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AMD Beats Intel For Retail PCs

AMD is more popular in retail PCs and notebooks, but Intel continues to lead the market in revenue, analysts say.

Advanced Micro Devices Inc. may have found a segment of the microprocessor market where it can outperform industry giant Intel Corp. For the second consecutive month, AMD has beaten Intel in providing processors to the retail PC desktop market, and in October exceeded Intel in overall PC sales when notebook sales are included.

But Intel continues to lead the market in terms of revenue and has a "solid grasp" on the overall U.S. consumer PC market via its exclusive relationship with Dell, according to research firm Current Analysis. Dell sells direct to customers and only uses Intel processors in its PCs. Intel's revenue lead—57.6% to 40.1%—is attributed primarily to Intel's lead in the notebook market, where average selling prices are higher.

Current Analysis says 49.5% of all desktop and notebook computers sold in the U.S. retail market in October used AMD processors, narrowly eclipsing the 48.5% share held by Intel. AMD was the leader in retail sales of desktop PCs in the U.S. in September as well.

AMD's unit share of the U.S. retail desktop market increased from 52% in September to 67.7% in October, and its share of unit sales of U.S. retail notebooks increased from 26.2% in September to 31.5% in October.

Matt Sargent, an analyst with Current Analysis, says it is likely that Intel will retake the overall U.S. retail PC leadership position in November and December, "but we expect that AMD will take a much larger share of the overall holiday buying season than they have in the past."

Going into the new year, the two processor vendors "will continue to duel for the top spot, but the difference now is they are dueling, whereas in the past Intel had a huge, enormous lead and AMD was just trying to pick up what it could. Now it's clear that AMD is an even-standing competitor to Intel," he says.

Part of AMD's holiday season boost is expected to come from retail giant Wal-Mart, which Sargent says is expected to offer AMD-based systems beginning the day after Thanksgiving, which is one of largest single days for holiday purchases. Wal-Mart will offer a $398 notebook and $398 desktop from Hewlett-Packard that will utilize AMD processors.

"I think the most important take away from this is that when AMD is allowed to compete with Intel on an even standing in the retail channel, and when customers are given a choice, right now they are choosing AMD over Intel," Sargent says.

Sargent says it will continue to be difficult for AMD to transfer success in the retail market to the business market, where large corporate vendors like Dell and Toshiba continue to maintain an Intel-only posture, and even companies like Hewlett-Packard that use AMD processors in their product line offer a very limited number of systems for use by corporate accounts.

AMD's share of the total x86 processor market grew to 17.6% in the third quarter of this year, up from 16.2% in the second quarter, and 15.1% in the second quarter of 2004, according to Mercury Research. When counting only x86 processors used in servers, AMD's share grew to 12.7% in the third quarter, up from 11.2% in the second quarter, and up from about 5% in the second quarter of 2004.

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