AMD gets big win as Gateway trades out Intel chips for new PCs

Computerworld - Advanced Micro Devices Inc. got some much-needed good news this week when Gateway Inc. announced that it's trading in Intel chips for AMD Phenom quad-core processors in two new high-end desktop machines.

Gateway, which has been mostly an Intel-only company for years, yesterday unveiled AMD-based GM and GT series desktop systems. And for a microprocessor company that has been struggling with missed shipment dates, financial woes and a slide in mind share, this is welcome news, according to industry analysts.

"This is very positive for AMD," said Dean Freeman, an analyst at Gartner Inc. "Almost any wins are good news for AMD at this time. AMD has been beaten down pretty hard lately and this says someone thinks enough of them still to put their chips in their systems."

Focusing on "media-hungry users," the new Gateway GM5664 desktop is geared toward gamers and users interested in video editing or watching live TV online. Available at U.S. retailers for $1,149.99, the computer also sports a "Hybrid-SuperMulti" optical drive that reportedly can read both HD-DVD and Blu-ray movies, as well as read and burn CDs and standard-def DVDs.

The Gateway GT5662, which costs $749.99, is a multimedia lite machine. This desktop uses the lower-power AMD Phenom quad-core 9500 processor, a 500GB hard drive and its own SuperMulti drive to enable users to burn content onto DVDs or CDs.

Both Freeman and Nathan Brookwood, an analyst at Insight 64, noted that by getting some AMD processors into the mix, Gateway is able to buy some of its chips for a lot less cash. "This allows Gateway to go ahead and lower margins or offer lower prices for customers," said Freeman. "Gateway is looking to make strategic moves to increase profitability."

Having Gateway buy into its quad-core family isn't going to put AMD back on top by any means, noted Gordon Haff, an analyst at Illuminata Inc. "No specific OEM, especially a second-tier one, is going to change AMD's market position dramatically," he added. "That said, this is how companies need to build their market position -- one win at a time, whether big or small."