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AMD server chips face tough audience

The company will try to reach new customers next month with a line of Athlon processors aimed at workstations and servers, but hardware makers so far are passing on the chips.

Advanced Micro Devices will try to reach out to new customers next month with a line of Athlon processors aimed at workstations and servers, but hardware makers so far are passing on the chips.

IBM and Compaq Computer both have said they have no plans to adopt the new 1.2GHz and 1.3GHz Athlon chips and the accompanying 760MP chipset that allows the processors to be used in dual-processor machines.

Analysts say it's not surprising for server makers to turn up their noses at any new chip, even one from Intel.

"It's not surprising at all," said Dean McCarron, principal analyst at Mercury Research. Manufacturers' responses, he said, will be based solely on their size: Large server and workstation makers will be reluctant to adopt the new chip, whereas smaller outfits might jump at the chance to use the Athlon product.

"It has no reflection on AMD," McCarron said. "You see the same behavior with Intel products...a lot of (server makers) don't even use Intel's new products."

The Athlon is a crucial step in AMD's efforts to branch out from the desktop PC business. The chipmaker has found acceptance for mobile versions of its processors aimed at the notebook market, but penetration of the high-end corporate market has remained elusive.

Analysts believe that though AMD may find a footing in workstations--high-powered PCs used for data-intensive tasks such as scientific calculations and animated graphics--it will find servers a much greater challenge.

AMD says it's up to the task. The company's new director of enterprise marketing, Kevin Knox, said AMD has beefed up its efforts to work with the PC makers, software makers and business customers.

"We're really paving the way to make sure we have the right programs and are putting the infrastructure in place for the enterprise market," Knox said.

Some of that infrastructure includes building in features that help make a server or workstation meet the standards for stability and manageability corporate IT managers are used to.

"We're working with our...partners...to make sure the software is ready to go," Knox said. "And we're working directly with the end users to let them know what our capabilities are in the enterprise market."

But acceptance still has been slow.

"We have wonderful tech, but we haven't been able to penetrate at the rate we would have liked to," Knox said.

At least two major computer makers have said they're not interested in the Athlon.

IBM has no plans to use Athlon in servers, according to a company representative. Neither does Compaq.

Compaq, one of AMD's oldest PC maker allies, seemed most likely to use AMD in servers. However, "We have no plans" to use AMD chips in servers, Mary McDowell, head of Compaq's Intel server group, said in an interview. "We are 100 percent Intel today."

Analysts agreed that type of reaction is to be expected. "AMD hasn't penetrated commercial desktops yet, so I'd say it's a tough row to hoe" for the company, said IDC analyst Roger Kay.

Smaller hardware makers have been more interested, however. Roland Baker, president of Net Express, a small manufacturer of servers for the technical market, said he has seen acceptance of Athlon at several large companies.

Baker said his company has sold servers to some divisions at AT&T as well as to departments at the Massachusetts Institute of Technology.

"Athlon is the default choice" ahead of Intel for Net Express, he said.

AMD believes it can bring some big manufacturers onboard by offering a way to differentiate their wares.

"On the desktop, there's not a huge amount of difference between the vendors," Knox said. "We think we can offer a very different solution than what's being sold" to businesses now.

"We're going to have some wins there," Knox vowed. "It might not be a Compaq or an IBM. We're working towards that, though."

Workstations might be the key for AMD. The machines can be purchased in small numbers, allowing companies to test them with relatively little investment.

Workstations are "probably AMD's strongest play right now," said Kevin Krewell, a senior analyst with MicroDesign Resources. "Athlon has got a lot of power...and it's going to be a lot less expensive" than Intel's chip.

Athlon "should be a better solution, but AMD doesn't have the brand name" in the corporate market, Krewell said. "It's an uphill struggle."

But Knox says AMD is up to it.

"I think...all it's going to take is a foot in the door," he said.

News.com's Stephen Shankland contributed to this report.