Look At The Numbers

In an era of hype, when sizzle is so often sold that people don’t even know what steak is, it is always good to look for the beef.

When it comes to claims by technology companies, to “look for the beef” means to look at the sales numbers and marketshare, and if the claimers don’t give them to you, rest assured they’re hiding something.

Let’s examine the claims of two companies:

Apple: Here’s Half The Beef

How often do you hear about Apple and Macintoshes in what is called in other circles the mainstream media? Fairly often, I bet. Certainly a whole lot more than you hear about machines based on CPUs made by Via, probably even more than you hear about AMD.

Yet if you look at the numbers, there isn’t that much difference between the number of CPUs/computers sold by the two. Via has a bit under 1.5% of the market place. Apple has a little bit over 2%.

Has Apple been selling more Macs lately? Why, yes. This has boosted their marketshare from somewhat under 2% to somewhat over 2%. Mind you, this is a company that had a little over 10% marketshare about ten years ago.

Did you know that Via increased its share of the x86 market by 27% the last nine months? Did you know that Via increased its share of the desktop market by 40% over the same time period?

Are you impressed? You shouldn’t be, because those impressive increases meant Via went from 1.1 to 1.4% of the overall x86 market, and 1.5% to 2.1% of the desktop market. These net gains aren’t much less than the numbers Apple is crowing about. So why do you hear about the first and not the second? Because the media thinks Apple is cool, and Via isn’t.

(Another little secret hidden in full view about Apple is that their sales are more seasonal than PC sales. This is because Apple doesn’t update its models as often as PC OEMs. So sales surge when new models show up and they slump just before new models show up. As a general rule, Apple yells about the first, and gets deaf-mute about the second. The ADD-led mainstream press notices the first, but only the specialists note the second.)

True, moving to Intel might do something for Apple’s nominal marketshare, that will interesting to watch. However, keep in mind that a 50% sales increase means going from 2% to 3%. Good for Apple, but hardly world conquest.

Truth be told, Apple is turning into an iPod company that sells computers on the side. iPod/iPod-related sales began approach Mac sales a couple quarters ago, and will almost certain exceed them by a large margin the Christmas quarter. Good news if you’re an Apple shareholder, not so if you’re a Mac fan.

For Apple, iPods are the place where there’s some real beef. Apple has been able to rack up big increases in market share, real increases, not going from 1 to 2%, more like 30% to 70% (at least in the U.S.). This is what real technological conquest looks like.

In contrast, we have . . .

AMD

To recycle and revise an analogy I’ve used before:

Your basketball team plays three games against another:

The first time, you lose 93-7. The second time, you lose 89-11. The third time, you lose 87-13.

Oh, by the way, on paper, you have the better team.

Do you start screaming, “We’re number one?”

If you play a fourth time, and lose 85-15, or 84-16, has the picture really changed?

I have just described the competition between Xeon and Opteron in 2005, in the only competition that matters, sales. All else is BS. Later this month, we’ll get the score for the fourth quarter.

Let’s describe another basketball game, with two different teams:

The first, second and third times you play, you lose 80-20, but you almost score 21 the third time.

Again, do you start screaming, “We’re number one?”

Again, if you score 21 or maybe even 22, has the picture really changed?

I have just described the competition between AMD and Intel for the desktop market in 2005.

Would you describe the first effort as eating away on your competitor’s lead “like Pac-Man eats dots?”. Only if your Pac-Man takes six months to eat fourteen dots.

And he’s a voracious beast compared to the desktop Pac-Man. In six months, he’s chewed up one dot (and about half-way through another). Would you call that doing “incredibly well”, or might you think somebody needs some recalibration?

Just for comparison’s sake, the iPod Pac-Man already had chewed up a third of the screen in 2004, and swallowed something like a hundred dots in the US market over the same timeframe. (Non-US sales were rather lower, but Apple still had hefty marketshare there).

(In case you’re wondering, a Pac-Man screen has 240 dots per level. Opterons have gone from a 7 to a 12.7% server market share between Q1 and Q3 (and we’ll add that the server market for CPUs is less than a tenth of that for desktop chips). AMD’s desktop market share has gone from 19.8 to 20.4% over the same time).

Fabricated Momentum

Some may say, “But AMD has momentum!”

Well, there’s momentum, and there’s “momentum.”

What iPod did this year was say “Fe, Fi, Fo, Fum,” then crushed anything in its way. They gained something like three dozen market share points. That’s momentum.

In contrast, what AMD did in the server market was kick Intel in the shins pretty good a couple times, and on the desktop, well they ate that one dot, and they did say, “Fe, Fi, Fo, Fum” a lot. That’s “momentum.”

On the Opteron side, while AMD has done pretty decently in a tough market to crack, they haven’t even approached the market share they normally have in desktops yet. If AMD’s market share keeps growing at the rate it has the last six months (a dubious proposition, to say the least), it wouldn’t be even until sometime in 2009.

On the desktop, at current rates of growth, catchup would occur the year 2030.

Yes, there’s “momentum” but it’s like the basketball team losing by a few less points, but still losing by sixty. They have a long, long, LONG way to go before they can say, “We’re number one” without needing their heads examined.

Of course, AMD need not win or even come close to playing Intel even to be a successful company. I’m a reasonable guy. When AMD starts grabbing 30% of the world-wide market in desktops, or servers, or mobile (and I don’t mean little market niches like the CompUSA/Best Buy buy-it-in-a-store retail niche; AMD has always done disproportionately well there), then we can talk about having a real success story here.

But not until then.

It’s like getting fed up with McDonalds and deciding to open up your own burger place, with better burgers. You may well end up making better burgers, and be quite successful at it. Your customers may love your hamburgers and despise those from GoldenArch Land.

That doesn’t mean Mickie D’s is going down anytime soon, and having your fans, whether in a forum or a news article, claim that is just, well, premature.

Just look at the numbers.

Ed