AMD's Market Gains Help Its Channel Push

By Pedro Pereira  |  Posted 2005-11-11 Email Print this article Print
 
 
 
 
 
 
 

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News Analysis: AMD is making an aggressive push into the channel, which traditionally has had closer ties to market-share leader Intel. But recent market gains by AMD point to user acceptance of its technology, and that bodes well for its prospects

Success builds on itself, and that is what Advanced Micro Devices Inc. is counting on as the chip maker aggressively pushes its new channel strategy and fights for market share against Intel Inc.

AMD's technology has momentum. And that should prove beneficial as the Sunnyvale, Calif., vendor sets about laying a channel infrastructure for its line of microprocessors, flash memory and low-power processor solutions with VARs, integrators, solution providers, ISVs and systems builders.

The vendor is sure to win mind share with such gains as a report released this month by San Diego-based Current Analysis Inc.

The report said 49.8 percent of the personal computers sold by retail stores in the United States in October had AMD processors, compared to 48.5 percent with chips from market leader Intel Corp. In September AMD edged out Intel in desktops.

In addition, AMD's third-quarter market share increased to 17.8 percent from 15.9 in the year-ago quarter, according to Mercury Research Inc. of Cave Creek, Ariz.

And while that remains less than one-fifth of the overall chip market, AMD views these gains as reaffirmation of what the company is promoting as superior technology buoyed by a comprehensive market approach.

"The market has realized that without competition you don't get innovation," said Ben Williams, vice president of AMD's server and workstation business.

In 1999, he said, AMD embarked on a strategy to develop innovative technology such as dual-core and 64-bit chips. As the technology has entered the market, it has picked up more and more support from such vendors as Sun Microsystems Inc., Hewlett-Packard Co. and Microsoft Inc., he said.

Williams added that having invested in innovation and developed advanced technology, AMD now believes the time is right to aggressively pursue the channel.

"In the value chain you've got to start with the right technology, you've got to start with the right system," he said.

That strategy includes Web-based and field support, partner access to the vendor's business development team, and specialized support promotion solutions aimed at tackling end users' specific business challenges. The company also formed a Commercial Channel Council through which channel partner members can offer feedback, gain access to company executives and learn about strategy.

An important component of grabbing the channel's attention and winning market acceptance is the strategic relationship AMD has forged with vendors such as HP of Palo Alto, Calif., and Sun, based in Santa Clara, Calif.

AMD casts a wide net with its first commercial channel. Click here to read more.

Sun is using AMD Opteron systems for its Sun Fire line of systems aimed at the enterprise. The AMD-based systems are a component of Sun's strategy for transforming itself from a proprietary technology company to one that embraces partnerships, industry standards and open source.

Pradeep Parmar, product manager at Sun's network systems group, said Sun and AMD worked closely together as the company developed the AMD-based systems. Sun chose to use Opteron processors instead of Intel Xeon chips because the AMD technology came out ahead in price and performance and uses less power, he said.

"We went for the best solution that was available to us in the market that we want to address," Parmar said. "The AMD Opteron product line represents an expansion strategy for us."

To push its AMD-based systems, Sun has done several promotions with channel partners, aimed at displacing competing products from customer sites. For instance, Sun is offering a 20 percent discount to customers that replace Dell Inc. servers that are up to five years old in favor of Sun systems and service plans.

While in the past it may have been necessary to defend AMD technology to skeptical customers, Pramar said, that is no longer necessary.

"What that tells me is that the recognition is already starting in the marketplace," he said.

End-user brand recognition, in fact, is key to the success of AMD's channel push. While VARs and integrators say that as much as 80 percent of the time their customers buy the brand they recommend, AMD is going up against one of the most recognizable brands in the industry, Intel, as it seeks to boost market share. That's because Intel over the years has invested millions in end-user marketing.

To read about AMD's shift in focus to marketing and production, click here.

While acknowledging this reality, Williams sounded confident in an interview with The Channel Insider that AMD is making major strides in this regard. The company has taken an aggressive stance by getting in front of partners with its innovation message, he said.

At industry trade association CompTIA's Breakaway annual event in Las Vegas, there was standing room only for an AMD presentation during which the vendor touted dual-core and 64-bit technology.

As part of the marketing push, the vendor also has done a series of Webcasts with representatives from such partners as HP, Sun, Microsoft and Electronic Data Systems Corp. "That's had tremendous success," Williams said.

To push its message, the company also publishes a magazine that updates partners on the company's doings and keeps frequent contact with OEM, ISV and other partners.

Williams, who contacted The Channel Insider following an opinion column about the vendor, "AMD's Challenge: Fixing an Image Problem," acknowledged the company has a lot of work to do to raise its profile, but wanted to make it clear the work already is underway and the company is fully invested in its channel engagement.

If the momentum the company is enjoying keeps up and AMD makes good on its promise of solid channel support, the company has the right to feel it is well poised for further growth and market share gains.

 
 
 
 
 
 
 
 
 
























 
 
 
 
 
 

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