AMD still sending mixed signals on netbooks

The Wall Street Journal has an odd story in today's print edition with the headline: "AMD enters netbook market." (It was posted on the Dow Jones newswire earlier).

The Wall Street Journal has an odd story in today's print edition with the headline: "AMD enters netbook market." (It was posted on the Dow Jones newswire earlier). The basis of the story seems to be a comment by Pat Moorhead, AMD's vice president of advanced marketing, acknowledging that the company will play in netbooks "because our customers are." AMD already said as much back in June when Gateway announced its 11.6-inch netbook, the LT 3100, which uses the 1.2GHz Athlon 64 L110 single-core processor. And as far as I can tell, the company hasn't announced a new chip nor have any other computer makers released AMD-based netbooks.

Meanwhile, Nigel Dessau, AMD's senior vice president and chief marketing officer, yesterday devoted his blog to the reasons why customers should avoid netbooks. His evidence: an upcoming survey that found most users are willing pay a few hundred dollars more for "a bigger screen, faster processor and larger keyboard" and a BusinessWeek story that pegged the total cost of a subsidized netbook and wireless contract at $1,440. The latter argument makes no sense. If you want wireless broadband, the monthly service fees will be the same on a netbook or a notebook, and the total two-year cost of an unsubsidized notebook will obviously be significantly more than $1,440.

But given the performance limitations of netbooks, it would seem to make sense that most customers would spend a little more for something better. To be fair, AMD has been consistent in its strategy of focusing on this low-cost, ultra-thin segment with its Athlon Neo processors. You can now pick up the HP Pavilion dv2z with a 12.1-inch display, 1.6GHz Athlon Neo X2 dual-core processor, 2GB of memory, ATI Radeon 3410 discrete graphics with 512MB, 320GB hard drive and Vista Home Premium for $599. (It's a bit cheaper without the discrete graphics, but this is the configuration I'd recommend.) Setting aside processor performance, that's a whole lot more notebook for only a little more money.

The trouble is, to date, what respondents say in a survey (this one hasn't been made public yet) and what they actually do in a store are two different things. The Pavilion dv2 series hasn't sold well. And despite major efforts by both AMD and Intel, with its ULV processors, to steer buyers toward higher-priced 12- and 13-inch notebooks, more are still choosing lower-priced netbooks. Despite their limitations, netbooks will likely outsell low-cost ultra-thin notebooks this year, though this is partly due to the fact that Intel ULV-based notebooks are only now reaching the market.

Ultimately this distinction won't matter. The legacy of netbooks will be a category of mobile PCs with 10- to 12-inch, high-resolution displays, integrated wireless broadband, and HD video playback for around $500 or less. You don't need a survey to tell you that this is what the people want.


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