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AMD stakes out notebook turf

AMD turns up the heat with advanced K6 chips for notebooks and a deal with long-time Intel ally Toshiba.

Let the price wars begin.

Advanced Micro Devices rolled out the first advanced K6 microprocessors specifically designed for notebook computers today and announced a design win with long-time Intel customer Toshiba.

The notebook achievements come the same day that AMD is expected to report bullish earnings for the fourth quarter. The company is expected to post earnings of 18 cents a share, according to a consensus estimate on First Call, up from a loss of 9 cents a share for the year-ago period.

The expected profit will mark the first time AMD has turned in successive profitable quarters since the first and second quarter of 1997. AMD shipped 5.4 million processors during the quarter, according to some estimates, while processor revenue jumped 31 percent up to $805 million.

Still, pricing pressures from Intel will begin to impact AMD severely over the next few months. AMD will release its earnings at 1:50 p.m. PT and hold a conference call at 2:15 p.m.

The mobile K6-2 chips, as reported earlier, will be similar to the K6-2 used in desktops but will consume less power. Reducing power consumption is crucial in the notebook market because low-power chips require less insulation and extend battery life.

Perhaps more important, the chips appear to be tuned to create heat for Intel. The 333-MHz mobile K6-2, for instance, is priced at $299 in volume. At 333 MHz, the chip is the fastest mobile part for the PC market, pointed out Dana Krelle, AMD's vice president of marketing. It also costs much less than Intel's 300-MHz Pentium II. That chip sells for $637 in volume, although Intel earlier this week quietly released a 300-MHz version of the Pentium MMX for $144.

The 300-MHz K6-2 mobile chip, meanwhile, sells for $187 while the 266-MHz version of the chip goes for $106. As with the 333-MHz chip, these processors cost more than Pentium MMX chips running at the same speed, but far less than their Pentium II equivalents. The K6-2 chips, Krelle added, also all come with a 100-MHz system bus, faster than the 66-MHz bus used by Intel mobile chips.

Toshiba will use the mobile K6-2 in its Satellite 2520 notebook, which will be sold to commercial and retail customers in Japan, according to the companies, while further AMD-powered Satellites will appear over time. More design wins for the business market are on the way, Krelle said, as well as lower prices overall for notebook consumers.

"It's a big chink in the armor," said Mike Feibus, analyst at Mercury Research. "Toshiba is very conservative. It is in Japan only now, but..."

"The mobile space is where AMD products are crossing over into the enterprise space," Krelle said. "Additional OEM announcements are coming in the quarter."

Intel to counter
Nonetheless, Intel is not standing still. The company is expected to release low-cost Celeron processors for notebooks on January 25 as well as three new Pentium IIs with 256KB of integrated cache memory. The integrated Pentium II, code-named "Dixon," is expected to run at 300 MHz, 333 MHz, and 366 MHz. The new chips will also lead to price cuts on existing Intel mobile processors.

AMD, for its part, will counter with "Sharptooth," a K6-2 with 256KB of integrated, secondary cache sometime in the first half, Krelle said. Sharptooth will be targeted at the mobile market. Earlier, AMD executives indicated that Sharptooth would come out in the first quarter.

In the end, cheaper, and higher performing notebooks will be the result. Historically, notebooks have started at around $1,800 or more as computer vendors mostly catered to customers that placed a premium on performance. Last year, however, with the world awash in sub-$1,000 computers, customers started to demand better bargains in notebooks, said computer resellers. Demand existed for $3,000 units, but the models that sold quick were closeouts for around $1,300. Retail notebooks now are emerging around the $1,400 to $1,500 price point.