IBM dumps AMD from North American PCs

Advanced Micro Devices Inc. (AMD) lost some ground in its evolving price war with Intel Corp. as IBM Corp. said it will drop AMD's Athlon microprocessors in PCs sold in North America.

IBM offered AMD chips as a build-to-order option for consumer models, but discontinued the AMD option in May. The IBM NetVista A40i consumer PC will no longer offer the AMD processor as an option and will only be sold with an Intel chip, said Anouk Bikkel, an IBM spokeswoman in Europe. IBM hopes to make its NetVista offering more clearly defined to customers by making it all Intel-based, she said.

Additionally, the cost of designing separate chip sets for each processor brand used in a product line became too expensive, said Ray Gorman, an IBM spokesman in the U.S. Though low-end NetVistas are targeted at consumers and not businesses, consumers don't express much processor brand loyalty, he said. IBM ultimately chose Intel because business customers preferred Intel over AMD, Gorman said.

IBM has ceased to promote computers with AMD chips worldwide. IBM will continue to sell AMD-processor computers until its inventory is cleared, Gorman said.

Before IBM decided to drop AMD chips as an option, Dell Computer Corp. was the only vendor among the four top-selling PC makers that did not offer such chips. Along with IBM and Dell, Hewlett-Packard Co. and Compaq Computer Corp. are the four leading PC makers in terms of sales. Dell made some exploratory gestures regarding AMD chips when it asked customers about preferences in a June online poll. [See, "Dell asks customers, AMD or Intel?," June 29, 2001.] Both Compaq and HP make extensive use of AMD Athlon and Duron processors in consumer PCs.

A recent report by Lehman Brothers Holdings Inc. chip analyst Dan Niles said Intel plans to detonate a "price bomb" later this month, slashing prices on its high-end Pentium 4 processors by about 50 percent to take market share from AMD.

(Joris Evers in Amsterdam contributed to this report.)

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