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To: T L Comiskey who wrote (94240)	2/2/1999 8:46:00 PM
From: Mohan Marette	Respond to of 176387

<Intel Vs AMD> AMD a one trick pony,yup 'suppose so,at least so far. AMD's Cheap Chip Hell February 02, 1999 by Phil Harvey Advanced Micro Devices Inc. (AMD) occasionally twitches a little, but that may be rigor mortis--not a return of life's precious vital signs. "They're just continually trying to catch up in an intensely competitive area," says Tim Mahon, VP of Semiconductor Research at San Francisco-based Volpe Brown Whelan & Co. LLC. Mahon says Volpe Brown maintains a "neutral" rating for AMD because it's so difficult to make money and reinvest in its technology while chasing the low-margin rainbow of sub-$1,000 PCs. Today Intel Corp. (INTC: +9/16, 24 5/16.) is gunning for AMD's space. At the very least, Intel has a way to make up low margins for consumer machines with its high-priced business products. AMD is handicapped with only one sales target: Penny-pinching consumers. But the company is still fighting. AMD's K6 chip gave Intel mild hysterics in 1998. And based on AMD's success with consumer PC vendors, analysts wouldn't be at all surprised if the rumored deal between AMD and Gateway Inc. progresses to something more than a press clipping. AMD, at this point, is a one-trick pony with a sprained ankle. Its philosophy in the lower-end PC market has been to undercut Intel's prices by 25 percent, says Mahon. This tactic will be difficult as Intel becomes more aggressive in its pricing. What should AMD do? That's a damn good question. Analysts can't help noticing that AMD is nowhere to be found in the business-computing arena. Mahon says that's because business users want the best performance available without having to upgrade. Mahon tosses out a well-worn maxim that's yet to be proven wrong: "No IT manager ever got fired for choosing Intel." Mahon, however, does think AMD could inch its way up to the business computing market, but only with a product that absolutely spanks Intel. How likely is that with AMD's razor-thin margins? Out-muscling Intel in R&D spending is no feat for mere mortals. (Phil Harvey writes for Upside Today. Please send your comments to pharvey@upside.com.)