Intel inside and outside
By K R Nambiar
The microprocessor market in India has been bipolar for a few years now. While Intel has been the near-monopolistic market leader since the early nineties, the past two years have seen AMD steadily gaining mindshare and marketshare among users as well as the channel.
In the last two years, the CPU market has witnessed negative growth rates following a sharp decline in the share of assembled PCs, which is about 31-35 percent of the overall market. The domestic market for microprocessors was pegged at less than two million units during the last fiscal.
Both AMD and Intel are positioning microprocessors in three broad categories—desktop, mobile and server processors. As the assembled PC server market has not attained the desired maturity levels, and the white-box mobile PC market has not taken off (compared to the white-box PC success story), the assembled PC market accounts for 96 percent of processor volumes.
In recent times both Intel and AMD have been slashing the prices of their multi-core CPUs, transitioning the mainstream desktop computing market toward dual-core and more recently quad-core processors.
Intel is positioning Celeron (priced at Rs 1,850 per unit on an average) and select processor models from its depreciated Pentium-4 family (assembler price Rs 2,600 per unit) for the entry-level PC market. Meanwhile, AMD continues to ship Sempron processors (around Rs 1,100-1,400 per unit) and some of its lower-frequency Athlon XP processors. Both are targeting B- and C-class cities for these entry-level processors, controlling distribution at the grass-roots level.
Both Intel and AMD have also attempted to make an impact in the high-end computing space with their Xeon and Opteron processors targeting the server market.
The average selling price of processors sold by both the companies has come down significantly in the past few months with the introduction of the fast-moving low-budget Intel Pentium dual core processors, and also due to the rupee gaining against the dollar.
Product availability
In almost every quarter for past three years, one model or the other of an Intel or AMD microprocessor has been in short supply for at least a few weeks. Whenever a processor has gone into short supply, apart from price hikes, distributors have insisted on cross-bundling, upsetting several key partners in the process.
With the new logistics policy from Intel (of shipping microprocessors to Indian offices of distributors), availability of microprocessors has improved even in the remotest of towns.
Parallel imports were rampant in the microprocessor business till recently. But several policies and steps taken by Intel have helped reduce parallel imports, instilling more faith among channel partners in the chip maker’s distribution system.
AMD also restructured its distribution set-up early this year. While this helped control over-distribution of processors, it also upset the channel equilibrium in a few states. All these seemed to have helped Intel score over AMD in our survey, although by a low margin.
Marketing and branding
As one of the most visible IT brands in India, Intel is a winner by a huge margin in this category. While Intel has now started focusing on vernacular areas too, brand awareness of AMD is relatively poorer, and according to the system builders who took part in our poll, Intel’s commitment to identifying niche markets and creating opportunities is commendable while AMD still has a long way to go in this regard.
Channel relationship
This year AMD tweaked its channel model, ensuring product supply at city level through select distributors. Intel too recharged and revamped its channel management, appointing new channel account managers in key cities across the country.
Even here Intel edges out AMD. Intel is considered the more channel-friendly of the two by most of the respondents. Intel, in fact, has scored better than AMD on almost all counts. Intel has fine-tuned almost all of its channel programs, bringing accountability and at the same time ensuring a level-playing field.
Price-performance
Intel microprocessors are perhaps the most over-distributed product at the reseller level in the country. Understandably then, the margins which partners make are low though their volumes are high. System builders we polled also complain that customers are well aware of Intel’s processor prices, unlike AMD’s, which do not enjoy the same exposure. However, AMD has scored better on profitability.
While Intel is the overall performance leader in the mainstream desktop market, AMD scores better on price/performance by a small margin.
Service and support
Parallel imports of microprocessors have spelled warranty concerns for smaller resellers who source processors from traders and sub-distributors.
Respondents to the Channel Champions study believe that Intel does a better job of addressing issues concerning replacement and warranty. They also observe that AMD processors are more difficult to install, presumably because of the relative lack of choice of complementary building blocks. The fact that Intel has a significantly larger operation than AMD in India, and is perhaps better geared to handle the length and breadth of the country, also goes in its favor. However, information from B- and C-class cities indicate that replacement delays are sometimes over two weeks for both brands.
Conclusion
Intel wins hands down, despite many partners feeling that AMD is better than Intel when it comes to certain criteria, notably overall profitability, and the performance gains on some of AMD’s high-end processors.
Intro
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