ebnonline.com
...this one is illustratative of the beautiful friendship relationship between mu and amd...
Deal with Micron improves AMD's prospects in business market
By Jeanne Graham
EBN
(01/05/01, 06:40:51 PM EST)
Advanced Micro Devices Inc. took a significant step forward in its race with Intel Corp. for PC market share when it announced this week that Micron Electronics Inc. will use its Athlon microprocessors in a business-class line of personal computers.
“Two years ago competitors of Intel couldn't shoot straight,” said Nathan Brookwood, an analyst at Insight64, Saratoga, Calif. “But ever since AMD came out with the Athlon series in mid-1999, they've done a marvelous job of competing with Intel.”
MicronPC, an affiliate of Nampa, Idaho-based Micron Electronics, will use AMD's Athlons in its ClientPro PC line. AMD increased its share of the PC market from 13% to 17% during the past year, but needs a stronger presence in business computers, which make up two-thirds of the total market, according to analysts. The deal with Micron gives Sunnyvale, Calif.-based AMD such an opportunity, they said.
“From AMD's perspective, it's a way they can position themselves to enter the business segment,” said Roger Kay, an analyst at IDC, Framingham, Mass. “Typically, AMD [processors are] sold to consumers, and Micron's primary market is medium businesses.”
Owners of smaller businesses tend to behave more like consumers when buying PCs, and look for the best price/performance trade-off they can find. By contrast, many corporations still prefer Intel, believing the company offers greater product stability and availability, Kay said.
“Micron is a recognized and credible brand name here in the Americas,” said Bob Myers, AMD manager of system integrators and strategic OEMs, Austin, Texas. “It's important for us to brand with a machine that is well received in the commercial market.”
A stronger presence in business computers would not only bring AMD bigger market share, but better margins, Insight64's Brookwood said. Consumer systems are available for less than $800, while people are still spending $1,000 to $2,000 for business machines, he noted.
“There's not the same price pressure for system components, including microprocessors, on the business side as on the consumer side,” Brookwood said. “That helps with the average selling price.”
Today there is a wide disparity between the average selling prices of processors from AMD and those from Intel, Santa Clara, Calif. Intel's processors sell for an average of $200, Brookwood said, compared with an ASP of about $80 or $90 for AMD.
Citing data from Dataquest Inc., San Jose, AMD's Myers estimates that the company's share of the midsize business segment is 7%, and 10% and 14%, respectively, of the education and government markets.
It's difficult to accurately size AMD's commercial market share because small businesses tend to buy PCs privately rather than through volume purchase agreements, Myers said. AMD's stated goal is to obtain a 25% to 30% worldwide PC market share in all segments.
In the past 18 months AMD has made successful strides in that direction, according to Scott Randall, an analyst at SoundView Financial Group Inc., Stamford, Conn.
“I would argue that over the last year, what we've seen is some increase in comfort on the part of corporations [with AMD], because the company's Athlon family is a solid, good price/performance product,” Randall said. “If they can continue to execute well, and increase confidence and evolve a viable service strategy, customers will look at AMD that much more favorably.”
Still, limited manufacturing capacity will keep AMD's growth in check, according to IDC's Kay. “AMD has two fabs, and one is not built out yet. Intel has 11,” he said. “If [AMD] takes all the market share it can eat, 18% is the max.” |
