No one ever got fired for buying Intel

AMD's corporate challenge

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AMD last week told the world it wanted 30 per cent of the processor market by 2003. Jim Doran, who runs AMD's German manufacturing operations, mapped out the company would produce the chips (see AMD builds two million Athlons).

Today, we publish AMD's latest roadmap, which shows us the chips it intends to sell to reach this market share goal.

But what about sales and marketing, the final part of the equation? Intel massively outspends and outfights its smaller rival, as Bloomberg pointed out at the weekend (see AMD Needs Marketing Push to Combat New, Faster Intel Chip, Analysts Say).

However, is really more advertising grunt that AMD needs? AMD's key weakness is in the corporate sector. This is hampered by the lack of a credible server offering, and until the launch of the Athlon, a CPU able to take the Intel P3 head on (Athlon's power consumption, remains an issue, however). Most of all, AMD's key disadvantage with corporates is that it is not Intel.

In discussing AMD's sales performance with an AMD executive last week, we learned that the company's key objective - in Europe, at any rate - is to get on the Invitation to Tenders lists, in the first place. As a matter of habit, as much as anything else, many large companies and public sector organisations specify Intel-powered computers.

A run-through of 305 It-related Euro tenders live on Ace-quote.com reveals that only six specified Intel/Pentium and only one specified AMD... However this is to be expected, Ace-quote says, as the "Tenders are intended to be simply initial and fairly brief outlines of a requirement, with the official tender document that sellers apply to receive, containing more specific technical and branding details".

The results on the Acequote's Market Place (used mostly by large companies and public sector organisations in the UK) produced 344 live requests for computer products. Here's the breakdown for vendor CPU specs:

Intel/Pentium (or incorporated brands) - 43 per cent
AMD (or incorporated brands) - 11 per cent
Did Not specify a processor brand - 46 per cent.

That's not too horrendous - AMD OEMs are allowed to bid for 57 per cent of UK big PC contracts, while Intel can bat for 89 per cent.

But, apparently in some other European countries, AMD fares much worse (we've asked Ace-quote to supply us with a breakdown of ITTs in Germany, where its parent company is based, and we'll publish this when it arrives). So what is it to do?

The battle for OEMs

AMD has gained desktop market share this year, but a lot of this can be attributed to its relative strength in the booming consumer market, and its relative weakness in a stagnating corporate market. What happens when the corporate sector picks up?

First up, the company needs to get its chips into the corporate lines of big OEMs - Compaq, Hewlett-Packard. (And it still can't get into Dell.) Easier said than done, when there is no great demand from corporates for AMD-powered machines.

This means chiselling away on the account repping front. Spending huge amounts on advertising to reach OEMs and corporate customers strikes us as an expensive way to influence key decision makers. ®


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