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Processor Numbers Adding Up For AMD

According to market research firm Mercury Research, AMD grew its share of the x86-based server microprocessor market from 3.1% in the fourth quarter of 2003, to 6.6% in the fourth quarter of 2004. Similarly, its x86-based PC microprocessor market share grew from 14.7% in the fourth quarter of 2003 to 16.6% in the fourth quarter of 2004. Mercury Research is expected to publicly release its first-quarter 2005 market-share numbers in a couple of weeks, and AMD is expected to gain share again in both segments.

AMD’s position in the market is arguably strongest in its history. In 2001, AMD hit its high-water level in the market when it had 20.2% share of all x86-based processors shipped. That market position, however, was derived strictly from PC processor shipments. Today AMD is becoming firmly established as an alternative provider of technology is increasingly at the heart of many a business enterprise infrastructure, with Hewlett-Packard, IBM, and Sun Microsystems all offering servers based on AMD’s Opteron processor.

Dean McCarron, an analyst with Mercury Research, says the key to AMD's moving from single digit share in the server market to the 15% to 20% range is getting those three server manufacturers to continue to expand their portfolio of Opteron-based servers. Currently, Opterons are generally limited to a handful of servers in each vendor’s portfolio, while Intel Xeon-based systems continue to hold the “top to bottom product line ownership.”

Gaining that 15% or more market share would also likely be the key to forcing Dell into the AMD fold. Getting the final holdout of the big four server vendors might even allow AMD to dream about controlling a quarter or more of the market.

McCarron and other analysts are quick to point out that Intel should never be underestimated and that AMD’s hard-fought gains of the last year could quickly evaporate with or without a misstep from AMD. Intel is unlikely to suffer long with the bruised ego of seemingly playing catch-up to its aggressive competitor.

“I would not interpret the timing of specific product announcements as necessarily indicative of how competitive you are,” McCarron cautions.

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