AMD AND INTEL: Rivalry in the Computer Industry

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NOTE: Phil is a college student who wrote this as his final for a business communications class and submitted it to us for posting.

Computers now have come into every aspect of our lives and are in most homes and businesses. They have made our lives into a race of how much we can do in so little time. We use them everyday ranging from our elementary schools to our universities to our jobs; even when we go on vacation we seem to take them with us.

They are always changing and getting faster by the month. Two years ago about this time, the fastest computer out was the Pentium 266; today it is the AMD Athlon 1 GHz or AMD Athlon 1000. It has come to my conclusion that AMD has become David coming back to get the Goliath (Intel).

Both Intel and AMD are multibillion-dollar companies with thousands of employees. Intel’s net worth is 8 billion dollars and AMD’s net worth is 4 billion. Intel has spent over $800,000 alone on research and development on their computer processors this year alone. This is twice the amount AMD has spent which is over $400,000.

In the past, Intel was the computer processor of choice and have built up quite a business market, having years to fine-tune their products. AMD, on the other hand, has been in their shadow just trying to keep up with their pace of the speed of Intel’s processors.

The speed of a computer processor or CPU in the computer business is essential. The speed of a CPU can make a massive difference in the business world. A faster CPU can cut 5 hours worth of work in half compared to a slower one. This is very important especially when it comes to business: It cuts down on labor costs, increases productivity and customer satisfaction with a faster turn around rate of work.

In the home, speed is essential in a similar but different way. If someone was working on a draft of their deck with Computer Automated Drafting (Auto CAD) for a home improvement, the time they could have their work done is hours compared to days with a faster CPU.

AMD is now setting the pace on how much we spend on our computers and how fast they will be; in retrospect, Intel has done this. This made it very hard for other companies such as AMD. AMD and other companies in the past were always trying to just catch up to Intel’s pace of putting out faster processors.

Intel had all the necessary essentials to almost monopolize the industry of computer processors. Intel was able to produce more and get their products to the computer makers in a timely manner. AMD, on the other hand, was having extreme difficulties making their product in quantity and with the quality compared to Intel. This caused a problem; there were many shortages of AMD’s products. AMD was just getting an extremely poor rating because of the difficulties they were having, causing many computer makers to shy away from using their CPU’s in the industry.

The year 1999 was an illustrious year for the computer industry. Intel released their latest CPU, the Pentium 3 or P3. The P3 was the fastest CPU in the world at its release. All that AMD had to even compare to the P3 at the time of its release was the K6III series CPU.

In the third quarter of 1999, AMD caused an uprising in the computer industry. AMD released their K7 series chip or Athlon chip. The Athlon chip was very different from any other processor that was available. It was using a completely different design of architecture and a connection that was rejected almost 10 years prior in the industry.

The Athlon is able to achieve higher speeds than any CPU that Intel has to offer. The computer industry was very skeptical of AMD’s new release due to it having little support for its revolutionary design. Luckily for AMD, many corporations took a chance on their newest product and their company to produce what AMD said it could.

AMD expanded the production capabilities of its products. In 1999, AMD started producing chips from its new plant in Dresden, Germany. The Dresden plant is called Fab 30 due to its opening 30 years after the company was founded. AMD’s new factory is now able to produce double the amount of CPU’s to 12,000 CPU’s per week. The Register reports that AMD is planning to add even more space to its facilities in Dresden to produce even more than that in the near future.

AMD has driven the prices for computers down. AMD has always kept their CPU prices down, but now it was able to compete with Intel’s top line processors. Many businesses and people have now been able to afford computers where they were not before. AMD has kept their CPU’s cost to roughly half of Intel’s. AMD has also been able to produce faster processors and make them available when Intel has not been able to produce now.

Intel has even gone so far as to lie to the public to keep the public away from AMD. In March of this year, Intel announced that they were releasing a 1 GHz speed CPU. To this day it is not available to the public, whereas AMD released their 1 GHz CPU a week prior and was available two weeks after.

Intel is now playing catch up. Since March of this year, Intel has not been able to keep up with AMD and has had problems producing the quantity and quality that AMD has. There have been shortages of Intel’s CPU’s since the Athlon was released. Intel spends over triple what AMD does in advertisements, double in Research & Development and still has not been able to produce or keep up with AMD’s abilities with high-end processors.

The writer at “Kewney’s World” states “There’s no polite way to put it: Intel has been humiliated, has trod in the cow-pat, has missed the boat, and is in more trouble than you can easily imagine.”

The computer industry is starting to shun away from Intel increasingly. Before when AMD was having difficulties, very few computer companies were willing to put their products in their computers, only using Intel’s CPU’s. Today there is only one major corporation that is still Intel only – Dell. Most every computer corporation is willing to use and promote AMD’s processors and products, some of them actually moving towards AMD only.

In the 2nd quarter of 1999, AMD had only 10% of the world’s computer business; today they have 20%. AMD plans to have 35% of the world’s computer business by the 2nd quarter of 2001. This year alone, AMD’s stock has risen over 400%; starting out at 20%, they are now staying in between the 80-90pts mark daily. On the other hand, Intel’s stock has only risen roughly 23%, thus showing strong confidence in their company. Business Week Online has story about AMD and the lack of respect it’s been getting on Wall Street.

Particularly of note is the recent dive after record earnings were reported: “Intel had reported a middling quarter that would have been a disaster if it hadn’t been able to convince analysts to count a multibillion-dollar sale of stocks it owned as recurring income rather than as a one-time gain. Intel’s stock rose 3% on the quarterly earnings news. Meanwhile, AMD delivered one of the brightest reports in its 20-year history. The company earned $207 million on $1.2 billion of sales for the second quarter. The sales figure was more than double its take for the same quarter of 1999.”

I am leaving the actual decision for you all to decide as to what is happening with all the recent developments in the hardware realm. With the recent release of the newer AMD processors and the upcoming Intel processors, I feel the decision is properly put into the reader’s hands. There are too many considerations to call into play in this new age of developments that are in decision making of how well AMD and Intel will do in the Business.

Only one thing is a sure bet: Computers and prices keep getting better and better for us everyday as prices drop! My personal feeling is that AMD is the David that is beating up on Goliath (Intel) and winning!

Philip Lee Willson

Reference: www.amdzone.com, www.intel.com, www.hardocp.com, www.theregister.com, www.pricewatch.com, www.amdzone.com, Computer Shopper Magazine, Pcworld Magazine, Maximumpc Magazine


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