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Can AMD's Alchemy turn Wi-Fi into gold?

Half-baked response to Centrino world domination

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The smart choice: opportunity from uncertainty

AMD has begun to address Intel's almost total domination of the Wi-Fi market by launching a hotspot co-marketing scheme designed to promote its Alchemy WLAN chips.

AMD will offer providers of free hotspots a listing in its forthcoming directory of free Wi-Fi locations - planned for the second quarter - in return for putting an AMD badge in their window. This will label them "AMD Hotspots" (regardless of the technology used in their access points and with no tests carried out into whether their hotspots work effectively with Alchemy gear).

AMD told US journalists that "we are supporting businesses that offer free Wi-Fi access to their customers. We're just providing advertising and promotional support". Most of the hot-spots included in its scheme are in independent coffee shops, hotels and restaurants.

There is no indication that AMD will fund the hotspots it has listed or that it has any plans proactively to increase the numbers of locations available, for instance by donating equipment to new venues. It does plan to provide additional resources from its AMD Hotspot home page as the year progresses, including a directory applet and promotional events through its retail and reseller partners. The latter could be highly valuable to business-focused hotspots.

AMD has a long way to go to make an impact on Centrino. While Intel is often criticised for keeping its chipset away from the Wi-Fi cutting edge, AMD is even further behind. Its Alchemy Am1772 WLAN chipset and Alchemy Au1500 base station processor - which is used in the Apple AirPort Extreme access point, among others - have no support at all for 802.11a or 802.11g as yet and no timescales for this upgrade.

While Intel can afford to shrug off taunts that it lags behind its rivals in technology, because of the power of its branding, AMD cannot. As we reported last week, the marketing whirl-wind behind Centrino has established it in the public mind as synonymous with laptop Wi-Fi and hotspots - to the extent that, in some population groups, Centrino is a better recognised term for WLAN than Wi-Fi itself. This makes the Centrino label on a hotspot location a strong marketing tool for that venue because AMD falters with attempt to counteract Centrino in hotspots of its high recognition factor - an AMD logo will be far less powerful.

To date, AMD's main response to the Centrino brand campaign has been negative. Recently, Kevin Knox, director of worldwide enterprise business development, claimed Centrino was "garbage". "The chip is good," he said. "The wireless technology they bundle with the chip is garbage. But if you want Centrino, you've got to take that technology." He also said Intel had spent £300m on marketing but has "convinced you of a lot of things that aren't true".

Many hoped that the hotspots move represented a rather more constructive response to Intel's success. But so far it looks half baked. It will not carry the same reassurance for the non-technical user as the Intel scheme. Intel's Centrino logo on a hotspot is a guarantee that the equipment has been tested as interoperable with its chipsets and therefore carries a certain badge of quality. AMD's scheme appears to involve no testing or certification element but is merely a low-cost approach to advertising the AMD products.

And even this may have been compromised recently, with reports that, in the US, some hotspot venues have found AMD stickers on their windows when they had not given permission. Such unprofessionalism, even if not officially sanctioned by the company, could tarnish the brand and deter potential partners, especially as some feel AMD has taken a heavy handed approach, insisting that the stickers are displayed in order to keep the directory listing, even though there are many other hotspot directories available.

In product terms, AMD has taken a very different approach from Intel in the Wi-Fi market, focusing on embedded wireless silicon and access point chips, rather than on integrating wireless into its PC processors. Its product range is based on combining two product lines - the Au Mips-based embedded processor it acquired with its $50m purchase of Alchemy Semiconductor in 2002, and its own obscure WLAN chipsets.

The products are targeted at PDAs, consumer devices, access points and client cards and, in future evolutions, smartphones. It has not been an easy road for AMD. Its Personal Connectivity Solutions (PCS) division - which houses Alchemy and which is close to the heart of CEO Hector Ruiz, who previously ran Motorola's semiconductor business - has suffered from the strength of ARM in the market for embedded thin client chips. System design and software engineers are reportedly apathetic about Alchemy because of their deep attachment to the dominant ARM architecture.

AMD will have to provide a serious performance edge to get their attention. It has the engineering brains to do this, but it is saddled with the Mips core. When it was founded in 1992, the ARM architectural license was not available, so Alchemy took Mips instead, even though its founders had come from the StrongARM team, whereas Intel gained an ARM license when it bought Digital's chip operations.

The AMD PCS roadmap includes separate and combined embedded processors and Wi-Fi chips, and a full system-on-a-chip. The primary targets will be makers of PDAs, tablets, in-car systems and home controllers, although smartphones will be a future option.

As such it will run up against Intel XScale, with AMD al-ready jibing at the familiar enemy, claiming far superior video performance and a cleaner bus design than XScale before Alchemy is out of the prototype stage.

AMD can snipe at its larger rivals' wireless products all it likes, but the fact remains that its strategy is confused between embedded systems and gaining higher recognition through hotspot branding, and it will have problems finding a niche between Intel and the Wi-Fi specialists such as Broadcom. More fruitful, given the threat by both these chipmakers to boycott Chinese Wi-Fi markets, may be AMD's stated plan to buck the US trend and work with Chinese companies to make WLAN products that con-form to the country's own WAPI security standard.

© Copyright 2004 Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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