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Blog: Hardware System Builder Market Update
Rahul Sood (Blog) - November 18, 2006 7:45 PM

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The tech industry has reached a new level of consolodation and innovation. This year is the beginning of some pretty significant industry shifts.

So here is a quick market update that many of you have been asking about: It's no secret that Intel is kicking ass in the consumer desktop and notebook side. Even though they are in a winning position it's likely that Intel will further lean out their organization and continue to lose market share to AMD.

It’s an odd situation really – AMD is gaining share in notebooks, desktops, and they are still doing well in servers. The problem is AMD is also maximized on production, and unfortunately they can’t increase their pricing in order to “curb” demand – instead they have to force some customers to wait or switch.

Some might say it’s an enviable situation to be in; people love your product so much that they are buying everything you make – like Ferrari. On the other hand when you have little control over your pricing and you can’t produce enough products… well that’s almost the opposite of Ferrari.

Ferrari has a 2+ year waiting list to get a car – yet they have full control over their pricing. As a matter of fact, to buy a Ferrari you have to spend about 50k+ over retail if you want one now (you’d be lucky to get it at that price).

AMD definitely has their work cut out for them -- they must continue the integration of ATI into their organization and they also have to launch a new core as soon as possible. In the meantime AMD must consider their brand positioning, because their “Ferrari Branding” strategy could unravel if more of their customers continue to position AMD based systems lower to that of the competition. Therefore I feel that AMD faces the challenge of preventing their premium brand positioning being devalued based on their overall system positioning in the market. Only innovation in its purest form will prevent this.

I know and trust AMD management will do whatever it takes to make the right moves, and we will continue to support them because we believe in offering our customers choices. <

In the end I believe the integration with ATI will be very successful and AMD will come back with a vengeance. By then Intel will most likely be ready as Paul Otenelli is proving to be a very effective leader -- turning around a giant sinking ship and leaning out the fat organization in a matter of months.

I’ve said it before and I’ll say it again, Intel should thank AMD for forcing them to change for the better. Now AMD needs to light a fire under their engineers – they can’t live in the glory days of 2005, they have to move quickly!

In the meantime NVIDIA is sitting back and enjoying being the only independent graphics and chipset solution. It’s nice that they launched the G80 (one of the most significant product launches for NVIDIA ever).

UPDATE November 16, 2006: Apparently the NVIDIA Geforce 8800 is widely available.

NVIDIA will most likely blow away expectations as usual – they are in a very strong position at the moment.

So there you have it – click here for more the entire blog and comments.

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