HPs Business PC to Feature Chip From AMD

Move may hurt Intel, Dell, give amd credibility among customers.

In a potentially game-changing move, Hewlett-Packard Co. this week will announce the first commercial PC from a major U.S. manufacturer to feature a processor from Advanced Micro Devices Inc., a move that will likely have repercussions at Intel Corp. and Dell Computer Corp.

HP executives said the Compaq D315, priced starting at $549 for a 1.67GHz Athlon XP 2000+ chip with 256MB of synchronous dynamic RAM and a 20GB hard drive, is the beginning of a long-term plan aimed at lowering the cost of its business PCs while providing competitive performance. Until now, HP had used only Intel chips in its business PCs.

One HP official said this will be the first in a series of PC rollouts that will feature chips from AMD, of Sunnyvale, Calif.

AMD, which garners most of its revenue from consumer PC sales, has long sought to break Intels lock on the commercial PC market, but top-tier U.S. manufacturers Dell, IBM, HP and Compaq Computer Corp. had repeatedly rejected it. The decision by HP, the worlds largest PC vendor, is a setback for Intel, of Santa Clara, Calif., and indicates slipping support for what has been one of the high-tech industrys most dominant players.

"What youre seeing is an erosion of the Intel Inside brand, which has been showing up on our surveys," said Rob Enderle, an analyst with Giga Information Group Inc., in San Jose, Calif. "The OEMs have also found that companies are more interested in the perceived value than the Intel brand."

HP said it adopted AMD after research showed the chip maker had already captured 20 percent of the commercial PC market in the United States, thanks to the support of smaller PC makers, and enjoyed even higher adoption rates overseas.

The pairing of AMDs Athlon XP processor with a new integrated-graphics chip set from Nvidia Corp. offers unbeatable performance for the price, HP officials said.

At least one customer is impressed by the new AMD-based PC.

"An error-free installation of our standard Windows 2000 load, as well as numerous additional applications, was easily and quickly performed," said Leslie Persia Chady, project manager for Houston-based Veritas DGC Inc., which provides seismic data to oil and gas companies worldwide. "The system offers the best value for our short- and long-term technology investment."

The emergence of AMD commercial systems could have the greatest impact on Dell, of Round Rock, Texas, whose product line is based on more expensive Intel processors.

HPs announcement provides AMD with much-needed credibility among enterprise customers as the chip maker prepares to release its first 64-bit processor later this year. AMD is optimistic that next years release of a 64-bit server chip, the Opteron, which will be able to run existing 32-bit Windows-based applications and more robust 64-bit programs, will attract business users who find Intels new 64-bit Itanium chip too big a leap to adopt. While the Itanium, co-developed by HP, is expected to offer higher performance, the chip requires customers to re-compile existing software or purchase new applications to achieve optimal performance. By contrast, Opteron users should be able to continue using existing 32-bit applications as they gradually migrate to 64-bit platforms.