11/25 11:34
AMD Needs Marketing Push to Combat New Intel
Chip, Analysts Say
By Cesca Antonelli
Sunnyvale, California, Nov. 25 (Bloomberg) -- Advanced Micro Devices Inc.'s
speedy personal-computer chips beat Intel Corp. at its own game earlier this
year. Now, analysts said the company has to win at Intel's other favorite sport:
marketing.
Once a lagging rival to the No. 1 chipmaker, AMD overhauled its manufacturing
and held the crown for the fastest chips for most of this year. With Intel's new
Pentium 4 expected to keep the top spot for months, AMD may need a new way
to sustain momentum.
Buyers have traditionally used a processor's speed to measure how well a PC
performs tasks. Intel's image took a hit when AMD was the first to introduce an
850-megahertz device in February and then rolled out chips at 1 gigahertz and
beyond. Now, with the Pentium 4 starting as fast as 1.5GHz, AMD needs a new
sales pitch.
``AMD is going to have to convince consumers that clock speed isn't all that
matters, and that's going to be a challenge,'' Insight 64 analyst Nathan
Brookwood said.
Speed emerged as the primary benchmark when PCs ran a handful of basic
applications like word-processing and data entry. As the Internet blossomed, that
standard didn't change.
Still, it isn't the only way to judge a processor, and some analysts say it's no
longer a good measure as the Web morphs into a three-dimensional arena for
movie viewing and online auctions.
New Applications
By most accounts, Intel's Pentium 4, unveiled Monday, outdoes AMD's flagship
Athlon in hefty applications like 3-D games and video editing. Intel executives
promote the chip as built for ``where the Internet is going.''
Still, analysts said AMD's 1.2GHz Athlon bests Intel's new chip on basic
programs consumers use every day.
``The die-hard gamer fanatic should like this machine (the Pentium 4),''
Brookwood said. ``For most other applications, AMD will continue to lead.''
Even so, Sunnyvale, California-based AMD must convince the undecided
computer user that even though one chip is faster overall, it's not always better
for every task. Recent ads in USA Today and the Wall Street Journal highlighted
Athlon's design and new performance-boosting features.
That strategy will remain the same in the wake of Pentium 4, said Mark Bode,
marketing manager for Athlon. A chip's design affects its performance by
deciding how instructions are carried out, and AMD says its chips' so-called
architecture is better.
``Users are becoming increasingly savvy,'' Bode said. ``They really look at what
does this system deliver.''
Ubiquitous Competitor
It's a daunting challenge. Intel has built Pentium into one of America's
best-known brands, and promotions featuring its hallmark chime jingle,
bunny-suited workers and the trendy Blue Man Group have become part of
popular culture.
Whatever the performance comparisons, some users just want a Pentium
because it's so ubiquitous. That perception gives AMD the chance to compare
results against products people already know and highlight the things it does
better, said Zain Raj, president of ad agency FCBI Chicago.
Fighting for notoriety means finding the specific applications people need most
and promoting AMD's wares, because the company can't just say it's got the
fastest chips, he said.
``AMD talks about being better, faster than Intel -- it's a comparative thing, versus
`You do this. I think AMD does that better.' There are a lot of people with very
specific needs that AMD might do a better job at,'' Raj said.
AMD says ads only go so far. The chipmaker's newfound acceptance has come
from improving its products and working with PC makers to help sell the systems
to users, Bode said.
``Marketing is more than a glossy piece in a magazine or a TV ad,'' he said.
``We've got a great product now.''
What a Year
AMD doesn't have to dethrone Intel to win. Since Santa Clara, California-based
Intel holds 80 percent of the market for PC processors, AMD can boost sales as
long as it continues to gain share.
The company typically sells chips about 25 percent cheaper than similar models
from Intel. If that pattern holds, steep price cuts may be looming. The 1.4GHz
Pentium 4 sells for $644, while the top Athlon was unveiled last month at $612 --
just a 5 percent discount.
Still, AMD has time to plot its marketing strategy. Analysts said the Pentium 4
will be too expensive for all but the best of the high-end PCs this year and into
early 2001.
``If you're running Web browsing, e-mail and Quicken, you'll be hard-pressed to
rush out and buy it,'' Mercury Research analyst Mike Feibus said of the Pentium
4. ``When it falls into other price points later next year, it makes sense.''
Despite Intel's formidable strength, those expecting an easy ride for the company
next year might want to think again. AMD floundered with product delays and
manufacturing problems as Intel faced smooth waters in 1999.
This year, it's Intel that has been plagued by recalls and slower-than-expected
sales. What a difference a year makes. |
