AMD: Low-end servers

Low-end servers, while not as sophisticated as million-dollar machines from companies such as Sun Microsystems, Hewlett-Packard and IBM, still are a cut above desktop PCs, with requirements for more and higher-quality memory, faster and longer-lived hard disks, faster network communications and other features.

The low-end server market--systems costing up to $100,000--grew 7 percent last year, from $29 billion in 1999 to $31 billion in 2000, according to market research firm IDC.

AMD has grown more ambitious with its Athlon line, which for a time ran at faster speeds than Intel's top-end models and which enabled AMD to grow out of its previous low-end, low-margin stronghold. Intel has responded with an aggressive push to sell its new Pentium 4 line, charging a mere $352 for its top-end 1.7GHz model.

"It's definitely a bloody price war," Andrade said.

But penetrating the server market is a different game altogether. Not only must customers be convinced that AMD's chips have high enough performance, but AMD has to convince server sellers it's in it for the long haul and go up against joint marketing agreements and other tested Intel sales tactics.

To make headway in the server market, AMD will first have to make more than its current limited progress expanding from home PCs to corporate models, said TBRI analyst Brooks Gray. That route wins over conservative corporate buyers to provide an entryway to higher-end bids.

"The progression needs to be through the corporate desktop channel first, then you can move into servers," Gray said. "I'd be very surprised if AMD can jump from consumer desktops...to a broad presence in the server market. The 'Intel Inside' brand clearly pulls more weight."

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