Intel, AMD fight it out for market share

Intel continued to reclaim server chip market share from AMD in the fourth quarter of 2006 but the smaller rival's strength with consumers helped it gain in desktops and laptops.

Overall, AMD continued its gain in the x86 processor market, said Mercury Research analyst Dean McCarron. The chipmaker had 25.3 per cent of chip shipments in the fourth quarter of 2006, an increase from 23.3 per cent from the year-earlier quarter and the highest number in its history.

Intel dropped from 76.0 per cent to 74.4 per cent over the same period, McCarron said.

AMD's gains didn't mean a financial windfall, though. The company's average server chip prices dropped, contributing to its financially difficult quarter. According to AMD, the company's server chip share was 22.2 per cent for the quarter, up from 16.4 per cent a year earlier but down from 23.6 per cent in the third quarter despite price cuts.

McCarron said: "Intel's gains in the server market are basically due to them having 'Woodcrest'" - referring to Intel's dual-core Xeon 5100 chip for dual-processor servers. Intel's 'Clovertown' processor, which squeezes two Woodcrest chips into a quad-core package, "made a meaningful contribution to their business in the fourth quarter. Quad core is starting to happen fairly quickly", McCarron said.

AMD and Intel both showed gains in x86 processors for servers with four or more chips, McCarron added. That's particularly interesting, he said, because Intel's Xeon 7100 'Tulsa' chip uses the older NetBurst design, not the new, more energy-efficient Core design of Woodcrest.

McCarron said: "In the server environment, the world's moving more to multiprocessor systems, looking for beefier servers."

In 2006, AMD won over Dell, the last of the four major server sellers to use Opteron servers. But Intel also went four for four in January, announcing that a partnership with Sun Microsystems is joining Dell, HP and IBM in offering Intel-based servers.

AMD fared better in desktops and laptops than it did with its Opteron server chips. In desktops, fourth-quarter share increased from 24.4 per cent to 29.1 per cent, and in laptops, fourth-quarter share increased from 15.1 per cent to 19.4 per cent.

Given that only a tiny fraction of the x86 chip market goes to other competitors such as Transmeta or Via Technologies, almost all of AMD's gains come at Intel's expense, or vice-versa.

McCarron said: "Their mobile business in particular has been growing very strongly in the last couple of quarters, driven by them having more compelling products than in past - Turion 64 - and working hard on getting [computer makers] to use them." HP has sold AMD-based PCs for years, and Dell followed suit in the second half of 2006.

Stephen Shankland writes for CNET News.com