Joe Rules, Not You

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It will be the average Joe who will decide whether or not processors like Hammer will succeed, not the experts. — Ed

A lot of people didn’t or wouldn’t understand the Hammer article I wrote the other day.

Ironically enough, it usually was for the exact same reason those who thought that the Hammer was ridiculous against Itanium or McKinley gave me in the past.

“Of course it will be a success. All my friends (associates) and I like it.”

One of the worst things you can do is assume that all or even most people in the world think like you.

Just as bad is assuming that you and those who think like you have some mystical influence or power over them.

I live in New York City. If Al Gore had been running for President of New York City, he would have won in a landslide not much less than dictators normally claim after a rigged ballot. New York City usually votes Democratic, but even by NYC standards, this was a crushing defeat for a Republican national candidate. I’m sure there are many people in this city who literally don’t know anybody who voted for W.

Who is President of the United States?

Chads and the like notwithstanding, obviously a much higher percentage of people outside New York City preferred W. to those inside New York City. Even if you think the election was stolen, you still have to concede that obviously tens of millions of people put W. in the position to make that even possible.

You want to say New York City is unrepresentative of the U.S.A. as a whole? Precisely. And so is the computer hardware community compared to the computer-owning community. They and all their friends voted for Al Gore and can’t understand how W. won.

Let me give an example. If you went wandering around computer forums or newsgroups, you’d probably think that at least a majority (if not a big majority) of people own Athlon systems.

However, overall, that’s not true at all. Last quarter, AMD sold somewhere between 4.5 – 4.7 million Athlons. That only comes out to about 11-11.5% of the overall CPU market. The best Athlons have done in any particular quarter might be 15%.

If you want to throw Durons in, too, AMD has still only sold somewhere between 18-23% of the processor sold in any given quarter during the Athlon era. Ignoring the 3-4% worth of Macs, etc., that means around 80% of the processors sold came from Intel.

Somebody’s buying those Intel processors, and whomever they are, there’s about four times more of them than AMD buyers.

How could this be if this computer hardware community had the power and influence it often claims to have?

The obvious answer is it doesn’t.

You can say the same about Linux, or multiple processors, or many, many other things. The percentage of people interested or dedicated to such items within this ghetto will be much higher than those outside it. The computer ghetto is a highly skewed and unrepresentative subgroup within the overall computer-owning group.

Joe Sixpack and Suit own the desktop computer market. They have the votes. We don’t, and they obviously don’t listen to us very much as a whole. If they did, then a lot more than 12% of CPUs sold would be Athlons, or Athlons would be in incredible shortage.

Sixpack actually likes AMD chips (though not as much as those in the ghetto). However, the main reason why he likes them is that they’re cheaper. If Intel has something cheaper, he’ll buy that.

AMD’s market share in any particular market depends highly on how cost-sensitive that market is and whether or not Intel has anything decent in those price ranges.

If you take the U.S. consumer market, for instance, AMD has occasionally beat Intel in market share when Intel didn’t have a rough price equivalent. When Intel does, AMD’s market share drops quite a bit (though it still remains much higher than the overall market).

AMD has historically done very poorly with Joe Suit, essentially because “Nobody ever got fired buying Intel.” While they’re doing better in some business niches, again, those niches (small business, government) tend to be more price-conscious than the whole.

It should also be noted that during these rough times, the only computer company showing real growth is Dell, which is an Intel-only firm.

Please also note that until the last few months, there was practical unanimity (well, as much as you’ll ever get) for at least a year in the computer ghetto that AMD processors were better performers than Intel processors.

And what did that superiority get AMD? Even by AMD’s overly generous estimate, only about 8% extra marketshare in their best recent quarter (which is now down to about 4.5%)

Spare me talk of shortages. If there were shortages, then why were AMD processors selling for much less than Intel processors, or for that matter, AMD’s own official prices. Sorry, guys, when there’s shortages, prices go up, not down.

The point of all this is not to knock AMD (well, not too much). The point is to show that while the ghetto may be overwhelmingly for AMD like New York City was all for Al Gore; the country is going Intel and W..

The point of the Hammer article was to point out that it doesn’t matter a hoot what the people in the hardware ghetto think of Hammer. What matters is what Joe Sixpack and Suit think of it, and the recent past proves that they march to the tune of a different drummer.

From their perspective, Hammer has weaknesses. By far the biggest one will be having a PR far higher than the “actual” GHz. A lot of “experts” can’t stand PR as it is. What’s going to happen when the PR “gap” gets about three times as big? More importantly, what is Sixpack and Suit going to think about it, especially if Intel draws that to their attention?

From all indications so far outside of AMD’s public relations office, a 15-20% PR adjustment that hasn’t been attacked by Intel (until recently) doesn’t have a positive and may have a small negative effect.

You have to at least wonder what a 50% or more PR adjustment will do, especially if Intel attacks it. Again, what you or I think about it doesn’t really matter in the big picture. It’s what the Joes thinks about it.

Even in the ghetto, Hammer may have at least initially a rough ride. Even in the ghetto, a lot of people are going to be reluctant to abandon Socket A, and even if they decide to, they could just as well go to Prescott and a dual-DDR system. Personally, that’s the comparison I’d wait for were I going to do a major upgrade.

Hammer also presents another interesting challenge, both to AMD and its supporters. Up to now, AMD has never been able to supply enough processors to even aspire to being Pepsi to Intel’s Coke. That will change in the next year to two.

AMD will be able to make enough processors to grab around 40% of the market place (if not more). The only way they can is if Hammer is a great success, and that will mean 40-50 million Hammers sold a year.

Who’s going to buy them? Who are the only people who are numerous to buy them? The Joes. Only the Joes. Not you, not us.

Ed

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