Long the chip of choice for enthusiasts on a budget, Advanced Micro Devices Inc.'s Athlon XP now finds itself in a battle to maintain its status over Intel Corp.'s faster-running Pentium 4, according to vendors of high-performance desktop PCs.
Last year at this time nearly 98 percent of all Falcon Northwest Computer Systems Inc. PCs shipped with an Athlon CPU, says Bradd Berdelmann, Falcon's general manager. The company specializes in high-performance computers.
But this year, the P4 has battled its way back into the hearts of many enthusiasts, he says. Falcon expects its customers to order about 50 percent AMD and 50 percent Intel systems this holiday season.
Intel Speeds Up
Intel's relentless speed updates to the P4 (it's up to 2.8 GHz now), plus its faster 533-MHz bus and new, faster 1066 RDRAM have helped Intel PCs catch up with AMD-based computers in Falcon's benchmarks, Berdelmann says. (Recent PCWorld.com tests have shown similar results.)Despite a slight price premium on Intel PCs, gamers and others who demand the best performance are often willing to spend that little bit extra, he says.
Fellow specialty PC maker Alienware Corp. has seen the same trend, says Kevin Wasielewski, vice president of marketing.
He declines to release Alienware sales percentages for Intel versus AMD. However, he notes that AMD was clearly the top chip of most Alienware customers last year at this time, and "that's totally flipped, and Intel is absolutely the favorite now."
Chip Delays Hurt
In addition to Intel improving its P4's performance, Falcon's Berdelman says AMD's decision to push back two new chip technologies until next year has hurt its image among some buyers.
AMD announced in September delays in the release of an updated Athlon chip with a larger L2 cache, code-named Barton, and its next-generation desktop processor, code-named Clawhammer. The Hammer chip will support both 32-bit and 64-bit programs and is expected to offer significantly higher megahertz than current Athlons.
That delay, plus Intel's pending release of a 3-GHz P4, has hurt AMD's image, he says. "AMD is hurting compared to six months ago in terms of mind share," he says. "They were looking for a performance win in the fourth quarter with Clawhammer, and that would have been a home run for them," he says.
An industry analyst agrees that AMD's delay of Clawhammer hurt. In-Stat/MDR General Manager Kevin Krewell says AMD's decision affects buyers' perceptions more than it is likely to hurt actual sales.
"This weakens their case that they're a stable and reliable supplier," he says. "They need to keep up with Intel in terms of market perception and leadership issues."
AMD: Not to Worry
AMD executives say they're not worried about such perceptions. They argue that the company is well positioned to beat Intel for the hearts and minds of enthusiast PC buyers this holiday season.
"Performance is king for the holiday season, and AMD is ready to dominate the performance market," says Mark de Frere, Athlon brand manager.
"We might not have the fastest megahertz, but what customers really want is performance," he says. "For the gamer who wants the best possible performance, you have to look at the way the whole system is designed."
AMD decided to push out Barton and Clawhammer after the company had launched another technology upgrade that enables its current processor line to successfully compete with Intel's top chips, de Frere says.
In its August announcement of the Athlon XP 2700+ and 2800+ chips, the company upgraded the front side bus from 266 MHz to 333 MHz. The performance jump, when combined with the new chip sets that support it, was quite good, de Frere says. AMD's 2700+ chip actually runs at 2.17 GHz; the 2800+ runs at 2.25 GHz.
"We were blown away by the difference the 333-MHz front-side bus delivers," he says. "We underestimated our model numbers; we have the best-performing processors in the world."
Falcon's Berdelman agrees that the new front-side bus, combined with NVidia Corp.'s new NForce 2 chip set, offers a strong performance gain. In fact, the company expects PCs using the 2800+ chip to compete on a par with systems using Intel's soon-to-be-released 3-GHz P4.
To get the 2800+ soon, you may need to buy a Falcon system. "We're testing now and shipping early next month," Berdelman says. "We'll be the only system builder to have that for about four weeks. Everybody else gets it in early December."
AMD's de Frere says Falcon isn't the only vendor that will offer the 2800+ "in the next month or so." Alienware, ABS, Voodoo, and MicronPC will also have AMD's newest CPU, but larger vendors will not, due to limited supplies, he says.
Alienware's Wasielewski declines to comment on the 2800+'s availability, but notes: "You'll notice we're not selling it on the site yet."
Mindshare Versus Marketshare
AMD's inability to ship its top chip in quantity, plus its delay of two anticipated chips, gives people the impression it is in trouble, says analyst Krewell.
"Right now everyone sees AMD as struggling to hold on to its customers while suffering losses on the bottom line," he says.
While AMD has reported losses in recent quarters (it lost US$254 million in the third quarter on revenues of $508 million), de Frere says it continues to win market share. He points to a recent Gartner/Dataquest report that shows the company owns "19 percent worldwide combined market share among shipments of Windows-based desktop and mobile computers," up one percentage point from last year. The company saw a similar increase among consumers buying desktops and notebooks for their homes, where the company's share increased from 25 percent to 27 percent.
During the same quarter Intel reported a net income of $686 million on revenues of $6.5 billion.