AMD surging in consumer PC market
Though Advanced Micro Devices isn't bowling over Wall Street, it is doing the equivalent to
archrival Intel at retail stores across the country. In a scenario that would have seemed
unbelievable only a year ago, AMD has swept the shelves at many retail PC stores across the
country. This success comes despite less-than-encouraging earnings reports from the
Sunnyvale, California-based chip manufacturer. And these systems aren't coming from second
tier vendors. Consumer PCs on shelves today from the top three retail suppliers--Compaq, IBM,
and Hewlett-Packard--seem to be nearly all based around AMD chips. Sunday paper inserts are
awash in AMD green.
"We make more money on the AMD systems," said one representative at a CompUSA store in
suburban Philadelphia. "It's all AMDthat's what they send us," quipped a sales person. Intel,
of course, isn't standing still. On January 4, the company released new Celeron processors
and pledged that it would win back retail market share. Price cuts on chips have flown from
Intel since, and even faster Celerons are on the way next month. The company has also
dedicated millions to a marketing effort around Celeron.
AMD's rise can be seen at CompUSA, the largest PC retailer, where desktop PCs using Intel
processors are completely absent in some lines. The store sells consumer systems from all
three of the major consumer PC makers. At some stores surveyed on the West and East Coasts,
CompUSA had no Compaq systems on the sales floor using Intel processors. All models, with
exception of one or two that come with a Cyrix chip, were based on the AMD K6-2 processor. An
OfficeMax store on the East Coast had no Intel systems.
In a large downtown CompUSA store in New York, the makeup of consumer models from IBM is
similar: AMD K6-2 across the board. An IBM spokesperson confirmed that most of its consumer
systems use AMD chips but said this could change anytime. IBM evaluates the components it
will use in consumer PCs month to month, he said. "Megahertz sells," said Mike Feibus, a
principal at market researcher Mercury Research. The megahertz rating is the principal
benchmark that consumers use to distinguish models. At any given price point in the low end,
AMD sells more megahertz, Feibus said. "This was Intel's wake-up callnow you see fast and
furious price declines and speed bumps [increases] from Intel trying to correct this."
HP is also keen on using the K6. HP systems that appear at CompUSA, and stores such as
Circuit City and Microcenter, are also mostly AMD, though there are one or two Intel models.
A CompUSA store south of San Francisco carried no Intel-based systems from Compaq or IBM,
though there were two HP models with Intel Pentium II chips. However, a sales person did say
that new Pentium III systems from one or all of these vendors are expected in the coming
weeks. On the 26th, Intel will introduce the Pentium III processor and high-end consumer
systems Compaq, IBM, and Hewlett-Packard are expected. Moreover, Intel dominates business and
corporate systems including notebooks, desktops, and servers. But this may be changing
slowly. "AMD is using its beachhead in U.S. retail to push into other spaces that have
historically been Intel-only market segmentsareas such as notebooks, direct, and possibly
even the corporate channel," Feibus said.
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