AMD wants 30 per cent of commercial market by 2009

AMD is pushing itself to raise its profile among business customers, setting a specific and difficult target for the end of the decade.

Fueled by its arrival as a corporate server chip vendor, Advanced Micro Devices (AMD) hopes to translate that initial success into broader adoption of the company's desktop and laptop processors, an AMD executive said Tuesday.

Traditionally known as either a second-tier processor company or a gamer-oriented niche player, AMD now calls on chief information officers and IT managers at large enterprise companies on Wall Street and Silicon Valley. The company's Opteron processor opened the boardroom door for AMD, and now that it has an audience the company wants to encourage customers to look at its chips for desktops and notebooks, said Ben Williams, vice president of AMD's new Commercial Business unit.

Three years ago, AMD had very few server customers. But its Opteron processor, with its integrated memory controller and 64-bit extensions to the x86 instruction set, has captured the attention of corporate users and server vendors such as Sun Microsystems, Hewlett-Packard, (HP) and IBM.

"IT managers are telling us, 'We're buying your products in the data center, now we're interested in understanding what you're offering in the client space.' That discussion hadn't taken place before Opteron," Williams said.

As a result, AMD is setting a 2009 target to capture 30 per cent of the market for processor shipments to businesses, Williams said. Right now, the company has under 5 per cent of all desktop and notebook processor shipments to business customers, and 11.2 per cent in server processor shipments, he said.

AMD thinks it can attract corporate PC customers by pointing to the company's improvements in managing power consumption as evidenced by Turion, its first mobile processor considered on a par with Intel's Pentium M notebook processor. The company also believes its dual-core processors have a more elegant design than Intel's, which will translate into improved performance in successive generations.

AMD hopes to start its ascent by pitching its desktop and notebook chips to specific markets, such as transportation and financial services, Williams said. This approach worked well for Opteron, which was initially marketed to high-performance computing customers and research organisations, he said.

But the company will have a tough road ahead of it trying to erode Intel's advantage in corporate IT departments, said Roger Kay, president of Endpoint Technologies Associates.

"There's not a whole lot of energy coming from the end user market or the [PC vendors] to increase the percentage of AMD dramatically," Kay said. "But on the other hand, they aren't against it either."

Adding AMD-based products means additional costs for both PC vendors and IT departments to support and qualify the new systems. Software images built for Intel PCs wouldn't necessarily work on AMD PCs, and Intel-only PC vendors like Dell would have to set up additional testing teams since AMD-based PCs use different chipsets and motherboards from Intel PCs, Kay said.

If AMD can demonstrate enough of a performance or manageability advantage to IT departments, they will consider switching, Kay said. However, there is a whole other subject looming over AMD's march to 30 per cent market share that has nothing to do with technology.

AMD filed an antitrust lawsuit against Intel in June, claiming the larger chip vendor is using its marketing budget to selectively distribute rebates to PC vendors that agree to keep their usage of AMD chips at a certain level. AMD believes this practice of exclusionary rebates is keeping it from gaining market share, despite favorable reviews from chip experts and benchmarks showing better performance than Intel's chips. Intel doesn't deny the existence of such programs, but vehemently denies that the practice represents unfair competition.

So, the natural question is: Does AMD need to win its lawsuit in order to reach 30 per cent of the market? Williams declined comment on that issue, saying that he was focused on raising AMD's profile among corporate customers and leaving the legal battles to the lawyers. Indeed, there was no mention of the lawsuit in a 20-slide Powerpoint presentation prepared by AMD on the topic of expanding its commercial business.

The case is not expected to come to trial until the end of next year. However, it will be hard for AMD to grow at the rate needed to reach its target without a little help, Kay said.

"Somebody has to clear away some of the institutional inertia for them to get beyond where they are now," Kay said. But even if AMD gets everything it is asking for in the courts, it will still take a lot of work to convince IT managers and PC vendors that its products offer a compelling reason to switch, he said.

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