

Will USB disappear? Semico does not believe this will happen anytime soon. It takes time for the PC industry to make legacy features obsolete. One recent example is the industry-wide agreement to phase out VGA by 2015 in favor of DisplayPort and HDMI. Not all peripherals, such as mouses or keyboards, will need Thunderbolt. But the amount of data we create, store, and transfer keeps growing. One can buy a terabyte-sized HDD at Costco for under $100. How long do you want to take backing up data?

Semico Research Corp. believes it will take time for Thunderbolt to reach widespread adoption. Semico also assumes that the technology will increase in speed and come down in price. By increasing the capabilities of the connections, Intel is providing more to developers for further innovation.