AMD slowly evolves with netbook demand

While AMD has tried to avoid selling to the low end, its chips are appearing in small laptops

Despite Advanced Micro Devices' historical stance that it has no interest in the netbook space, PC makers continue to build the chip maker's processors into low-cost PCs.

Just two weeks after Acer's Gateway unit announced an AMD-based netbook, another PC maker on Monday introduced a netbook with a low-power processor from AMD. Medion started selling the Akoya Mini E1312 netbook, which includes a low-power Sempron 210U processor.

The news was first reported by enthusiast Web site Pocket-lint.

AMD in the past has derided netbooks, saying that the PCs were too small and didn't offer full functionality. Netbooks are typically characterized by small keyboards and screens up to 12 inches. The laptops are designed for basic applications like Web surfing and word processing, and are typically priced starting at US$299.

The company still maintains it doesn't want to get into the netbook space, but a spokesman was less dismissive of the PC category than AMD has been in the past.

The company's presence in the netbook space is happenstance, said John Taylor, an AMD spokesman. AMD doesn't want to artificially dictate how PC makers use its chips, and the low-power consumption of Sempron chips could lend itself to netbooks, Taylor said. Sempron chips are low-end chips made by AMD for mainstream PCs.

"We haven't gone out and built a platform for netbooks," Taylor said. But the placement of its chips in netbooks is a positive as it offers a greater choice to buyers, Taylor said.

Beyond netbooks, AMD's low-power chips could also make their way into different form-factor devices like all-in-one PCs, Taylor said.

The Akoya Mini has an 11.6-inch screen and comes with a 160GB hard drive and 1GB RAM. It also includes the M690E chipset with ATI Radeon integrated graphics. The laptop is already available in Germany through Medion's Web site for EUR399 (US$557).

The netbook could top the performance of laptops based on Intel's Atom chips, said Nathan Brookwood, principal analyst for Insight 64. Atom chips are used in most netbooks today.

"A netbook with a Sempron chip, with a decent integrated chipset and graphics could provide better performance in some applications than Atom," Brookwood said.

With its chips now in the netbook space, AMD unwittingly competes with Intel and Via, another vendor that sells netbook chips. However, AMD would prefer to focus on developing chips for laptops that deliver better processing and graphics performance, Taylor said.

That's because AMD runs the risk of deriving lower margins if sales of netbooks with its chip cannibalize higher-priced AMD chips used in products like mainstream laptops, Brookwood said. Intel faces the same risk of generating lower margins when people opt for lower-priced Atom netbooks instead of higher-priced mainstream laptops.

AMD has developed the low-power Athlon Neo chips for PCs called ultrathin laptops, which are pricier than netbooks but offer better processing and graphics performance. The company has already announced a dual-core Neo variant available in Hewlett-Packard's Pavilion DV2Z laptop. Intel sells low-power consumer ultra-low voltage (CULV) chips to compete with AMD in the space.

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