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Processor vs. System Performance
It is important to remember that the processor is not the only component in the system that determines overall system performance. It is an important one, but it isn't the only one. Many hardware companies like to overstate the value of the processor's performance (sometimes focusing just on the clock speed). For example, you'll see claims that a system running with a Pentium 150 is "50% faster" than one with a Pentium 100. Or a retailer will try to sell you a 120 MHz Pentium OverDrive for your Pentium 60 system with claims that it will "double performance". These claims are, in almost every case, totally untrue. In fact, they are usually nowhere close to being true.
The reason is that speeding up the processor only improves system performance for those aspects of system use that depend on the processor. In most systems, the processor is already fast enough, but it is other parts of the system--the memory, system buses, hard disk and video card especially--that are the "bottlenecks" to system performance. Since most processors are already much faster than the devices that support them, they spend a great deal of time waiting around for data that they can use. Putting a still faster processor in place of the current one will not yield a very large performance increase if this is the case, because the faster processor will just spend more time waiting.
One of the most important factors that influences overall system performance is memory bus speed. The availability of Pentium PCs with both 60 and 66 MHz system bus speeds has emphasized this. Since the processors on these machines are so fast, they end up waiting a great deal on data from the memory bus. As a result, a slower processor running on a 66 MHz system bus can provide comparable performance to a faster one on a 60 MHz bus.
The classical example here is the Pentium 133, which provides performance virtually identical to the Pentium 150 in most cases. In fact, the Pentium 150 scores below the Pentium 133 in some benchmarks. Another way to look at this: setting a Pentium 100 to run with a memory bus speed of 50 MHz and a clock multiplier of 2 will result in a significant decrease in system (not processor) speed compared to its normal setting of 66 MHz and clock multiplier of 1.5, even though in both cases the CPU is running at 100 MHz.
The faster processors get, the more this phenomenon is observed. This is sort of a law of diminishing returns in processor speed. When you get to very high clock speeds, the improvement in overall system performance is minimal even if the processor's performance increases a great deal. The classic example is the Pentium 200, which by most benchmarks provides less than 10% system performance improvement over the Pentium 166, despite having 20% higher benchmarks when looking just at the processor.