AMD's PC Jab

Fellow Fool Seth Jayson's rendition of Advanced Micro Devices (NYSE: AMD  ) as the poor second-class prizefighter always a punch away from an untimely nap hits home after seeing yesterday's news.

AMD landed a solid punch in its long-term bout with Intel (Nasdaq: INTC  ) by launching a new line of microprocessors that will compete with its rival's Celeron chips, which are designed for low-priced desktop and laptop computers. The main attraction to the chips, called Sempron, is the price, at least 10% lower than Intel's cheapest Celeron processor. Already, Hewlett-Packard (NYSE: HPQ  ) and Asian PC makers Acer and Sharp have agreed to launch PCs based on Sempron here in the U.S. in time for the holiday season. The chips will also be available in China within a week or so.

Of course, whether this latest shot just stings or delivers real hurt is unclear. I'm guessing Intel will have no trouble making the standing eight count. Still, it's as though AMD has rewritten the role of Brando's Terry Malloy, finally becoming a contender. After years of getting mercilessly beaten up in the ring, the little guy's constant jabs have finally given Intel the business equivalent of a swollen eye. (Heck, the beating has been so punishing there's even speculation that Dell (Nasdaq: DELL  ) might start working AMD's corner.)

More than anything, the jab should force the top chip maker to cut prices to protect its 80% share of the PC market. Of course, Intel easily has the resources to do so, but you can't fault AMD for taking a swing. For one, the PC market is growing rapidly, and market share gains earned now are likely to carry over in a down period. Second, the low end of the PC market competes mostly on price, so Intel's brand is unlikely to provide much cover here. Finally, cheap models account for roughly 20% of desktop and laptop sales, and a good number of those will be sold during the upcoming Christmas shopping season.

So, yeah, AMD is taking its shot at the title seriously. But the firm has displayed a glass chin in the past, and there's no reason to think Intel can't come back with a haymaker of its own.

For more Fool coverage of AMD's brawl with Intel:

Are you looking for contenders for your portfolio? Yes? ThenMotley Fool Stock Advisoris for you. David Gardner made Dell a pick months ago, and he and brother Tom are still walloping the market. You can give Stock Advisor a try risk-free for six months.

Fool contributor Tim Beyers was never a contender, unless you're talking about the 1980s arcade game Punch Out. He threw a wicked virtual right hook. Tim owns no stake in any of the companies mentioned, and you can view his Fool profile here.


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