2006 Brings Renewed Rivalry for Intel, AMD

Chip rivals Intel and AMD are set to write a new chapter in their ongoing rivalry. The business market, more than ever before, will play a role this year.

Advanced Micro Devices Inc.s fourth quarter advance against Intel Corp., could signal a shift in the two companies ongoing battle.

AMD, which on Wednesday reported a fourth quarter earnings jump whereas Intel on Tuesday missed its fourth-quarter estimates, claims to have gained at least a point of market share in the fourth quarter.

Intels share, which has hovered around 80 percent of late, slipped by about the same amount, is executives confirmed. The change was a significant one for AMD, whose PC processor business has slowly grown slowly over the last three years, increasing by about two points per year trough the third quarter of 2005.

The two chip makers late 2005 performances appear to have set the stage for a new battle in 2006—one in which the companies are increasingly vying for business buyers, a traditional stronghold of Intels.

AMD, whose CEO, Hector Ruiz, said now has more momentum than ever, will seek to use its past successes with its Opteron server chip to springboard into selling a wider range of business PCs.

But Intel, which blamed its market share loss on its inability to synchronize its processor and chip-set shipments, will work to ensure that its fourth quarter performance wont become a turning point for AMD.

Intel CEO Paul Otellini said an all new product lineup, which rolls out in the second half of 2006, will allow Intel to beat back AMD and regain its lost market share.

/zimages/5/28571.gifRead more here about businesses uptake of dual-core processor desktops.

For AMD, the business PC space "quite likely is going to be a major source of growth going forward," said Dean McCarron, analyst with Mercury Research in Cave Creek, Ariz. "Very modest gains in the business market will drive significant growth for AMD."

Intel has ample incentive to fight back, however.

"What I expect will happen is that this turns into a pretty aggressive battle between the two companies," McCarron said.

"Intel certainly commands more of the [PC] OEM landscape. But AMD is coming into all of this, overall, with a pretty significant pricing discount. This sets them up pretty much perfect for a quite a battle."

Thus far, AMD has found strong business partners in Hewlett-Packard Co. and Fujitsu-Siemens Ltd.

HP offers AMD chips in its HP Compaq dx5150 desktop and two of its HP Compaq nx6000-series notebooks.

At the same time, Fujitsu-Siemens is a strong proponent for AMD in Europe, offering AMD Athlon and Sempron processors in its Esprimo P5600 desktop, for example.

Still, AMD has been working to gain even more of a presence in the business space, said Dirk Meyer, president of AMDs Microprocessor Solutions Sector, in a recent interview.

/zimages/5/28571.gifClick here to read more from the interview with Meyer.

"The first thing youve got to do is get design wins," Meyer said. "The next step is to start to generate familiarity of the platforms across ... the ecosystem, which consists of both end users and the channel from which they buy."

To that end, AMD has also been working to strengthen relations with systems resellers, VARs and systems integrators and, more recently, launched a corporate PC stability program, dubbed its Commercial Stable Image Platform, which guarantees no changes to specific machines based on its chips and third-party hardware for 15 months.

Generally, PC stability programs—Intel calls its program the Stable Image Platform—promise certain business PCs without changes for a similar time period, allowing three months for testing and another 12 in which to roll out new PCs.

"Im confident enough that we have enough [design wins] that will be showing up [in 2006], so well be reasonably able to substantiate a move in our share," Meyer said.

Next Page: Benefiting from Intels stumbles.