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AMD May Need New Ad Push

Marketing: To better chip away at Intel, it might highlight features other than speed, analysts say.

November 27, 2000|From Bloomberg News

Advanced Micro Devices Inc.'s speedy personal-computer chips beat Intel Corp. at its own game earlier this year. Now, analysts say, the company has to win at Intel's other favorite sport: marketing.

A lagging rival to the No. 1 chip maker, AMD overhauled its manufacturing and held the crown for the fastest chips for most of this year.

With Santa Clara, Calif.-based Intel's new Pentium 4 expected to keep the top spot for months, AMD might need a new way to sustain momentum.

Buyers have traditionally used a processor's speed to measure how well a PC performs tasks. Intel's image took a hit when AMD was the first to introduce an 850-megahertz device in February and then rolled out chips at 1 gigahertz and beyond.

Now, with the Pentium 4 starting as fast as 1.5 GHz, AMD needs a new sales pitch.

"AMD is going to have to convince consumers that clock speed isn't all that matters, and that's going to be a challenge," Insight 64 analyst Nathan Brookwood said.

Speed emerged as the primary benchmark when PCs ran a handful of basic applications such as word processing and data entry. As the Internet blossomed, that standard didn't change.

Still, it isn't the only way to judge a processor, and some analysts say it's no longer a good measure as the Web morphs into a three-dimensional arena for movie viewing and online auctions.

By most accounts, Intel's Pentium 4, unveiled Nov. 20, outdoes AMD's flagship Athlon in hefty applications such as 3-D games and video editing.

Intel executives promote the chip as built for "where the Internet is going."

Still, analysts said AMD's 1.2 GHz Athlon bests Intel's new chip on basic programs consumers use every day.

"The die-hard gamer fanatic should like this machine [the Pentium 4]," Brookwood said. "For most other applications, AMD will continue to lead."

Even so, Sunnyvale, Calif.-based AMD must convince the undecided computer user that even though one chip is faster overall, it's not always better for every task.

Recent ads in national newspapers highlighted Athlon's design and new performance-boosting features.

That strategy will remain the same in the wake of Pentium 4, said Mark Bode, marketing manager for Athlon.

A chip's design affects its performance by deciding how instructions are carried out, and AMD says its chips' so-called architecture is better.

"Users are becoming increasingly savvy," Bode said. "They really look at what does this system deliver."

It's a daunting challenge. Intel has built Pentium into one of America's best-known brands, and promotions featuring its hallmark chime jingle, bunny-suited workers and the trendy Blue Man Group have become part of popular culture.

Whatever the performance comparisons, some users just want a Pentium because it's so ubiquitous.

That perception gives AMD the chance to compare results with products people already know and highlight the things it does better, said Zain Raj, president of ad agency FCBI Chicago.

Fighting for notoriety means finding the specific applications people need most and promoting AMD's wares because the company can't just say it's got the fastest chips, he said.

"AMD talks about being better, faster than Intel--it's a comparative thing, versus 'You do this. I think AMD does that better.' There are a lot of people with very specific needs that AMD might do a better job at," Raj said.

Shares of AMD have risen about 43% this year. On Friday, they rose $1.19 to close at $20.81 on the New York Stock Exchange.

Intel shares close at $43.94, up $2.75 in Nasdaq trading Friday. They have risen about 7% this year.

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