Amd's 386 Deal Got Eighty Sixed By Compaq

Jerry Sanders is an optimistic man--perhaps overoptimistic at times. A few months ago, the chairman and chief executive of chipmaker Advanced Micro Devices Inc. was happily bragging to the press about his latest coup: Compaq Computer Corp., he proclaimed, would soon start installing AMD's version of the highly popular Intel 80386SX microprocessor in some of its machines. By last quarter, Sanders claims, AMD had taken 30% of the 386 market away from the chip's inventor. Most of those sales, however, were to lesser-known computer makers, so a deal with Compaq would be a real feather in AMD's cap.

But it looks as if Sanders spoke too soon. Intel Corp. agreed to meet Compaq's technical specifications and matched AMD's lower price. Compaq then, in effect, told Sanders to take a hike. "I think I've experienced what Gorbachev experienced last August" in the first few days after the attempted coup, says the ever-hyperbolic Sanders. By favoring Intel, he says, Compaq "continues to pursue the bankrupt philosophy of brand preference." Furthermore, he predicts Compaq eventually will buy his chips. "I've got nothing to lose" by criticizing Compaq, says Sanders. "What are they going to do, not buy from me again?" Maybe. Compaq declines comment.