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Intel picks up 6% marketshare during one quarter in the overall PC market

The price war that is waging between Intel and AMD paid off handsomely for Intel in the first quarter, according to the latest numbers from Mercury Research. Intel managed to capture 80.5 percent of the PC processor market for Q1 2007.

The strong performance by Intel in Q1 represents a whopping six percentage point increase from the 74.4 percent share that the company held during Q4 2006. The increases per segment come in at eight percent for the desktop market, four percent for the notebook market and seven percent for the server market.

Last year, AMD was quick to point out its strong growth in all computing segments. For the third quarter, AMD's share of the desktop, notebook and server markets stood at 26.5 percent, 18.3 percent and 24.4 percent respectively. The company's overall marketshare for Q3 2006 came in at 23.3 percent. For Q4 2006, that share rose to 25.3 percent.

Intel erased all of AMD's 2006 gains and pushed the company back under the 20 percent threshold. Analysts for JP Morgan reported that "Intel's superior products and aggressive pricing took their toll on AMD. We expect AMD to lose additional share during (the second quarter)."

AMD has responded to the best of its ability to Intel's strong Core 2-based product family and the company's steady stream of price cuts. By going toe-to-toe with Intel, however, AMD has seen its average selling prices (ASPs) fall along with unit sales.

The company also made a critical error by oversupplying OEMs with processors when they couldn't deliver on sales forecasts while at the same time leaving channel partners out to dry with processor supply. "We made a strategic risk on how we shifted our capacity to serve our customers and unfortunately some of our customers were not able to meet those very aggressive growth areas that they had so when we shifted that, we were not able to recover as fast this quarter as we would have liked," said AMD CEO Hector Ruiz in early March.

The increased pricing pressure, disappointing sales from OEM and the strong performance of dual-core and quad-core processors from Intel has taken its toll on AMD. The company posted a $611 million USD net loss in Q1 2007 and announced that it would restructure its business to cut costs.

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Scarey
By Kaleid on 4/24/2007 8:33:14 PM , Rating: 5
I'll be going back to AMD to support the underdog, no matter how foolish it may seem.
We absolutely need the competition.




RE: Scarey
By Oregonian2 on 4/24/2007 8:35:03 PM , Rating: 3
Even if you have to pay more for less performance?


RE: Scarey
By Heinrich on 4/24/2007 8:49:27 PM , Rating: 3
Yes, absolutely. Sometimes buying something shouldn't be all about what's good for ME but should be a statement about what's good for the community.

After Exxon tried to get out of paying for the Valdez disaster I still don't stop at Exxon stations, and I remind my friends regularly.

Buying something can be more than just ego satisfaction, it can be a political statement.


RE: Scarey
By GaryJohnson on 4/24/2007 9:07:17 PM , Rating: 5
I'm confused. So basically you're paying more to get less now to avoid paying more to get less later?


RE: Scarey
By Bonrock on 4/24/2007 9:51:19 PM , Rating: 5
I believe his logic is more along the lines of "pay more to get less now to avoid paying a hell of a lot more to get less later."

Incidentally, last time I checked, AMD is still very competitive with Intel in terms of price-to-performance ratio. That's not a good place for them to be as a business, but as a consumer, buying AMD doesn't necessarily mean you're paying more to get less. It's more like you're paying less to get less, which sounds reasonable to me.


RE: Scarey
By Kaleid on 4/24/2007 10:22:51 PM , Rating: 3
I'll never pay a lot for hardware so it's more like "pay little and get a little less". I do not need extreme performance since I'm less and less interested in games and other applications that require extreme performance.

There's always a possibility that AMD/Ati will go belly up (Sega for instance used to be a large company) and I'd hate to see the only CPUs available for purchase coming from Intel, who, when they never had any real competition from AMD could in their almost monopoly rule of the market decide when to release a new CPU, motherboard and also charge bucketloads of money for their silicon. AMD did well with K7 and K8 and deserved greater marketshares. Had they received that then my guess is that the company would be in better shape now.


RE: Scarey
By arswihart on 4/25/2007 8:11:26 AM , Rating: 2
I'm more of a "pay a little now, get a little or a lot, and then pay again on top of that, or maybe not" kind of guy.


RE: Scarey
By GoatMonkey on 4/25/2007 10:13:31 AM , Rating: 2
Even if AMD were to go out of business, which I don't think is very likely at this point, some other company would take their place.

If Intel were to be a CPU monopoly and overcharged for a stagnant product, someone would step in to give them some competition. As prices went up on CPUs the market would become more attractive to new competition.


RE: Scarey
By Axbattler on 4/25/2007 10:37:49 AM , Rating: 2
Then again, it depends how much they 'overcharge' by: economy of scale works in their favour - the new underdog will be burdened with start-up costs, and unless they come up with a magic product straight off the bat (or one which tackles a niche market Intel neglected - which is large enough for them to sustain until they get both feet on the ground), they would end up being in AMD's current position, but even worse.

That said, I do not think that AMD is going to go belly up either, although it seems that they've not only lost their momentum in the past few years, but are also losing the ground they've gained. I wonder who are the main constituents of the 6% though. I am sure quite a number of enthusiasts have gone Core2 in the past few months, but I've never been quite sure how significant is the enthusiast market.


RE: Scarey
By CollegeTechGuy on 4/25/2007 10:48:43 AM , Rating: 2
I think if AMD would go out of buisiness they wouldn't just disapear off the face of the earth. Someone would buy them out, and I think the best candidate to do something like that would be IBM. IBM has the money and the engineers to to take over a processor company...and video card. Its funny how many people today forget about IBM, mainly the average Joe that just knows alittle about the computer industry. Because IBM doesn't sell to the average Joe as much as they used to and they are more Buisiness based...plus a portion of their profits come from Patends.


RE: Scarey
By mrteddyears on 4/25/2007 11:32:32 AM , Rating: 2
IBM are going to make a fortune selling Cell CPU for all those PS3 why do they need AMD

"Snigger"


RE: Scarey
By MrBungle123 on 4/25/2007 11:19:37 AM , Rating: 2
Something as complex as A cutting edge CPU is not something that just anyone (or corporation) can just pull out of their ass and start manufacturing tomorrow. If AMD goes belly up the only way that anyone would have a chance at catching up with Intel would be to buy out whats left of AMD and invest Billions into more fabs and engineers.


RE: Scarey
By PrezWeezy on 4/25/2007 2:23:45 PM , Rating: 3
Just because AMD and Intel are the only ones you hear of making chips doesn't mean they are the only ones making chips. There are a lot of microchip manufactures out there and any one of them could start making CPU's if they so chose. Right now it would be very difficult to establish oneself as a CPU manufacture, however if Intel were a monopoly, Samsung, or IBM, or Sony, or Foxconn, or one of a handful of others could start making and distributing chips. They wouldn't have the performance lead to start, just like AMD didn't; but there are a lot of very bright engineers out there that don't wear an Intel badge to work.


RE: Scarey
By emboss on 4/25/2007 8:14:53 PM , Rating: 3
Unfortunately, there's very few companies that can compete in the x86 processor market as the x86 instruction set has half a zillion patents on it. Intel, AMD, and Via can due to cross-licencing agreements, and IIRC there's a couple others out there that are allowed to some degree. If AMD went bust (and AMD's license would almost certainly die with the company), then you'd almost certainly see Intel refuse to license out it's x86 patents and take nearly the whole market for itself (with Via eking out it's existance in it's own little niche as now).

And like it or not, x86 is here to stay for a long time. Intel has thrown billions of dollars (in the form of Itanium) at probably the most easy to convert market segment, and they haven't had a whole lot of success. So it's not like a new competitor can compete with a different architecture either.


RE: Scarey
By Oregonian2 on 4/30/2007 7:47:12 PM , Rating: 2
No, someone would buy out AMD's assets, which would include their IP related things. Wouldn't be IBM, they're trying to get out of hardware sales completely to become a 'services company'. AMD's estate agents wouldn't just throw away those rights, else I'll buy them for ten bucks.

Would be someone more like Samsung, Toshiba, or Sony. Etc. Somebody who already has big fabs going and funded.

But still, I think Intel would like to keep AMD around. If Intel
is a total monopoly as would be the case if AMD folded, their business practices would really be under government spotlights a lot stronger I think. They'd get class action lawsuits for ripping governments and other people off in one direction, and class action lawsuits from investors for not ripping people off sufficiently.


RE: Scarey
By Ryanman on 4/27/2007 12:32:10 AM , Rating: 1
Theres a difference between say Toys and Processors.
You have to invest HUGE amounts of money to start making Procs, you can't start in your backyard. The only way there would be competition after AMD would be from an already established electionics place like Sony or perhaps Mitsubishi?!?


RE: Scarey
By Calin on 4/26/2007 2:22:39 AM , Rating: 3
Intel launched the 386 processor for about $1,000. At the end of life, one could have bought one for $8.
Intel launched the 486 at about the same price point. At end of life, it was some $25.
Intel launched the Pentium at similar prices ($800+). I don't know how much it was costing at end of life.
And for as long as AMD held the performance crown, the prices all across the board in Intel's camp fell greatly.

One can not compare current processors with old processors, but I have the feeling that processor prices fell a lot since the Athlon (Slot A) days


RE: Scarey
By FITCamaro on 4/24/2007 9:38:42 PM , Rating: 3
I don't shop at Citgo for similar reasons (being that they're effectively owned by Venezuelan president Hugo Chavez and he has known ties to the terrorist group Hamas).