Advanced Micro Devices Inc. has a simple message that it urgently wants PC users to accept: less is more.
It's no easy sell, but the Sunnyvale, Calif.-based company's ability to advance against Intel Corp. in the microprocessor wars may hinge on its ability to spread its gospel that raw megahertz isn't necessarily the deciding factor in MPU performance.
"It really is a fight against people's instincts," said Eric Ross, an analyst at Thomas Weisel Partners, San Francisco. "And that's a tough message to get out there."
But as AMD prepares to launch its 1.5GHz Palomino processor in October, it has yet to indicate that it will make a significant marketing investment to back its claim that the new MPU will offer performance greater than or at least comparable to Intel's 2GHz Pentium 4 line, despite the megahertz gap.
Pat Moorhead, vice president of strategic marketing of the computation products group at AMD, declined last week to offer any clue on marketing and advertising plans for the fourth quarter.
But Mark Bode, division marketing manager at AMD's Computational Products Group in Austin, Texas, said the company plans no pricey television advertising blitz to hammer the point home. "We've always talked to end users about productivity, content creation, games," Bode said. "And I think we're making inroads because our market share is increasing."
But Dan Scovel, an analyst at Needham & Co. Inc. in New York, said that "previous messages about AMD's processors have never really gotten through. I also can't see them spending a whole lot more money than they have been, given the current climate."
Regardless of its spending plans, AMD will continue to push its claim that there is a performance lag of 300MHz between the Pentium 4 and its Athlon line, a benchmark that AMD contends will double next year when it launches its Hammer architecture.
"We're talking about performance per cycle and believe consumers care about application performance, not a measurement like RPMs; that would be like buying cars today based on how fast you can rev the engine," Moorhead said.
The importance of megahertz in the average consumer's mind dates back to the advent of the PC in the 1980s. Then, as now, a PC's overall performance was often overlooked by consumers who focused on processor speeds instead of factoring in memory or other variables.
The issue was brought to the forefront last year when analysts and hardware-review sites discovered that the 1GHz Pentium III outperformed the 1.5GHz Pentium 4 in common business applications. The newer processor, however, still reached higher performance for gaming applications, such as Quake.
Last week, at the Intel Developer Forum in San Jose, AMD attempted to drive the point home when it released a white paper titled "Understanding Processor Performance." The paper claimed Pentium 4's increased clock speed was based on a deeper pipeline. AMD's Athlon, the paper said, offers overall performance improvements through superscalar architecture, instruction scheduler developments, larger chip caches, and improved branch prediction.
But getting these points across to the average consumer will be a challenge. And ironically, the very people likely to be the most receptive to the subtleties of processor performance have proved to be the toughest to persuade. Among the IT managers and chief technology officers, AMD has made slow progress, with only a single-digit market share in the high-end enterprise space.
The difficulty was underscored last month when IBM Corp., Armonk, N.Y., announced it would discontinue selling its NetVista PC line-which uses AMD's Duron processor-in the United States.
"Intel is better able to leverage its size and volume sales position," Thomas Weisel's Ross said. "That's why [AMD's performance] is an easier sell for many individual CTOs, while that overall [enterprise] market has been a harder sell."
Meanwhile, as Intel plans for a commercial launch of a 3.5GHz processor next year, the performance message will become increasingly crucial for AMD, which is not expected to offer a 2GHz processor until next year.
"If AMD can't convince the world that megahertz doesn't matter, then it will have to rethink its more performance-focused roadmap," said Nathan Brookwood, an analyst at Insight64, Saratoga, Calif.
In order to reach the 2GHz level, the company faces the challenge of meeting its 0.13-micron production schedules in the first quarter.
"At 0.18-micron, AMD has a lower-cost solution, but if they can't for some reason move to 0.13-micron next year, as Intel has already done, they will not retain their market share," Ross said.
Given the likelihood that the PC market will not see a strong upturn anytime in the near future, observers are also probing AMD's ability to weather a prolonged price war against Intel, which has far deeper pockets and a significantly wider range of products. The latest battle occurred last week when both companies cut prices deeply.
AMD's Bode contends Intel's price slashing reflects a weakness on their part. "I don't see they have much choice but to cut prices because their product, albeit at a higher frequency, is at a big disadvantage competitively."
Additional reporting by Robert Ristelhueber