Micron Electronics Joins The AMD Fold
(09/22/00, 9:22 a.m. ET) By Mark Hachman, TechWeb News
Micron Electronics has signed on to use the Duron processor from Advanced Micro Devices, leaving Dell Computer as the lone top-tier vendor to use Intel-based PCs.
Perhaps leery of its existing relationship with Intel Corp. (stock: INTC), Micron Electronics Inc. (stock: MUEI) will initially sell only its single Duron-based model, the Millennia RS250A, in retail stores such as Best Buy, Staples, and Radio Shack in Canada by the end of September.
Analysts, however, said Micron has nothing to fear, and that Intel's public acknowledgement of its mistakes has left the PC microprocessor market with its first real duopoly in ten years. A Micron spokeswoman also broadly hinted that future Athlon-based machines will be forthcoming from Micron and possibly its direct-sales website, Micronpc.com.
"The key message here is choice for our customer base," said Paul Petersen, vice president of marketing for the retail area of Micron, Nampa, Idaho. "If you've been following Micron, you'll know that we have ventured into the retail space as well ... in the retail channel, our customers have been telling us that the choice between Intel and AMD is very important."
However, Micron is not severing or moving away from Intel-based PCs, but merely adding Advanced Micro Devices Inc. (stock: AMD) to its product lineup, Petersen said.
While the announcement of the Millennia RS250A is the first Duron PC to be officially announced, analysts also expect products from Compaq Computer Corp. (stock: CPQ), Gateway Inc. (stock: GTW), and Hewlett-Packard Co. (stock: HWP). A leading U.K. OEM, Tiny Computers Ltd., also agreed on Thursday to use both the Athlon and Duron in its systems, which are now shipping.
The announcement is also an important one for AMD, which has lost substantial low-end PC market share as the company has phased out its low-end K6-2 and K6-III microprocessors. According to PC Data Inc., Reston, Va., the overall marketshare of AMD-based PCs in July was only 15.1 percent, compared with an 84.1 percent share for Intel. AMD's high-water mark for retail market share was in February 1999 when the company held a dominant 51.4 percent market share, according to Stephen Baker, an analyst at PC Data.
"AMD's done pretty well, but AMD's been phasing out their K6-2's, and the Duron's not in stores yet," Baker said. "At the same time, they've been focusing Athlon on the high end [and not dropping it in price or speed grade to cannibalize the Duron]."
In overall worldwide microprocessor unit sales during the second quarter, AMD controlled 16 percent of the market, leaving Intel with almost all of the remainder, at 83.2 percent. Cyrix Corp. and its parent, Via Technologies Inc., sold less than 1 percent of the chips, according to Mercury Research Inc., Scottsdale, Ariz.
It's virtually assured that Micron will begin selling Athlon-based PCs as well.
"It's not a one-time alliance with AMD, and we expect to continue to build a relationship with them," a company spokeswoman said.
However, direct sales of AMD-based PCs might take a bit longer.
"If you look at Micron's direct business, we're focused on corporate-type customers and small and medium businesses," said Casey Gotcher, senior manager of Millennia product development. "As much as we love the technology, corporate customers are asking for Intel-based product."
The Micron Millennia RS250A is configured virtually identically to Micron's Celeron-based Millennia offering, the RS2000. The system will ship with 64 Mbytes of RAM, a 30-Gbyte hard drive, Nvidia Corp.'s Vanta graphics processor, speakers, and software, with a target price of $899 without monitor. Additional retail discounts could kick the system down under $600, addressing a market being vacated by the AMD K6-2.
Other sources within the industry postulated that parent Micron Technology Inc. and its DRAM patent fight with Rambus Inc. (stock: RMBS) might have forced Micron's hand. Whatever the reason, Mercury analyst Dean McCarron said the resulting PC processor market hasn't been as competitive since the days of the 386, a good ten years ago.
"It's not nearly as political as it used to be," McCarron said of an OEM's decision to buy either an AMD or an Intel processor. "I think the situation has definitely changed from a political and market situation vs. two years ago. There are still strategic alliances and camps among their customers, but the situation is one of two viable competitors." |
