The market for x86 processors grew by more than 12 percent in 2007, but a new report from IDC offered a conservative forecast for PC and servers sales in the first half of 2008 as the U.S. economy continues to slow.
The Jan. 22 report found that Intel continued to dominate the x86 market in 2007 as the company's market share hit 77.5 percent, an increase of 8.9 percent compared to 2006. During the same time, rival Advanced Micro Devices lost 3.5 percent of its market share, with the company accounting for 22.5 percent of all x86 chip shipments last year.
Overall, the market for server, desktop and mobile PC processors increased 12.6 percent last year. IDC analyst Shane Rau said the market was driven by demands for high-performing microprocessors, especially in the fourth quarter. This seems to show that consumers and commercial users were looking for more robust hardware to support Microsoft's Windows Vista operating system instead of just seeking out the lowest-priced PC, Rau said.
For part of the year, the market was driven by the lower cost of processors, which translated into a number of low-cost PCs, especially laptops. By the fourth quarter, according to IDC, users had turned their attention to performance instead of just looking at price.
"Processors are a leading indicator of the nature of PC demand, such as how many PCs will be purchased and what their configurations will look like," Rau wrote in an e-mail to eWEEK. "More shipments of mainstream and performance processors -- as occurred in [fourth quarter of 2007] ?Ã¶?Ã§?? means higher-end configurations, which are likely being used to support Windows and in lieu of simply buying cheaper PCs."
Although the PC market boomed in 2007, IDC analysts were cautious in predicting how the first half of 2008 will play out. While x86 processor shipments are usually down about 6 percent in the first quarter of any given year, recent concerns about the U.S. economy could mean that the market might slow down even more than had been expected.
When Intel reported its fourth-quarter financial numbers Jan. 15, the company's guidance for the first three months of 2008 caused its stock to fall and fueled fears that the technology sector could suffer during the next 12 months. Nevertheless, Rau did see some positives in the IDC report.
"A downturn in the U.S. economy is a mixed bag," Rau wrote. "On one hand, it probably means less demand from U.S. corporations and consumers for processors. On other hand, if it's combined with a weaker dollar relative to other currencies, the result could actually be increased demand from foreign markets."
For the year, Intel took market share away from AMD in both the server and desktop spaces. Those numbers, Rau said, showed that AMD's delays in bringing its quad-core processors to market -- Phenom for desktops and Opteron for servers -- hurt the company's standing within the market.
However, Intel did lose some market to AMD in the mobile space. For the year, AMD increased its shipments and claimed 17.4 percent of the market, compared to 15.6 percent in 2006. AMD was helped by its low-cost chips for consumer notebooks and by adding Toshiba to its partner list.
In the fourth quarter, Intel's and AMD's shares of the market remained virtually unchanged from the third quarter. During the fourth quarter, Intel controlled about 72 percent of the x86 market, while AMD held 27.7 percent.