Volume sales of the K6 and K6-2 are crucial to improving the company's fortunes, a goal which has not always been easy. AMD has stated that a return to profitability hinges on boosting sales of K6 chips. Despite lingering production shortfalls, the company has landed a number of design wins with major computer vendors this year.
AMD, moreover, has vowed to stay below Intel in price. Because of changes in the processor lineups at both companies, AMD is no longer strictly pricing its chips 25 percent below an equivalent Intel chip running at he same speed, said Dana Krelle, vice president of marketing at AMD.
Instead, AMD is pricing its chips to ensure that a computer built around an AMD will cost less than a system built around the closest Intel competitor. And, rather than just compete against Intel in the consumer realm, AMD will try to branch out into the business market.
"In the future, the actual discount is going to vary for a competing performance product," Krelle said. "The trouble is we are leaving the arena of easy comparability." The K6-2 will largely be priced against Celeron chips when the clock speeds are equal, but lockstep pricing will be gone.
The processor price war has been quite in evidence this week. On Monday, Intel released two new low-cost Celeron processors with integrated cache memory.
The 333-MHz and 300-MHz Celeron chips sell in volume for, respectively, $192 and $149 with retail prices slightly higher. Following the release, a number of chip dealers cut the price of 300-MHz and 333-MHz K6-2 chips. Now, the 333-MHz K6-2 sells for $180 at various retail outlets while the 300-MHz K6-2 sells for $119.
The 350-MHz K6-2 comes to market for a wholesale price of $317. Lynn Computer Products, however, is already advertising that it will sell the chip for around $269 when the company get supplies in the first part of September.
The 350-MHz chip comes with a 100-MHz bus and AMD's 3DNow technology, which improves the quality and richness of 3D applications that support Direct X 3D technology from Microsoft, said Krelle. A computer based around the K6-2 will provide a richer experience for the game Quake, for example, than a Pentium II computer because of 3DNow technology, he said. Microsoft's upcoming Chrome technology, which will bring 3D to Web sites, will also run better on K6-2 computers.
Intel will enhance 3D performance on its chips with the Katmai generation of processors coming in Q1 1999.
Krelle further added that AMD has cured its manufacturing problems. Late last year, the company could not produce enough of its K6 processors. While this glitch was being fixed, AMD started to have problems in producing enough 333-MHz K6-2 chips. Released in late May, most dealers did not have chips until close to August.
AMD altered some of the speed paths on the 333-MHz K6-2, which brought volumes back up.
"There was a little bit of a slow ramp to the 333," he said. "The 333 is now pretty available. The 350's we are shipping in high volume. We will ship several hundreds of thousands of them," in the near term, he said.
Some observers, however, question whether all of AMD's manufacturing bugs are behind it. The 350-MHz comes to market after an eight week delay, said Ashok Kumar, an analyst with Piper Jaffray. "We are still skeptical of the company's ability to supply the 350-MHz in volume," he said.