Intel, AMD Retreating In Price, Researcher Says - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Business & Finance

Intel, AMD Retreating In Price, Researcher Says

Both processor firms reported higher third-quarter revenue, in spite of the brutal price war that negatively affected each company's gross margins.

Intel and Advanced Micro Devices have unilaterally declared a truce in their brutal price war, as both vendors increase market share as demand for PCs and servers rises, a researcher said Monday.

Both companies in their third-quarter financial reports said there was an easing in the use of price to grab share from each other, a strategy that had ruled for most of 2007, iSuppli said. The researcher said it interprets the lull as "the beginning of the end" of the price war, which has had a negative impact on each company's gross margins, a key measure of profitability.

Prices are stabilizing because both vendors are increasing share at a time of robust sales of computers. Shipments, including desktops, notebooks, and entry-level servers, amounted to 68.1 million units in the third quarter, up 13.8% from 59.9 million during the same period a year ago. Shipments rose 11.1% from the second quarter of this year.

Pricing trends are also being affected by Intel's rapid migration to its new Core 2 architecture microprocessor, and AMD's launch of its Opteron quad-core server processor, which was code-named Barcelona. Demand for the more expensive chips in the vendors' portfolios is rising because of the increasing penetration of multi-core processors in the market, iSuppli said.

Intel raised its market share in terms of revenue to 78.7%, up 0.3% from the second quarter, iSuppli said. AMD did even better, raising its share 0.6% quarter-to-quarter to 13.9%.

Both increases were at the expense of smaller rivals in the general-purpose processor market. Their collective share declined to 7.4% from 8.2% in the second quarter, iSuppli said. In ranking vendors, the research firm considers sales of all types of general-purpose chips, including RISC and PC-oriented x86 machines.

Intel and AMD together accounted for 93% of global microprocessor revenue in the third quarter, an increase of 2% from a year ago, iSuppli said. "The combination of strong PC and server demand -- combined with stable microprocessor prices -- led to a prosperous quarter for both Intel and AMD," iSuppli analyst Matthew Wilkins said in a statement.

Despite the positive trends, competition between AMD and Intel is expected to remain fierce, particularly in terms of technology. AMD's Barcelona products give the vendor a strong portfolio to compete, and Intel is looking to stay ahead of its rival by shipping an increasing number of products on its new 45-nanometer manufacturing process, which squeezes better performance-to-power ratios. "Neither company is resting on its laurels," Wilkins said.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
COVID-19: Using Data to Map Infections, Hospital Beds, and More
Jessica Davis, Senior Editor, Enterprise Apps,  3/25/2020
Enterprise Guide to Robotic Process Automation
Cathleen Gagne, Managing Editor, InformationWeek,  3/23/2020
How Startup Innovation Can Help Enterprises Face COVID-19
Joao-Pierre S. Ruth, Senior Writer,  3/24/2020
Register for InformationWeek Newsletters
Current Issue
IT Careers: Tech Drives Constant Change
Advances in information technology and management concepts mean that IT professionals must update their skill sets, even their career goals on an almost yearly basis. In this IT Trend Report, experts share advice on how IT pros can keep up with this every-changing job market. Read it today!
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll