To spur demand, Intel is investing a sizable portion of its $4 billion R&D budget in some unexpected ways. The company's Microprocessor Research Lab, led by Intel Fellow Fred Pollack, spends much of its effort developing applications for high-end CPUs, not just the technology behind them. At an open house, the lab demonstrated the fruits of its research.

Several voice-recognition demos, some using Intel speech technology and others using Lernout & Hauspie engines, showed usable accuracy within specific contexts. This technology will be broadly deployed in the coming years.

Another demo showed PC-based video conferencing with the camera directly behind a projected image, providing realistic eye contact between the speakers. These systems will use MPEG-4 video compression to reduce bandwidth requirements, but MPEG-4 places a correspondingly greater load on the CPU.

Visual recognition can place an unbearable load on today's processors. Intel showed software that can recognize faces, and other software that recognizes images and movement in 3-D space. Simply feeding multiple video streams into a system overwhelms today's PCI bus.

Intel's intent is generally not to develop software products but rather to "accelerate the software spiral," as Pollack says. To do so, the company in many cases is using an open-source approach, providing its software free of charge to anyone who wants to use it.

New human-computer interfaces like those mentioned above will drive demand for faster processors. The key question is whether the pace of hardware innovation will continue to exceed the pace of software innovation.

Most PCs can comfortably run most applications. Without the demand for more performance, sales of Intel's most profitable processors will begin to wither.

The company is deploying more of its enormous brainpower to work on this problem. Accelerating the entire software industry is a Herculean task, but Intel's profits depend on it.

Linley Gwennap is the founder and principal analyst of The Linley Group, a technology analysis firm in Mountain View, Calif.