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AMD helps Intel get back its market share

by Steve Kerrison on 6 October 2006, 08:31

Tags: AMD (NYSE:AMD)

Quick Link: HEXUS.net/qagxk

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Is AMD trying too hard to fight against Intel, and is it fighting on the wrong fronts? It looks that way to us.

AMD appears to be almost completely neglecting its consumer market in an effort to make inroads into the corporate and enterprise market. The cost to AMD could be catastrophic.

What are we ranting about? You needn't look far to see what we mean. Last Thursday evening, the marketing team for MESH Computers posted an apology to its customers in the MESH.care@HEXUS forum, due to delays in shipments of AMD processors. Customers are ordering the systems, but AMD hasn't been delivering the CPUs on time, leaving MESH in a sticky position.

MESH isn't the only company thinking of expanding its Intel-based line of PCs, folks. System integrators, distributors and e-tailers are all feeling the shaky AM2 processor supply line coming from AMD, with the high-end chips seemingly the worst affected. The problem looks to have been going on for several weeks now, and when it'll end isn't clear, but the longer it goes on, the deeper AMD digs a hole for itself.

Core 2 really rocked the boat

It's been a challenging few months for AMD. It launched its AM2 socket for desktops and workstations in May, but the move to DDR-2 hasn't come with any great performance leaps. That in itself wouldn't be too much of a problem, but Intel delivered on its promise of opening a can of whoopass with its new mArch, letting Core 2 desktop chips loose just a month after the release of AM2.

Core 2 is faster and cheaper than what AMD has to offer. That's a simple fact. By letting its customers down, AMD has rubbed salt further into the wound. Companies that once sold systems primarily built around AMD processors now have product ranges increasingly dominated by Intel's wares.

The only effort AMD's made to compete with Core 2 so far is to lower its prices, but without any faster SKUs in sight and no breakthrough architectural changes taking place any time soon, all the company seems to have done is reduce its margins. There's little point in lowering prices on products that you cannot reliably supply, either. One might cite the launch of the Athlon 64 X2 5200+ as another form of response, but the company made such a woeful effort at publicising its launch that it hardly earns itself a mention.

The way we see the current situation, AMD's gone running after the corporate and enterprise markets and forgotten all about the consumer market. There was a cheer from many when Dell started selling AMD gear, but has this move hit AMD's manufacturing capacity? Even if it hasn't, AMD is now feeding stock to a company that can ship products at prices that undercut many of the smaller system builders.

It's hard enough to keep customers loyal when you're not pissing them off with unreliable shipments, helping giants to crush them, while going after other markets, right?

Right now, Intel's ploughing ahead, most definitely clawing back a market share it has gradually being losing. Meanwhile, AMD's helping them by giving distributors and system builders every reason to make the switch. There's either one hell of an ace up its sleeve (early arrival of quad-core, perhaps?), or some people inside AMD are pushing some very silly strategies.

Is our viewpoint unnecessarily harsh or are we right on the money? Let us know your thoughts in the HEXUS.community.

HEXUS Right2Reply

Jan Gütter, AMD's Public Relations and Analyst Relations for Europe, Middle East and Africa (EMEA), was kind enough to offer AMD's thoughts on our take.

'The competitive performance and advantages of AMD’s current product offerings combined with our widening relationships with system builders and regional and global OEMs have hampered our ability to fully meet the demand of some customers, including regional OEM partners. The situation is slowly but steadily improving, and we continue of course to work every avenue to meet the needs of our customers. Because we are in our quiet period prior to reporting our Q3 2006 Financial Results, this is as detailed a response as we can provide at this time'.

Interesting, eh?



HEXUS Forums :: 14 Comments

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The main thing AMD have had going for them for the last few years, is gaming/overall speed supremacy. Which is the cornerstone of CPU sales.

Without that market, they lose a load of sales and most importantly other markets dwindle too.
Unless you already own an AMD system, is there really any incentive to buy AM2 over Conroe??? Having been an AMD fanboy :embarrassed: for the past few years I really cant see my next upgrade being anything but Conroe :) Its a shame really
Well I agree generally what you are saying. Some of the blame had to lay with the the likes of Dell for not seeing what was going to happen. Most enthusiasts knew what was happening 12 months ago. So how a corporation like Dell didnt know about the performance of Conroe over AM2 is negligence tbh, and its their own fault.
AMD have decided to try and make a go at the server market which afaik is far more profitable than the consumer desktop. Good luck to them theres more to life than just desktop pcs.
greektony
Unless you already own an AMD system, is there really any incentive to buy AM2 over Conroe??? Having been an AMD fanboy :embarrassed: for the past few years I really cant see my next upgrade being anything but Conroe :) Its a shame really
Even if you have an AMD system, there is no incentive to buy AM2. In either case you will have to replace your RAM as well as your motherboard and CPU, and the way RAM prices are going at the moment, replacing 1Gb of quality RAM is not an incedental expence.

At the moment, AMD could have a fairly captive market of upgraders. If you allready have a working AMD system, then replacing the CPU with a faster one is a fairly cheap no brainer, But AMD preventing that by moving sockets and RAM to the point where everything is incompatible. If you are going to spend the money gutting your system and replacing all the core logic then there is no incentive to stick with AMD.

Personaly I have a stable S754 system, but I am stuck and cannot upgrade without replacing everything. If AMD brought out a decent dual core CPU for that socket they could have £150 of my money right away, as it is, I am thinking of switching to Intel at some point next year.
The problem is, once Clovertown is released, I fail to see why most people will buy Opteron servers…..

AMD could be getting themselves in a pickle indeed.