AMD has been gaining on Intel recently and Intel doesn't seem to be fighting back
AMD has recently announced that it will be sold out of its Athlon and K6-2 processors until June due to huge demand. Intel has also announced that it is having problems keeping up with demand to. AMD has increased market share and is now competing directly with Intel for their best processors. How could this happen? Intel is much larger than AMD and yet AMD is beating Intel in speed contests. Is Intel getting too old? AMD is seen as a young, fast growing company and Intel is starting to be seen as old and slow. AMD could probably have a good commercial by featuring a youngster beat his Grandpa in a race. That is how it is seen by many. If Intel was being run by Gates, Gates would never have allowed AMD to gain market share. He would have cut prices and made AMD go into bankruptcy or work harder to make better products. Investors wouldn't probably mind to see Intel hurt themselves for a year or two if it helps the long-term stability of the company. The long-term rewards of a monopoly are much greater than a year or two of poor profitability. Intel should be giving away their processors near cost in order to get rid of AMD. Since Intel CEO Andy Grove stepped down, Craig Barrett seems to be failing and slightly arrogant. Intel claimed that its focus would be on solutions rather than high-end speed. I think that this may have been a very bad thing for Intel. After Intel started loosing in high-speed, it has hurt the companies reputation and has been drawing more people to AMD. Craig Barrett also displayed some arrogance when speaking about AMD as well. When AMD announced pricing for some of its processors, the pricing was higher than than Intel's, he seemed to underestimated AMD and stated that he didn't think people would be willing to pay more for an inferior product. This kind of arrogance isn't something Intel shareholders are looking forward to. AMD has been having financial problems in the past and was close to possibly not existing anymore. Intel should have hit AMD hard during this period. AMD has been putting the entire company into its products with the philosophy that if it works, they will do well and if it doesn't they go bankrupt. In AMD's 1999 annual shareholders meeting, AMD CEO W.J. Sanders III stated that their business is like playing Russian roulette and waiting two years to see if your head gets blown off. AMD put most of its resources into the Athlon processor and was loosing hundreds of millions of dollars during this period. This would have been absolutely perfect for Intel to hit them with CPU price reductions. Now, however, AMD has taken off and is starting to earn money and it will be much harder to beat. Now, if you listen to the latest annual shareholder meetings from both companies and look at the latest hardware review sites such as Toms Hardware and news releases, you can see the problems at hand. AMD has been faster and increasing PCI bus rates than Intel. AMD came out with 133 and 200mhz bus before Intel. They have also been faster on getting their chip fabs to smaller micron levels. The micron level determines how much power is required to run a CPU. Chips have historically gotten smaller and smaller to where they are working the way towards .13 micron now. This means that chips require less power, as a result produce less heat and can operate at higher clock speeds. AMD has been winning at this and have most of their chip fabs at the lower micron level while Intel is working on theirs. Some other things that Intel has done is to try and support Rambus RAM exclusively. The problem with this is that Rambus RAM costs much more that regular SDRAM and offers little improvement for the money as most experts have claimed. As a result of this, their was a huge demand for SDRAM chipsets and Intel processors. So, as a result, a company called VIA came out with a chipset that would support SDRAM and Intel's latest. And so, VIA has now been getting a large percentage of the chipset market from Intel. But beyond this the important thing is that Intel was not working with the customer. Customers didn't want expensive Rambus RAM and Intel didn't listen. At AMD's 1999 annual meeting, AMD showed plans for their mobile AMD K6-2 processor. These are to be used in notebook computers and other portable devices. The processors feature a unique feature which allows the voltage to be regulated based on what the user is doing. They claimed that Intel's equivalent was locked and locks in at a low voltage but does not change. This is another plus for AMD. Intel still has great strength in many areas. They have a wider motherboard support for their CPU's which means greater choice for consumers and lower price. AMD still lacks dual processor motherboards, while Intel has them widely available. Also Intel has the support from many large companies such as Dell Computer as well as loyal Intel customers. Intel has done a pretty good job of handling mistakes from the customer's point of view. When the Pentium processor came out their was a flaw in it that would occur very rarely and may not ever occur for most users. Intel did a huge recall, and replaced processors to anyone who had the problem chip. They have also done a pretty good job recently with the motherboard issue and SDRAM. Intel gave Rambus RAM to those who had the faulty boards. Intel also has the strength that their PIII's have used less power than AMD's Athlon and aren't as picky with RAM. Athlon processors often require very high quality RAM in order to avoid instability problems and to offer optimum performance. Much of this should change with the new chips that are coming out of the .18 fabs. AMD will eventually have a problems, and it will be interesting to see how well they handle the problems. Nearly every company will have a problem sometime in its lifetime. Microsoft has had to do bug fixes for its software, auto companies do recalls and companies like Intel and AMD have to do recalls for flaws in its products. Lets just hope that when it happens AMD does as good of a job as Intel has. Sources: http://www.amd.com/news/prodpr/20119.html http://www6.tomshardware.com/blurb/00q2/000525/
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