The Digital Enterprise Group (DEG)'s products are incorporated into desktop computers, enterprise computing servers, workstations, a broad range of embedded applications, and other products that help make up the infrastructure for the Internet. DEG's products include microprocessors and related chipsets and motherboards designed for the desktop and enterprise computing market segments; microprocessors, chipsets, and other components for communications infrastructure equipment, such as network processors, communications boards, and embedded processors; wired connectivity devices; and products for network and server storage.

Net revenue for the DEG operating segment constituted 53% of our consolidated net revenue in 2007 (56% in 2006 and 65% in 2005). Revenue from sales of microprocessors within the DEG operating segment represented 40% of consolidated net revenue in 2007 (41% in 2006 and 50% in 2005).

Desktop Market Segment

Our current desktop microprocessor offerings include the:

• Intel^® Core™2 Quad processor
• Intel^® Core™2 Duo processor
• Intel^® Pentium^® Dual-Core processor
• Intel^® Celeron^® Dual-Core processor
• Intel^® Celeron^® processor

Most of these microprocessors are based on the Intel Core microarchitecture. Intel Core microarchitecture-based processors are designed for energy-efficient performance and are manufactured using either 65- or 45-nanometer (nm) process technology. We offer microprocessors at a variety of price/performance points: from the high-end Intel Core 2 Quad processor with four processor cores, designed for processor-intensive tasks in demanding multitasking environments, to the Intel Celeron processor designed to provide value, quality, and reliability for basic computing needs. The related chipsets for our desktop microprocessor offerings primarily include the Intel^® 945G Chipset, the Intel^® Q965 Chipset, and Intel^® 3 Series Chipsets.

We also offer processor technologies based on our microprocessors, chipsets, and motherboard products that are optimized for the desktop market segment. For business desktop PCs, we offer the Intel^® Core™2 processor with vPro™ technology, which is designed to provide increased security and manageability, energy-efficient performance, and lower cost of ownership.

Our new product offerings in 2007 and early 2008 include:

• Intel Core 2 Quad processors designed for processor-intensive tasks in demanding multitasking environments.
• Intel 3 Series Chipsets designed to be used with Intel Core microarchitecture-based processors, including 45nm products. These chipsets help improve system performance, energy efficiency, and video and sound quality.
• A new generation of Intel Core 2 processors with vPro technology, which includes Intel^® Trusted Execution Technology (Intel^® TXT), designed to help protect business PCs and data within virtualized computing environments against hacking, viruses, and other threats. Intel Core 2 processors with vPro technology include the Intel^® Q35 Chipset and feature Intel VT and Intel AMT.
• Intel Core 2 Quad processors and Intel Core 2 Duo processors designed for mainstream desktop PCs and manufactured using our new 45nm Hi-k metal gate silicon technology (45nm process technology).

Enterprise Market Segment

Our current server and workstation microprocessor offerings include the:

• Quad-Core Intel^® Xeon^® processor
• Dual-Core Intel^® Xeon^® processor
• Dual-Core Intel^® Itanium^® processor

Our Intel^® Xeon^® processor family of products supports a range of entry-level to high-end technical and commercial computing applications, and is based on the Intel Core microarchitecture. Compared to our Intel Xeon processor family, our Intel Itanium processor family generally supports an even higher level of reliability and computing performance for data processing, the handling of high transaction volumes and other compute-intensive applications for enterprise-class servers, as well as supercomputing solutions.

We also offer platforms that are optimized for use in the enterprise market segment, which includes entry-level to high-end servers and workstations. Servers, which often have multiple microprocessors or cores working together, manage large amounts of data, direct data traffic, perform complex transactions, and control central functions in local and wide area networks and on the Internet. Workstations typically offer higher performance than standard desktop PCs, and are used for applications such as engineering design, digital content creation, and high-performance computing.

Our new product offerings in 2007 and early 2008 include:

• Quad-Core Intel Xeon processors designed for single-socket servers, dual-processor (DP) servers, and multi-processor (MP) servers. We also introduced low-voltage versions of the Quad-Core Intel Xeon processor designed for DP and MP servers.
• An industry-standard, four-processor server platform based on our processors for MP servers. The platform includes a new chipset designed to enhance data traffic between the processors, memory, and I/O connections.
• A new generation of Intel Itanium processors, including both dual- and single-core versions, designed for high-end applications. The new series includes extensive virtualization and other advanced features designed to improve reliability and reduce power consumption.
• Quad-core and dual-core Intel Xeon processors manufactured using our new 45nm process technology. The new processors are designed to increase computer performance while lowering power consumption. We also introduced three platforms to support the new 45nm processors, including a platform designed for high-bandwidth, high-performance computing; a cost-optimized platform designed to support either one or two processors and reduce power consumption by using DDR2 memory; and a platform designed for single-processor, entry-level servers.
• Modular server building blocks based on Intel^® Multi-Flex Technology, designed to enable system builders to easily integrate computing, networking, and storage capabilities into one system to meet the needs of a small- or mid-size business. The building blocks support up to six server compute nodes and 14 serial attached hard disk drives.

Communications Infrastructure Products

In 2007, we introduced the Quad-Core Intel Xeon processor 5300 series for the embedded computing segment. In addition, we announced the Intel^® IP Network Server NSC2U, powered by two 5300 series processors. The server includes the Intel^® 5000P chipset and features a rugged chassis and compact form factor.

Networked Storage Products

In 2007, we introduced the Intel^® Storage Server SSR212MC2. Designed for small- and mid-size businesses, this storage server is powered by either the Quad-Core Intel Xeon processor 5300 series or the Dual-Core Intel Xeon processor 5100 series.