AMD Presses Consumers to Rethink the Chip

Advanced Micro Devices (AMD) wants to change the way you think about its chips.

For years AMD emphasized the speed and other geeky details of its processors. But on Sept. 10, the Sunnyvale (Calif.) maker of computer and server chips announced a new marketing effort that will focus less on processor speeds and more on how those chips affect how a computer is used.

The new marketing approach is aimed at helping AMD reverse a market share slide against Intel (INTC), whose chips tend to be more powerful and prevail in side-by-side comparisons at retail outlets. "We know if people are choosing between Intel and AMD by looking at the current tags in Best Buy (BBY) or other stores, we lose every time," says Leslie Sobon, AMD's head of product marketing. "We have to change the rules."

To do that, AMD is capitalizing on its $5.4 billion purchase of graphics chipmaker ATI in 2006 and choosing to highlight overall computer performance—not just the ins and outs of an individual chip. "It's a big risk but fits where the industry is going in terms of focusing on personalization and figuring out how a computer fits your lifestyle," says IDC computer analyst Richard Shim.

Functional AMD Keyword: "Vision" AMD's marketing push comes just ahead of the Oct. 22 release of Microsoft's (MSFT) new operating system, which is expected to spur a wave of computer buying by consumers and businesses in the coming months. The chipmaker is working in conjunction with Hewlett-Packard (HPQ), Dell (DELL), Adobe (ADBE), and other makers of computers and software to include the new branding on machines.

To highlight the visual experience customers get from a computer, AMD is using the term "Vision." The entry-level Vision category offers general-purpose computing and the ability to watch online videos. With Vision Premium, users would be able to play Blu-ray movies. Vision Ultimate would let consumers create and edit video, while Vision Black is designed for gamers and people who want to edit Blu-ray content.

AMD follows Intel in trying to simplify its message to consumers. Intel, the world's largest chipmaker, said in June that it would consolidate its brands around three designations: the low-end Core i3, the midrange Core i5, and the current high-end Core i7. Yet, the approaches are starkly different. "Intel is continuing to beat the same drum with some modifications, while AMD is forming a new band and trying to play to their strengths," Shim says. Intel remains focused largely on the performance of its chips.

Intel's Coming Larrabee Platform For AMD, the shift in focus presages an escalation in the battle with Intel over which company will win the greater share of the overall silicon in computers, including a new breed of so-called integrated chips that combine tasks previously handled by separate chips.

Later this year, Intel is expected to launch improved integrated graphics chips called Arrandale and Clarksdale. And next year, Intel is due to one-up those with its Larrabee, which represents a radical design improvement for Intel—with processor, memory, and graphics seamlessly integrated onto one package. It is designed to compete with discrete graphics chips made by Nvidia (NVDA). Once available, the platform could force AMD to significantly lower prices on its products, analysts say.

Even so, some analysts say AMD is poised to gain back lost market share with its new moves. Barclays (BCS) analyst Tim Luke on Sept. 7 raised his rating to overweight from equal weight. He cited an improving PC market, new products, and "troughing margins."

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