AMD Gets Whacked by Intel in Workstation Market

Published: June 19, 2007

by Timothy Prickett Morgan

Last year was a good year for Advanced Micro Devices, which had a considerable market share gain in the workstation market as its Opteron processors provided better bang for the buck than rival Intel's Xeon chips. And now, in the first quarter of 2007, as Intel has gotten its product roadmap together, the market share pendulum has swung back the other way.

According to numbers compiled by Jon Peddie Research, 674,000 workstations shipped in the first quarter of 2007, an increase of 15.2 percent compared to the first quarter of 2006. Average sales prices of workstations were flat, which helped push up global workstation revenues rose by 15 percent, to $1.7 billion.

This is a significant cooling of the shipment growth rates the industry saw in 2006, which ranged from 25 percent to 35 percent, and it could be that some customers are waiting to see the quad-core "Barcelona" Rev F Opteron chips, expected to be launched next month, before they make their buying decisions. Or, it might be that the appetites for workstations has subsided a bit for reasons that have nothing to do with chip architecture.

The quarter workstation report from JPR shows that no matter what is going on, what is clear is that AMD is losing much of the market share that it gained in late 2005 and throughout 2006. In the third quarter of 2005, JPR estimates that Intel's Xeon chips had a 93.4 percent share of the two-socket workstation market, compared to 6.6 percent for AMD's Opteron chips; by the second quarter of 2006, AMD's share had risen to 13.3 percent, while the Xeon slipped to 86.7 percent. AMD saw some slippage in the final two quarters of 2006, dropping to around 11 percent of the workstations sold, but in the first quarter of 2007, AMD lost another three points of share, to 8 percent.

If you look at the entire workstation market, including single-socket Athlon and Opteron chips as well as Pentium and Xeon chips from AMD and Intel, respectively, AMD's share of the overall workstation market peaked at 3.6 percent in the second quarter of 2006 and has dropped to 2 percent in the first quarter of 2007.

"We'd expected AMD's share to moderate or level off by the time Intel improved its dual-socket Xeon platform in mid 2006, but we hadn't anticipated the decline we've seen," said Alex Herrera, the analyst who wrote the latest workstation report from JPR. "The extent of Intel's rebound will put that much more pressure on AMD to deliver quad-core Barcelona soon--and with better performance than Xeon."

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