jopawa.....
speaking of AMD
Gateway eyes AMD deal
By Michael Kanellos
Staff Writer, CNET News.com
October 8, 1998, 12:15 p.m. PT
Advanced Micro Devices is inching toward a deal with
Gateway that, if consummated, would lead to the first
AMD-based Gateway desktop computer, according to
sources, while IBM is considering using a K6-2
processor in a consumer notebook.
While neither deal has
yet to be finalized, the
existence of close
negotiations between
Gateway and AMD reflect
the changing nature of the
computer market.
Gateway has long been
one of the staunchest
allies of Intel.
Gateway, however, has
seen some of its
strongest growth this year
in the consumer market.
And the consumer market
is increasingly becoming
a sub-$1,000 market, a
segment where cheaper
AMD chips provide
advantage.
A K6-2-based Gateway
PC would allow the
company to expand its
presence in the budget
PC market that is
increasingly being absorbed by K6-based computers
from Hewlett-Packard and Compaq. Also, Sony, just
last week, indicated it would come out with a K6
system. A K6-2 based notebook from IBM, which
already uses the K6-2 in its Aptiva desktops, would
likely end up competing against low-cost notebooks
from Compaq that use the K6-2 and National's
MediaGX.
AMD, Gateway, and IBM declined to comment on
any negotiations. Sources inside and close to the
companies, though, confirmed the existence of
negotiations.
Adding fuel to the speculative fire, Jerry Sanders,
AMD's CEO, said in a conference call with analysts
that AMD would probably announce a new alliance
with a major PC vendor as well as a new notebook
design win.
"We're involved with the top guys--IBM, Compaq, HP,
Acer. We're getting another. We expect to add
another top tier guy in the current quarter. We're
expanding our customer base generally. I mentioned
Sony. There are others," he said. "We're expanding
our customer base and gaining market share."
In another segment of the call, Sanders said, "We do
expect to have a major announcement in the current
quarter of a K6-2 mobile product."
Of course, observers also point out that history says
the deal won't go through. Gateway has talked to
AMD before with no results. Last year, purported
negotiations between the two never came through.
Intel, according to many observers, also does not
take incursions into its customer base lightly and is
known to marshal company representatives at the
hint of encroachment. Additionally, Intel has
aggressively cut prices on its processors this year
and most expect pricing pressure to continue.
Although AMD reported its first profit in a five quarters
earlier this week, the stock has declined since then.
If the Gateway deal goes through, Gateway would
likely incorporate a K6-2 processor, or the upcoming
K6-3, in systems selling for under $1,200, said Ashok
Kumar, semiconductor analyst at Piper Jaffray.
"Gateway will probably roll it out in November," he
said, assuming the deal can be signed. With the K6,
Gateway could hit the $799 price band. "Their core
customer, the consumer, is going to $1,000 and
under."
Intel, however, won't likely sit back. "Intel is not going
to let them pick up a million units a quarter," he said.
These two deals would cap off a heady year for the
scrappy processor vendor. A year ago, AMD was
suffering from production problems that stumped the
supply of K6 chips. The company now has K6 and
K6-2 design wins with Compaq, IBM and
Hewlett-Packard. Accordingly, market share has
increased. While AMD so far primarily sells its chips
into retail computers, the company will try to make a
push into the corporate space with the upcoming
K6-3 next year, said Sanders.
Last week, Sony announced three new consumer
computers for the Japanese market based around the
K6-2.
No Sony PCs based around the chip were announced
for the U.S. market, but the Japanese models could
be a prelude to that, speculated Mark Edelstone,
processor analyst for Morgan Stanley Dean Witter.
Edelstone earlier this year predicted that AMD could
expand its market share to 16 percent or more,
based primarily around the strength of growth in the
PC market.
Steve |
