Intel's Otellini in the hot seat as AMD gains share

Intel's Otellini in the hot seat as AMD gains share

Summary: According to a report published today by Current Analysis, AMD sold more desktop and notebook systems sold through domestic retail outlets in October than Intel. The margin was 49.

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TOPICS: Intel
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Otellini2.jpgAccording to a report published today by Current Analysis, AMD sold more desktop and notebook systems sold through domestic retail outlets in October than Intel. The margin was 49.8 percent of PCs to 48.5 percent of the market, but it's a sign that AMD's technology bets and Intel's missteps over the last few years are shaking up the high volume processor business.  AMD's domestic retail share for desktops, for example, grew to 67.7 percent, up from 52 percent in September. The count doesn't include Dell's prodigious Intel numbers, but AMD's growth is more than a blip. Coincidentally, News.com's Michael Singer has a story that Intel stalwart Dell is offering six Athlon 64 processors for sale on its Web site--probably for performance crazed gamers--but so far isn't building the chip into systems.

After the recent financial disclosure that third quarter results will fall short, in part due to sluggish consumer sales, Dell might be compelled to discontinue its no AMD systems stance...which wouldn't make Intel happy. Intel CEO Paul Otellini, who took the helm from Craig Barrett in May, once drove a forklift during his early days at Intel to help make the quarter. He'll have to roll up his sleeves even further during the next year to fend off AMD's product momentum, the recent antitrust lawsuit brought by upstart chipmaker and others trying to crack Intel's market hold. Maybe the Apple deal and VIIV, Intel's digital entertainment technology brand due next year, will give Otellini something to crow about...

Topic: Intel

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21 comments
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  • If Intel is in the minority, where is the monopoly?

    How can there be a monopoly lawsuit now when Intel is losing market share and the monthly sale wars?
    george_ou
    • its in the strong arm tactics

      eg Japanese PC makers being forced to withdraw AMD microprocessors if they want better pricing. If they dont get the prefrencial pricing and suppose their competitors get, then their competitors would be at an advantage.

      Second the numbers in the article are only for US retail outlet. Not the overall picture of sales through web, corporate sales etc. When all this is taken Intel has 80%.

      AMD's argument is if they can get over 50 in retail and if there were no strong arm tactics from Intel, then they would have had 50% in corporate too. They would have had 50% however Intel strong arming their customer to drop AMD results in them having only 10% or less in other markets
      BrutalTruth
      • It is not illegal to offer better pricing as an incentive ...

        ... unless you are deemed a monopoly. Where competition exists the person can choose in this case to go with AMD and therefore is not placed at a competitive disadvantage. AMDs market share increases definitely damages their lawsuit.

        The more interesting part of this is what kind of incentives are in play with the retailers. It is naive to think that what sales in retail is only influenced by what the customer wants. In retail, the customer is forced to make a decision by what is on the shelf. A lot of times, what is on the shelf is decided by pricing and spiffs.
        ShadeTree
        • Likewise in Corporate

          Is it illegal for Intel to subsidize Dell deals against competitors such as Sun or HP (or even IBM to a smaller extent?) If Intel gives favorable pricing (which could extend to as much a 0-cost processors) to keep a customer from even TRYING Opteron is that monopolisitic behavior? I would posit that using a superior cash position to stifle competition smacks of Anti-trust.
          JackPastor
          • Actually, if you're a competitor in a market

            You can generally price your product how you wish as long as your stock holders will allow you. It's not a crime to tell a customer that if you buy my products exclusively I'll give you a big price break. The idea is a guarenteed customer requires less work to maintain so making a smaller margin per sale becomes a good thing for both the customer and the vendor. It's a good business deal for both. The only time it's illegal is if you're selling your product below costs to maintain a monopolistic market share. When you own 80%+ of the market the rules change for competion to allow the little guys a shot at the market. In this case Intel doesn't have a monopolistic share of the market it' has about half AMD has the other half.
            maldain
          • Intel's market share

            [i]When you own 80%+ of the market the rules change for competion to allow the little guys a shot at the market. In this case Intel doesn't have a monopolistic share of the market it' has about half AMD has the other half.[/i]

            AMD has a 50% market share in only 1 relatively small sub-market. In the whole x86 market, Intel still have 80+% of the market.
            Media Whore
    • anti-trust does not require a monopoly

      Anti-trust allegations have to do with restraint of trade actions. Anti-trust actions have occurred against regional cable providers for actions relating to a single apartment complex.

      AMD's numbers are for retail sales and do not include OEM direct sales (translation, as point out in the article, Dell's sales aren't included in that percentage).
      Robert Crocker
      • Actually only sort of.

        The fact is every case where anti-trust has been applied it's been applied to a captive customer base. Nobody forces anybody to buy intel products over amd products. Intel offers incentives to buy only Intel products which is smart business in a tough competitive environment.

        In the case of a cable company they were the only provider for those customers. When you have a captive customer base and move to exclude access to that captive customer base you'll have anti-trust problems. On the other hand, if you're saying that Intel's offering price breaks to loyal customers is an anti-trust issue my question would be what prevents a company like Dell from buying AMD chips? If you say it's the loss of an incentive then you're saying the only way to sell chips is for AMD and Intel to fix the price of their products.
        maldain
        • Let's not forget

          It's not the pricing incentives that propel this lawsuit. That's just competition. It is the strongarm tacticts such as refusing to ship chips to builders who also offer AMD. Orders were suddenly "back-ordered" out beyond a level where the builder could continue to offer the product at a reasonable delivery time. Thus forcing the builder to drop AMD in favor of the higher demand Intel product. AMD chips are already lower than that of swintel.
          digital@...
        • Talk about twisting things maldain!

          "If you say it's the loss of an incentive then you're saying the only way to sell chips is for AMD and Intel to fix the price of their products.
          "
          With logic like that you should be a lawer! lol
          Pyvent
        • Yes

          It is an issue of either captive customers or coercive selling technique hence the phrase "restraint of treade".

          In Intel's case AMD has charged that the structure of Intel's CPU discounts mean that they have been locked out of sales because companies are afraid to lose deep discounts that require high total unit sales [b]before[/b] they kick in. If you read AMD's site they show an example about how an Intel discount can affect sales.

          From AMD's complaint:
          61. Intel?s retroactive discounts can operate to price microprocessors so low that
          AMD is put at a competitive disadvantage it cannot overcome. Consider an OEM which
          anticipates purchasing 100 microprocessors that both Intel and AMD sell for $100 each. Intel
          knows that because of its prior model introductions, the customer will have to buy 60 from
          23
          Intel. The customer considers buying its expected balance for its new models from AMD, but
          Intel offers it a rebate that will entitle it to a 10% retroactive discount if, but only if, it
          purchases 90 units or more. If the customer buys 30 of the 40 additional units from Intel to
          qualify for the rebate, its incremental cost for the 30 will be $3,000 (30 units at $100/unit) less
          the 10% rebate going back to the first unit it purchased, which amounts to $900 (90 units x
          $10/unit x 10%), for a total of $2,100.
          62. AMD can only capture the 30 units if it offers a price that makes the customer
          indifferent between getting the Intel rebate and getting an overall equivalent deal on AMD
          microprocessors. Thus, for the 30 units that are up for grabs, AMD would have to lower its
          price to $70 per unit (because 30 units x $70/unit equals the $2,100 net cost for buying from
          Intel). In effect, the rebate forces AMD to charge $20 dollars less than the $90 discounted Intel
          price if it attempts to get any business from the customer at all. That is because it is selling the
          customer only 30 units over which it has to spread a $900 discount while Intel can spread it out
          over 90. At the end of the day, this creates a serious competitive disadvantage for AMD. As
          shown in the example, AMD is forced to discount its price three times as much as Intel just to
          match the Intel discount ? not because its processors are inferior ? far from it ? but because
          Intel has assured for itself ? by its past predatory practices ? a significant base of assured
          demand which enables Intel to inexpensively spread its first-dollar discount. Importantly, this
          new base of demand ? driven by the OEM?s purchasing ? will enable Intel to repeat its
          exclusionary practice when the next line of models is unveiled.
          Robert Crocker
    • One or two months don't make a monopoly

      >If Intel is in the minority, where is the monopoly?
      How can there be a monopoly lawsuit now when Intel is losing market share and the monthly sale wars?<

      The lawsuit is based on past Intel practices. Isn't it a coincidence that after the lawsuit, which limits Intel's ability to use strong-arm tactics, they lose the retail sales lead, and are taking hits on the business front as well?
      Hotshot3000
    • Does AMD lead in more than one market category?

      "According to a report published today by Current Analysis, AMD sold more desktop and notebook systems sold through domestic retail outlets in October than Intel."

      The report defined the parameters pretty clearly and narrowly. Apparently, in October AMD lead only under clearly defined circumstances. We have no information on the rest of the market (servers, bulk purchases for business use, etc.)

      We are still waiting the day when AMD takes the majority. But, that day is getting closer...
      NonCartoonist
  • HP Blades dump Intel

    We use BL30 blades from HP. We can not buy the Intel versions anymore because HP said they have termal problems with them. The chips run too hot for the cycles. They will sell us the AMD half height (means 96 servers in standard 7 foot 19' rack) with Opteron (which can do 64 bit Windows too!... bring on the memory!) no problem.... I thought that was a SLAP in the Intel face.
    john.gruber@...
    • SLAP in the Intel face?

      More like a kick in the shorts. Can't you hear the Intel sales team
      yelling at Engineering?
      frabjous
  • AMD vs. Intel

    AMD is cheaper and faster. Game over.
    john616
    • Faster with what ??

      Faster with what, games ???

      Intel still holds the benchmark for document processing, ziping, batch processing...

      And the only thing that makes it more cheaper is the PR rating crap.
      avatar_z
      • Faster with everything

        On what planet? Intel may have a higher (faster) clock speed, but in benchmark testing Intel is 10 - 20 % slower than the AMD processor. AMD's lower (slower) clock speed means that there is less heat and it requires less current which means the whole system runs cooler, is more stable, should last longer, and allows easier overclocking.
        upsman
      • Faster with everything

        On what planet? Intel may have a higher (faster) clock speed, but in benchmark testing Intel is 10 - 20 % slower than the AMD processor. AMD's lower (slower) clock speed means that there is less heat and it requires less current which means the whole system runs cooler, is more stable, should last longer, and allows easier overclocking.
        upsman
        • lol

          ok AMD is faster at Games and its by like 2% you can see benchmarks at Toms hardware for your self. But intell still best's AMD in Development and FPC by about 10% or more and you can see those benchmarks at toms as well. As for cheaper? ya by what a buck its not like the old days when AMDs were 100 bucks cheaper cuz they over heated like mad and didnt have the performance and even Microsoft said if you were running one they could not support you.
          now they are both the same price if you compaire apples to apples at new egg and other online retailers
          xxraptorxx