AMD Releases Athlon MP ProcessorsAMD Releases Athlon MP Processors

Advanced Micro Devices Inc. wants to establish a beachhead in the market for processors that power low-end servers, currently dominated by Intel. Its latest weapons: Athlon MP processors at 1 GHz and 1.2 GHz, and the one-two punch of the AMD-760 MP chipset, designed for servers or workstations that can use up to two processors.

AMD says that more than 20 hardware makers will use the chips. That doesn't include any of the so-called tier-one original equipment manufacturers, such as Compaq, Dell Computer, and IBM. Still, John Crank, AMD Athlon brand manager, says he's confident that the major players will pick up the chip once it develops a track record. The company already is in discussions with several major computer makers, he adds.

AMD faces a steep upward climb to gain a foothold in Intel's market. "They have a great product, but the OEMs are conservative--they want proven technology," says Humberto Andrade, an analyst at Technology Business Research. While he expects the top-tier manufacturers to eventually use AMD for entry-level servers, the company first needs to gain visibility and credibility. The company already has alliances with equipment makers overseas for selling commercial PCs in Europe and Asia. "They got a great contract with the Italian government two or three months ago," Andrade says. While the American market may be tougher because original equipment manufacturers here tend to be more conservative, AMD still could be well-positioned for a breakthrough deal with a large U.S. company, Andrade says. "If AMD wants to enter this market, they have to go for a price war."

And AMD is better-positioned to battle over price than Intel. AMD may be smaller than Intel, but it's profitable, more focused, and has lower overhead, Andrade says. Intel has huge overhead and lost $1 billion on its network and communications unit last quarter. "I think that offsets the fact that Intel has bigger volume," he says.

With budget tightening at many companies, IT managers will be putting additional pressure on original equipment makers to find ways to lower prices on large computer orders, Andrade says. "OEMs may start to realize that $50 to $60 per computer will make a difference."