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Big computer vendors pick Cyrix

Digital Equipment is very close to signing a deal with Cyrix to use its MediaGX chip in a new class of sub-$800 corporate computers, and Mitsubishi is already on board.

Burgeoning chip competition appears to be accomplishing more than any disciplinary action the Federal Trade Commission might impose on Intel, as Cyrix (CYRX) appears to have lined up two new major computer vendors for its chips.

Digital Equipment is very close to signing a deal with Cyrix to use its MediaGX chip in a new class of sub-$800 corporate computers to be released in the first half of next year. Meanwhile, Mitsubishi will bring out a Java-based Network Computer (NC) next year in the U.S. that uses the same MediaGX chip, according to Mitsubishi officials.

The news that computer manufacturers will use chips from a major Intel competitor comes in the wake of intelligence that Compaq will probably adopt processors from Advanced Micro Devices for its PCs. Other major vendors are also rumored to be looking at AMD's chips, including Packard Bell and Gateway 2000.

Separately, CNET's NEWS.COM reported today that Cyrix has affirmed it has the rights to the plans and other intellectual property necessary to make processors based around Intel's heavily guarded Pentium II design. (See related story)

Cyrix appears to be hitting its stride in the low-cost computer market with its inexpensive but highly integrated MediaGX processor, which incorporates functions such as graphics processing that are usually found on a separate chip. It is already being used by Compaq in its popular sub-$1,000 consumer PC line.

Sources close to Digital have said that it is negotiating with Cyrix over the issue right now.

Executives from neither Digital nor Cyrix would officially confirm the negotiations. Both companies, however, independently gave broad hints that such a deal is in the works.

Patricia Foye, vice president and general manager of the commercial desktop business segment at Digital, said that Digital has plans to release an Intel-processor-compatible corporate computer priced at $799 with monitor.

Digital is eyeing an integrated processor such as Cyrix's to keep costs low, she said. Because integrated processors put functions such as audio and graphics into the main processor, costs drop since fewer components are used.

"It could be Cyrix. It could be AMD. It could be Intel," Foye said.

The MediaGX, however, is the only processor from the three manufacturers that is an integrated processor.

Foye said that Digital will outline its plans for this new product further in December.

Cyrix, meanwhile, has released a reference profile for a low-end corporate computer (with monitor) that will be based around the MediaGX processor and cost approximately $750 to $799. The company is talking to every major OEM and is on the verge of at least deal, said Steve Tobak, vice president of corporate marketing at Cyrix..

"We are very close to a deal with a major OEM," Tobak said.

But Martin Reynolds, an analyst with Dataquest, said that it is still too early to count out AMD in this matter. The K6 processor will go into computers within this price range by mid-1998. AMD is also already selling processors to Digital, he added.

Using Cyrix chips, he pointed out, would mean that Digital's desktop unit would have to support three different microprocessors.

Speculation over Digital aside, Mitsubishi is a certain win for Cyrix.

The Mitsubishi Mon Ami/ES Network Computer is the apotheosis of integration. The all-in-one NC comprises a 13.8-inch LCD color screen and a processing unit that is actually built into the LCD?s stand.

The NC will use the Cyrix MediaGX processor running between 150 and 180 MHz and feature a minimum of 16MB of memory, built-in networking, and audio capabilities. It will run "Java OS" system software. IT will hook up to Windows NT servers, according to Mitsubishi officials.

Mitsubishi's Mon Ami NC is expected to be released in the U.S. next spring, selling for about $1,200.