AMD has made great strides in the PC microprocessor business during the past year. With the new K6-2/400, the company's fastest chip is only one speed grade behind Intel's top-of-the-line Pentium II-450. The 3DNow! instruction-set extensions put AMD in the lead in extending the X86 instruction set and enabled the K6-2 to deliver topnotch 3-D graphics performance (as long as the software has been optimized for 3DNow!). And AMD has been able to reduce the K6's power consumption enough for it to be used in notebook computers.
These gains have given AMD a high profile in the consumer PC market. Big names like IBM, Compaq, HP and Packard Bell are offering AMD-based PCs. According to ZDMI, AMD-based systems lead the retail PC market, accounting for about 36 percent of U.S. retail PC sales in September. This success led AMD to ship 3.8 million processors-close to 15 percent of the market-in the third quarter.
Early next year, AMD's K6-3 will integrate a 256k on-chip cache, enabling AMD to continue increasing performance despite the limitations of the Socket 7 interface. The K7, due in the first half of 1999, could enable the company for the first time to compete all the way to the top of Intel's product line. The K7 microarchitecture, disclosed at the Microprocessor Forum in October, appears to be as good as, or better than, anything Intel will offer in 1999.
AMD thus appears to be on the brink of finally achieving a profitable, sustainable role in the PC microprocessor market. The challenges remain formidable, however. The success of the K6-3 depends on the willingness of PC makers to stick with the Socket 7 infrastructure. The K7 requires an entirely new infrastructure to support the Slot A bus. Intel will make a splash with the Katmai New Instructions, which the K7 will not support. And AMD will have to make another process transition, to 0.18 micron, something it has not done very smoothly in the past.
AMD also must go beyond the retail consumer market if it is to continue gaining share. Direct-mail suppliers like Gateway and Dell are likely to be the last holdouts. But Compaq, IBM, HP and others could introduce business PCs using AMD processors. This year saw an explosion of interest in low-cost consumer PCs. An important milestone to watch for next is the emergence of non-Intel systems for the commercial marketplace.
— Michael Slater (mslater@mdr.zd.com) is principal analyst of Microdesign Resources and author of "Battle For The Desktop," a comprehensive report on x86 microprocessors.
