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Gateway expands AMD deal to business line

The PC maker says it will begin to incorporate AMD's touted Athlon processor into the Select SB line of small-business computers.

Less than two weeks ago, Gateway was only using one of AMD's processors in its computers, but the relationship is now deepening.

Gateway on Monday will announce that it will begin to incorporate AMD's touted Athlon processor into the Select SB line of small-business computers, according to an AMD spokesman. The Select SB line will be an extension of Gateway's Select consumer computer family.

The new computers, among other signs, indicate that the marriage of convenience between the two is growing affectionate. The San Diego, Calif.-based PC maker has also expanded its use of Athlon in the ordinary Select computers. When it first announced it would start using AMD chips again on Jan. 10, Gateway came out with only one computer using an Athlon. At 600 MHz, the chip fell within the bottom half of the Athlon family in terms of speed. The computer was priced at $1,299, within Gateway's budget class.

Since then, Gateway has begun to sell machines with 700-MHz and 800-MHz Athlons. Some of the machines cost over $2,000. Athlon is also featured on Gateway's recent TV ads.

AMD also scored another win recently when HP quietly began shipping consumer PCs using Athlons to some retail outlets. With HP adopting the chip, AMD has persuaded four out of the top five PC makers to manufacture Athlon consumer systems. Dell remains the holdout.

Increased cooperation between Gateway and AMD would serve the strategic aims of both companies. Gateway first started using AMD processors about a year ago, but it started phasing AMD out of its product line by the end of the summer. An Intel processor shortage in the fourth quarter, however, crimped Gateway's year-end sales and fourth-quarter earnings, Gateway CEO Jeff Weitzen charged.

AMD, meanwhile, needs to break into the commercial market to hit is goal of owning 30 percent of the processor market. "We'll never get there without substantial penetration into the commercial market," said W.J. "Jerry" Sanders, CEO of AMD, in a conference call earlier this week.

"As a tier one OEM, Gateway becomes the largest computer manufacturer to carry AMD Athlon processor-based commercial systems," an AMD representative wrote in an e-mail. An 850-MHz Athlon will come out later this quarter, the company has said, with a 900-MHz following soon after.

Gateway's upcoming SB Select computers appear to be hybrids between business and consumer PCs, but a deeper expansion into the "Soho" (small office, home office) market would represent a widening of horizons for AMD.