AMD must double processor market share to survive
Advanced Micro Devices
needs to more than double its share of the microprocessor market to survive,
according to a brief filed by the company's lawyers in its antitrust lawsuit
against Intel.
At the end of 2007, AMD had 13 percent of the processor market, "less
than half of what it requires to operate long-term as a sustainable business,"
the brief said, explaining that Intel's alleged efforts to shut the company
out of the processor business had largely succeeded.
"Measured on a revenue share basis, AMD made little progress growing its
slice of the pie," it said.
The argument that Intel's alleged anti-competitive behavior has so hurt AMD
that its future is in jeopardy is crucial to the company's claims for relief,
including damages. But the claims could further spook corporate customers already
wary of the company's financial troubles.
Companies generally make computer purchasing decisions with a long-term view
and plan to use and purchase similar systems for many years to come. Fresh concerns
about AMD's long-term sustainability coupled with existing worries about the
company's fiscal health -- weakened by the delayed release of its Quad-Core
Opteron processor and mounting long-term debt-- could lead CIOs to consider
computers based on Intel's chips instead.
"It will push them in the other direction," said Rajnish Arora, director
of enterprise server and workstation research at IDC Asia-Pacific.
AMD's brief was heavily redacted by the court and details of Intel's alleged
anti-competitive behavior and its relationship with major computer makers were
largely blacked out. But the general thrust of AMD's argument was clear: Intel
allegedly paid computer makers to rely exclusively, or almost exclusively, on
its chips.
The effect of these and other alleged tactics employed by Intel outweighed
gains that AMD made with its successful line of Opteron server chips, which
came out in 2003.
"That AMD gained some share and revenue is immaterial. It gained sufficiently
less share and sufficiently less revenue so as to suffer a critical diminishment
of its innovation roadmap," the brief said.
AMD's concerns about its future are legitimate, IDC's Arora said, underscoring
the capital intensive nature and short product cycles of the processor business.
"They are going to be challenged. They need to grow the business and scale
it up," he said.
The key for AMD is to generate strong end user demand for its processors, which
will in turn mean more computer makers will sell systems based on its chips.
"It's all driven by customer demand," Arora said.
IDG News Service
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