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The Compaq D315 will also use nForce Platform Processors from Nvidia for graphics. Users will be able to choose from AMD's Athlon XP processor family, including the top of the range 1.8GHz Athlon XP +2200.
A basic configuration of the PC with a 1.67GHz Athlon XP 2000+ processor, 128Mbytes of double data rate synchronous dynamic RAM, a 20Gbyte hard drive, a CD-ROM drive, and six USB ports is priced at $649 (£422) with Microsoft Windows XP Home. Users who opt for Windows XP Professional will pay $50 more but all buyers will receive a $100 rebate for a limited time.
"This particular product will set a new benchmark as far as price-performance in the commercial desktop market is concerned," said Kevin Knox, director of enterprise segment marketing and business development for North America at AMD. The cheapest business PC previously offered by HP is the Evo D310, which sells for $710 (£461) on HP's Web site with a 2.0GHz Intel Pentium 4 processor.
With many corporations forced to pay more in software licensing fees as a result of new licensing programs from Microsoft, money is being taken out of the hardware budget, Rob Enderle, research fellow at Giga Information Group, said. Businesses that still need to deploy new hardware have less money on hand, also as a result of declining IT budgets, and are looking for the lowest cost PC that still meets their performance requirements, he said.
Some companies have already started to use PCs based on AMD technology. "We had seen data from analysts that AMD had a fifth of the business market without its products being featured in a PC from a large, global vendor, such as IBM or Dell Computer," said Louis Kim, director of marketing for HP business PCs.
This PC "is targeted right at Dell's heart," Enderle said. Most vendors can't compete with Dell on price due to the company's efficient ordering and assembly system, he said. But by choosing a cheaper AMD processor, HP can sell this machine at a lower cost without inviting a response from Dell, he said.
Dell has a very close relationship with Intel, Enderle said, and it would be difficult right now for the company to move to AMD processors because "they are the most Intel-generic supplier on the market".
Intel still holds a commanding lead in processor shipments with 82% of worldwide shipments in this year's second quarter, according to data from Mercury Research. AMD had 15.6% of worldwide shipments in the second quarter.
This is not the first product from HP or the former Compaq Computer to feature Athlon processors but earlier models were targeted at the home market.
AMD is scheduled to release desktop processors based on its 64-bit Clawhammer technology later this year, its eighth-generation processor technology. HP would not comment on any specific plans for products containing Hammer in its business PC family, but did say that Hammer was in HP's plans for future business PCs.
AMD's seventh-generation processors still have a lot of life left in them, said Knox. Many businesses are looking for the most value they can get in a PC, instead of just pure performance, he said. The timing of the release also suggests that HP needs PC sales now and cannot afford to wait for Hammer, Enderle said.
The Compaq D315 is available in North and South America as from today (19 August). Worldwide availability should follow by late September, HP said.