AMD Gets Cowed

Read the facts rather than the spin from the AMD conference call, and you get a different message.– Ed

More Money, Less Marketshare

After looking at the Intel/AMD conference call transcripts (which you can find here and here.

The really good news is that processor sales for the quarter jumped up to roughly 40 million, which works out to about an 8% increase over last year’s Christmas season.

The big surprise is that Intel grabbed almost all the additional sales, and yanked a couple more marketshare percentage points from AMD, rather than losing a few as expected. Intel is back up to 80%.

So much for the XP being an Intel-hurting smash hit. However, sales were OK given AMD’s “me too” pricing, and the average selling price on AMD’s processors jumped from $60 to $90. This left AMD basically breaking even for the quarter (the flash memory part of the business is really hurting AMD at this point).

Jerry Protesteth Too Much

Jerry Sanders did a pretty impressive song and dance to try to obfuscate the truth about market share.

The reality is that AMD marketshare is little better today than it was at the height of the K6-2 era. Then, it was about 18%. It slipped to about 15% during Athlon transition, jumped up to 23% a couple quarters ago, and is now back down to 20%.

Intel’s price war made AMD say “uncle,” at least for a while, in its pursuit of marketshare, and they got an increased ASP as their reward. Under the circumstances, that probably was a wise tactical retreat by AMD.

This new semi-cowed AMD is showing itself in other ways, too. Last quarter, they were talking about increasing processor production from the current slightly over 30 million/year to 50 million/year. That would have caused a huge price war.

Now they’re talking about static or slightly declining unit sales the first half of the year, followed by an increase to a bit less than 40 million by the end of 2002. That still will probably lead to lower pricing by the end of the year, but if the U.S. bounces back from its semi-recession; this is something the Santa Clara people could probably live with.

2003 is now supposed to be the great advance with Sledgehammer. Given likely market conditions though, again, it’s not exactly going to be the Reign of Terror for Intel. More like a rising tide raising all the boats, and a continued low 20-ish percent marketshare for AMD.

This is not a disaster for AMD. This is more like preventing one, which had a good chance of happening if AMD had kept fighting Intel for marketshare at this point. It’s not good news for consumers; they’ll pay more than they would have if AMD had stayed bold and near-suicidal, but they’ll live.

It is a pretty bad setback for the “Intel must die and soon” fanatics. They have to wait at least an additional year to even begin entertaining hopes of that.

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