Barry,
Since Intel didn't lose market share, by not having additional capacity, Intel couldn't lower prices to compete any more aggressively than they did, so to that extent, you're right that they opened the door for AMD.
You may be right that Intel did not lose market share. But there were some drop-outs from the competition: NSM (partially), Cyrix, Rise, IDT. Someone is gaining market share that those companies lost - AMD.
Another variable that has to be taken into consideration is the product mix. Despite all the problems with execution, Intel still had the advantage in Q4 and Q1, since Intel's PIII and Coppermines were competing mainly against AMD's K6, and very limited quantities of Athlon.
AMD's product mix is going to change greatly: moving from low margin K6-2 to acceptable margin K6-2+ and K6-III+ in mobile market - premium product compared to mobile Celeron (deliberately crippled by Intel), Spitfire will compete with high end Celeron, mid range Coppermine, and Thunderbird will be all alone in high end (until Willamette).
In each market segment, Intel will be matched or outgunned for at least next 2 quarters. The good thing for Intel is that AMD is also capacity constrained, and therefore can't win a lot of the unit market share from Intel. But $$$ market share is shifting. Another thing to keep in mind is pricing. Even in time of tight supply, there will be pressure on Intel to cut prices, by the likes of Dell and Compaq, because the product that Intel will be selling will be inferior to the competition.
When Intel has the additional capacity later this year, I don't anticipate that AMD will be allowed to gain any market share - in fact, the opposite may occur.
If Intel was suddenly able to satisfy all the demand, you could in fact be right, and Intel could even gain market share, because AMD is capacity constrained as well. But looking to 2H 2000, AMD will be adding capacity as well, at the same or even faster pace than Intel. So the unit market share may stay the same, or we may see tiny gain by AMD. But in the share of the revenue, AMD will be making solid gains thanks to the shifting from low end product to premium product.
Joe |
