Term Paper on "Amd - Intel Duopoly"

Term Paper 4 pages (1045 words) Sources: 3 Style: MLA

[EXCERPT] . . . .

AMD - Intel Duopoly

After almost two decades of supremacy in the microprocessor market, Intel is finally beginning to sense a threat to its domination. The market has transformed into a duopoly with the rising influence and growth of AMD. Today, almost 25 of the 100 large fortune 500 companies use AMD's Opteron servers. [David Krikpatrick] This growth was not simple and straight. Prior to the success roll, AMD had suffered three straight years of losses entering into the millennium. This situation turned around and the company managed to create a turnover of $5 billion in 2004 compared to only $3.5 billion in 2003, a significant 40% increase. [DAVID KIRKPATRICK] by the third quarter of 2004, AMD had already secured a 6.9% on the X86-based server market, which is practically double the market share in the previous year. The statistics for the Q4 2006 released by Mercury research reflect this growing presence of AMD. AMD's market share for desktops stood at 29.1%, which is an increase from the 26.6% share it held the previous year. Even in the notebooks segment AMD gained its foothold with a market share of 19.4% improving upon its previous year share of 16.8%. [Tony Smith]

As Porter's five forces Model indicates, the market structure is subject to pressure from new entrants, substitutes, Buyers, Sellers and the intensity of rivalry between competing firms. According to Porter's model having substitute products and new entrants is definitely a winning situation as far as the consumer is concerned, as prices have to be under check in order for competitors to stay in business. Also, in a market with multiple players cost and performance are vital factors that decide the level of success of the business entities. AMD's big thrust came when it ventured into the 64 bit processor market with the launch of its AMD64 Opteron processor for servers in April 2003, as an ideal competition for Xeon server chips from Intel. In the very same year AMD also launched Athlon in September 2003 for the desktop market. Opteron became a strategic success for AMD as it not only provided the 64 bit capabilities but also was compatible with existing 32 bit based applications. [David Krikpatrick]

During this time though Intel was concentrating on Itanium-based workstations, which unfortunately were incompatible with 32 bit applications and allowed them to be run only in 'emulation mode'. This implied that Itanium systems required coding changes for 32 bit applications to run normally. [DAVID KIRKPATRICK] Intel was finally forced by market demand to mimic AMD and produce 64 bit chips that actually perform well with 32 bit applications. HP was collaborating with Intel on its Itanium-based workstations, and hence it is a credit to the performance of AMD Opteron processor that now HP has become one of AMD's important clients. Mark Hudson, the HP Server marketing manager says, "Opteron has sustained legs in the marketplace." [David Krikpatrick]. Proving right Porter's model for market dynamics this new alliance with AMD has sent strong signals to Intel to be more competitive, cost effective and customer friendly. To quote Hudson again, "Our interactions with Intel since we announced… READ MORE

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