HP PC Will Feature AMD Chip

HP announces the first commercial PC from a major U.S. manufacturer to feature an AMD chip.

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

The new Compaq D315 is being offered at relatively low $549 (after a $100 rebate) for a system featuring a 1.67GHz Athlon XP 2000+, 256MB of SDRAM and a 20GB hard drive. The PC also can be outfitted with a more powerful Athlon XP 2200+, up to 1GB of SDRAM, and a 60GB hard drive. The platform also features a new chipset by Nvidia Corp. that features an integrated graphics based on the companys Gforce 2 core.

In the future, HP will offer additional AMD-based commercial systems as part of a strategic long-term alliance, said an executive for the computer maker, which previously had only used Intel Corp. processors in its commercial systems.

"This is the beginning of a partnership with AMD," said Louis Kim, director of marketing for the commercial PC group at HP, based in Palo Alto, Calif. "This will be the first in a series of introductions of AMD platforms within our commercial desktop portfolio."

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. (acquired in May by HP) had repeatedly rejected it—until today.

"Obviously, were pretty excited," said Kevin Knox, director of enterprise marketing for AMD, based in Sunnyvale, Calif. "But I think theres a lot of demand, acceptance and awareness for AMD in the enterprise, and the deal with HP reflects that."

The new PC is targeted at small- to medium-size businesses, as well as the government and education markets, where AMD has already garnered about a 20 percent of the U.S. commercial PC market, HP said, thanks to the support of smaller "white box" computer makers.

The decision by HP, the worlds largest PC vendor, to embrace AMD marks a setback for Intel, one analyst said.

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

HPs new alliance with AMD could have the greatest impact on Dell, whose entire product line is based on Intel, whose processors traditionally have been priced higher than AMDs.

"Dells exclusive reliance on Intel is seen as one of their weaknesses," Enderle said. "This should give HP a cost advantage that they havent had before in their ongoing price war with Dell."

HPs announcement also provides AMD with some-much needed credibility among enterprise customers as the chipmaker prepares to release its first 64-bit processors late this year.

"Having HP as a partner out there supporting AMD in the commercial space," Knox said, "is really going to help our story as we go out there and talk about Hammer," the code name AMD uses for its 64-bit products.

It certainly would be ironic if HPs support of AMD bolstered enterprise acceptance of Hammer, since that product is designed to compete against Intels 64-bit Itanium, a processor HP co-developed and is currently heavily promoting.