March 4, 2001 9:00 PM PST
AMD snags first corporate win
NEC has decided to incorporate AMD's Athlon and Duron processors into a line of PowerMate DT computers for corporate and government customers in Europe. Initially, NEC will target customers in France, Britain, Italy and the Netherlands.
The deal marks AMD's first design win with a major manufacturer for the corporate market, an AMD spokesman said. The company has tried for years to get its chips into computers for large businesses, one of the largest subsegments of the market. However, manufacturing problems, shortages, business conditions and other issues have stumped the company's ambitions in the past.
Corporate customers and corporate computer manufacturers, moreover, have always been skittish about shifting from an all-Intel lineup. Computer buyers and sellers generally want to work with fewer, rather than more, types of processors because that cuts training, development, testing and other costs.
With the NEC deal, the psychological barrier is broken.
"It is the chicken and egg. You have to get the vendor to do this and you have the customer to do this, but they want the other one to do it first," Dataquest analyst Charles Smulders said.
More corporate deals could follow, IDC analyst Roger Kay said. Companies looking to gain a cost advantage might be willing to try AMD chips. Right now, Athlon chips are generally cheaper than Pentium III processors running at the same speed, according to advertised prices on Pricewatch.
In the consumer market, Athlon-based computers have often been less expensive than similarly configured computers containing Pentium IIIs at various times in the past several months.
"AMD is relatively well positioned right now," Kay said. Japan-based NEC, he added, has a recognized brand.
Sunnyvale, Calif.-based AMD is negotiating with at least one major U.S. manufacturer on a corporate desktop deal, according to sources. Athlon chips have already appeared in computers geared at small businesses. An Athlon-based Hewlett-Packard notebook is expected soon.
"We will probably see some more of these deals in the near future," said Linley Gwennap, an analyst with The Linley Group. "They have been working on getting Athlon into the corporate market for two years now."
NEC ranked ninth in terms of market share in Western Europe in 2000, said Smulders, shipping 455,000 business computers to that market. By contrast, NEC ranked No. 2 in the Western European consumer market. Overall, the company held the sixth place with a 5.5 percent market share in Western Europe.
Although AMD has virtually turned around its reputation since the release of the Athlon in 1999, the company faces a different sort of challenge now: a torpid economy. The slowdown in the PC market could put a chill on plans by some companies to adopt Athlon for business PCs. Adding the chip would add costs. In addition, many companies are trying to bleed off excess inventory.
"Anything which adds complexity adds costs. And in the current climate, companies are looking to simplify their product lines," Smulders said.
Others, though, have said that AMD could benefit from Intel's accelerated push with the Pentium 4 into the corporate market this year. The Pentium 4 can only be hooked up with Rambus memory, which some corporate customers are nervous about, Mercury Research principal analyst Dean McCarron said.
NEC said its new computers are available immediately.