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Packard Bell uses AMD inside

Packard Bell NEC becomes the fifth major retail PC manufacturers to ship systems using chips from Advanced Micro Devices.

Packard Bell NEC has begun to ship desktop and notebook computers with processors from Advanced Micro Devices.

The deal marks yet another design win for AMD, which has seen its market share rise rapidly during 1998 as computer vendors have sought less expensive alternatives to Intel processors.

So far, the only major domestic computer vendors AMD has yet to crack are the large direct vendors--Dell, Gateway, and Micron Electronics--and AMD came close to signing a deal with Gateway earlier this year, said sources close to both companies.

The Packard Bell alliance also increases AMD's presence in the notebook market. Inexpensive notebooks for the consumer market are expected to become a growth segment in 1999, according to a number of analysts. AMD will likely benefit because the company deliberately prices its chips at 25 percent below Intel's.

"AMD is finding that it is doing particularly well in the notebook arena, which forces Intel to respond," said Dean McCarron, principal analyst at Mercury Research. Intel so far has responded to the challenge by announcing that it will release Celeron chips for notebooks as well as new versions of the Pentium MMX chip, which has been discontinued on desktops, in the first part of 1999.

While the Packard Bell NEC deal encroaches upon Intel's market share, it also potentially hurts Cyrix, the processor subsidiary of National Semiconductor. Cyrix signed a deal to supply processors to Packard Bell earlier this year.

AMD-based desktop models include the Packard Bell 955 and NEC Ready 9888. Both will use the 333-MHz AMD K6-2 chip.

NEC is also shipping a new notebook, the 340T, in its NEC Ready line which uses a 300-MHz mobile K6 processor.

The Packard Bell 955 is similar to a Cyrix-based machine sold by Packard Bell right now.

IBM, Compaq Computer, Hewlett-Packard, and Sony are also using K6 processors in consumer PCs, giving AMD a clean sweep of the major retail PC manufacturers. Compaq, meanwhile, makes an AMD-powered notebook.

"Now, the top five PC [makers] who sell systems through retail in the U.S. are all able to offer their customers...systems based on AMD processors," said Dave Sheffler, AMD vice president of sales for the Americas.

Earlier this month, AMD chairman Jerry Sanders said that the company was on the verge of announcing a major notebook and desktop alliance with a major vendor.

Intel is an investor in CNET: The Computer Network, publisher of New.com.