HP ships first AMD Business PC

Advanced Micro Devices is moving into the big time, supplying Athlon XP processors to power the Hewlett-Packard Compaq D315 Business PC being released in the US this week.

Besides AMD CPUs, the customer-configurable new PCs feature NVidia Corp.'s NForce chip set with integrated graphics. An entry-level unit with a 1.67-GHz Athlon XP 2000+ chip, 128MB of DDR, a 20GB hard drive, a 48X CD-ROM drive, and Windows XP Home Edition will sell for US$549 after a $100 rebate. The high end of the line will use the 1.8-GHz Athlon XP 2200+ CPU, introduced in June.

HP is targeting the D315 at small businesses, government, and education buyers, says Jeff Groudan, head of business desktop marketing at HP. However, the company believes corporate customers are ready to buy an AMD-based PC as well.

Taking the Plunge

Both Compaq Computer Corp. and HP have successfully offered AMD chips in consumer PCs for years, Groudan says. Now, three months after their merger, HP has decided the time is finally right to roll out a business system with the popular Athlon XP. Business PCs traditionally offer better stability, longer product runs, and more management software than consumer PCs. For example, the new HP Compaq D315 line carries a three-year parts and labor warranty.

"The volume of requests from [small and medium-size businesses], government, and education [buyers]--as well as corporate--for an AMD-based desktop has been overwhelming," Groudan says.

For the past five years, AMD has been consistently proving itself in the consumer PC market, he says. From quality and compatibility to price and performance, the company has made huge strides, Groudan adds.

Add to that AMD's partnership with NVidia on its NForce integrated graphics chip set, and the time was right for an AMD chip in business systems, Groudan says.

The NForce chip set offers graphics on a par with the company's GeForce2 graphics cards, as well as a host of networking and multimedia capabilities, he says.

Battling Dell

A less expensive AMD CPU is also a weapon in HP's fierce competition with Dell in the business PC market, says Rob Enderle, a research fellow with Giga Information Group. HP is eager to win back customers lost during recent turbulent times, he says.

"During the merger, HP has been bleeding market share to Dell badly," he says. A budget business system gives HP an opportunity to win back some customers and maintain its market leadership position, he says. According to Giga, HP seized the top spot from Dell after absorbing Compaq's shipments; Dell is now second, with IBM a distant third.

The D315 should give Dell's Intel-based business PCs a run for the money in terms of performance and price, Enderle says. "[This] will perform comparably to P4 systems that cost double," he says. That should appeal to budget-constrained business buyers, he says.

Besides, Giga's surveys show that "Intel Inside" means less to business buyers now than it did in the past. Business customers rely more on the PC brand than on the processor name, Enderle says. They figure, "We trust the vendor to make it right for us, so we'll buy the best value," he adds.

The cheapest business PC previously offered by HP is the Evo D310, which sells for $710 on HP's Web site, with a 2-GHz Intel Pentium 4 processor.

AMD Challenges Intel

The D315 represents more than just a good deal for PC buyers and HP's attempts to defend itself against Dell, Enderle says. It is also a major breakthrough for AMD.

"They are really taking a shot at Intel's dominance in what has been the most lucrative part of the market," he says.

Intel still holds a commanding lead in processor shipments with 82 percent of worldwide shipments in this year's second quarter, according to data from Mercury Research. AMD had 15.6 percent of worldwide shipments in the second quarter.

Finding success in the business PC market is a long-term goal for AMD, which has long prepared for this moment, says Kevin Knox, AMD's director of commercial segment marketing and business development.

"We have been spending a lot of time and energy on the AMD value proposition," he says. "And we are seeing much higher levels of acceptance in those segments."

The fact that AMD plans to roll out an entirely new processor, code-named Hammer, later this year shouldn't deter business buyers from moving to AMD now, Knox adds. The stable, dependable Athlon XP will be around for a very long time, he says.

"The current Athlon will be around until 2004," he says. There is plenty of interest surrounding Hammer, but the chip won't become a mainstream product for some time, he says.

HP would not comment on any specific plans for products containing Hammer in its business PC family, but did say that Hammer was in HP's plans for future business PCs.

Tom Krazit of the IDG News Service contributed to this report.

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