Abstract

AMD: Technological Marketing, Cooperation with Major Vendors

AMD had originally focused on three marketing aspects or competitive advantages. First, backward compatible x86-64 architecture capable of running 32-bit applications. Second, built-in memory controller in its CPUs that shorten data access time. Third: price competitiveness.

Such advantages, however, will soon be tested by Intel's CPUs with 64-bit extension technology. Without a strong brand image like Intel, AMD may be deprived of its original competitive edge: first-mover advantage.

AMD's price-performance advantage used to be quite attractive to budget-minded small and medium-size enterprises. However, with the global economy gradually recovering from the second half of 2003, business budgets for IT outlays have been on the rise. Moreover, many businesses have switched to weighing the procurement cost for such high unit-price products by assessing TCO (Total Cost of Ownership), a trend which may challenge AMD's low-price advantage. The effect of the aggressive price strategy to grab higher market share will be limited to the short run. Without strengthening its high-speed transmission technology or cooperative ties with leading international vendors, AMD will find the low-price strategy detrimental to its long-term development.

Intel: Product Line Overlap Needs to be Addressed

Intel has been continuously pumping resources into the development of 64-bit server CPUs. However, it has repeatedly postponed the rollout of CPUs simultaneously supporting 32/64 bit, in the belief that overall environment for x86 architecture has not matured and consumer demand has yet to emerge. Recently, a growing number of customers have reportedly decided to adopt its rival's CPU products lines, and software vendor Microsoft has planned to launch two sets of software architecture, which have entered the beta-test stage. Whether or nor Intel follows AMD's lead, expectations from customers and software vendors have already long pressed Intel to consider the issue.

After the Xeon 64 series is launched, sales will likely impinge on sales of the existing Itanium II series to a certain extent. Intel has dismissed that Xeon 64 will impact the positioning and survival of existing offerings, indicating that the two processors are segmented for different markets. Therefore, the first issue to address for Intel will be avoiding confusion in the market and boosting share in mid-range and high-end markets by distinctively segmenting or using different bundling strategies.