III's A Crowd: AMD Takes on
High End
(02/26/99, 6:27 p.m. ET)
By Kristen Kenedy and Doug Olenick, TechWeb
AMD's efforts to claim a share of the
high-end retail PC market seem to be
working. As systems based on the K6III,
AMD's new high-end CPU, go on sale in
stores this week, research shows AMD
gaining ground in PCs with price points
above $1,000.
Once strong only in the sub-$1,000 market, where it
held about a 50 percent share in January, AMD's cut of
the $1,000-to-$1,500 PC market grew from 33
percent in November to 39 percent in January,
according to PC Data, in Reston, Va.
"AMD has made tremendous inroads in the last two
months, and they will continue to do so," said Jeff
Kirschblum, vice president of marketing, Nationwide
Computer, in Edison, N.J.
AMD enlisted Compaq as the first PC OEM to use
the 400-MHz K6III, a redesigned K6-2 that integrates
256 kilobytes of fast L2 cache and supports additional
cache on the motherboard. AMD officials said tests
show that adding up to 2 megabytes of cache increases
application performance up to 8 percent, although some
analysts question this.
Compaq will offer the 400-MHz K6III in its BTO PC
kiosks, and will release a 450-MHz K6III system via
BTO within 30 days.
Compaq K6III systems will start at $1,399 with 1 MB
of L3 cache, 64 MBs of RAM, a 10 gigabyte hard
drive, a 6X DVD-ROM drive, a 56K modem, 2x AGP
graphics, and a 17-inch monitor. AMD said systems
based on the K6III, and the new 450-MHz K6-2, will
target early adopters and businesses.
"They're trying to seed corporate [sales] through the
retail market," said Steve Baker, senior hardware
analyst for PC Data.
As Intel promotes 266-MHz and 300-MHz mobile
Celerons at low prices, Pollitt said AMD holds the
upper hand: "One big issue we face is perception. Right
now, AMD has an advantage in clock speed."
Regionals and independents point out that AMD pays
commissions and offers in-store training to small
retailers; Intel offers these programs only to top-tier
chains.
"I see AMD as the Avis of the computer business. Avis'
slogan is 'We try harder,' and AMD does," said Steve
Hassell, PC buyer at American Appliance, in
Pennsauken, N.J.
Kirschblum said AMD develops POP displays and
in-store training, which generates enthusiasm among the
staff. "We sell 4,000 PCs a month, which provides a
steady customer base for AMD," he said.
Dave Sheffler, AMD vice president of sales for the
Americas, said regionals and independents are
"significant" to AMD. "When one of the other guys drop
the ball, it just creates a vacuum for us," he added.
To be successful at high price points, AMD must
deliver high-speed K6-2 and K6III chips on schedule.
Analysts said AMD's primary weakness is its inability to
execute plans effectively. More important, AMD must
meet delivery schedules for the new K7, expected to
ship in the first half of the year.
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