January 18, 2006 1:11 PM PST

Intel loses market share in own backyard

Intel lost significant share to Advanced Micro Devices in the U.S. retail market in the fourth quarter, according to figures released Wednesday by Current Analysis.

Intel executives said Tuesday that they expected to lose about one point of market share to AMD during a disappointing fourth quarter. That figure refers to worldwide sales of microprocessors during the quarter, an Intel spokesman confirmed. Among U.S. retail PCs, however, the results were more striking.

Intel's share of the U.S. retail PC market fell by 11 percentage points, from 64.4 percent in the fourth quarter of 2004 to 53.3 percent, said Sam Bhavnani, a senior analyst at Current Analysis. Current Analysis' market share numbers measure U.S. retail sales only, and therefore exclude figures from Dell, which uses its Web site to sell directly to consumers. Dell, the top PC vendor in the U.S., exclusively uses Intel's processors in its PCs. (Sales by online retailers were excluded from the market share analysis as well).

Sales of Intel-based desktop PCs fell 22.3 percent during the fourth quarter, according to Current Analysis. As a result, sales of AMD-based desktops took the lead during the pivotal fourth-quarter holiday shopping season. AMD chips were found in 52.5 percent of desktop PCs sold in U.S. retail stores during that period.

Intel partially blamed poor demand for desktops for its fourth-quarter earnings results that were below expectations. But desktop shipments grew 13.4 percent among U.S. retail customers during the quarter, Bhavnani said. Last month, IDC predicted the entire U.S. PC market would grow only 8.3 percent during 2006.

Intel Chief Financial Officer Andy Bryant also noted that Intel's yearlong supply problems with desktop chipsets extended into the fourth quarter, hurting sales of Intel-based desktops and allowing AMD-based systems to make inroads at Intel's expense.

Notebook PCs have been the fastest-growing segment of the PC market for several quarters, and Intel has a sizable advantage over AMD in that segment. But its lead shrank during the fourth quarter as the percentage of AMD-based notebooks increased from 22.3 percent in the fourth quarter of 2004 to 30.5 percent in the fourth quarter of 2005. Shipments of AMD-based notebooks doubled compared with the previous year, while shipments of Intel-based notebooks increased by 34 percent in the U.S., Bhavnani said.

AMD is expected to report its own fourth-quarter earnings Wednesday afternoon. The results are eagerly awaited by analysts; investors are wondering if Intel's problems are its own, or if the three-year boom in the PC market has finally run its course.

"In posting the weakest Q4 revenue result and Q1 outlook since the bursting of the bubble, Intel has made it clear how much competitive ground the company has lost to AMD. The extent of the losses has exceeded our expectations," Merrill Lynch analyst Joe Osha wrote in a research note on Wednesday.

Intel's stock closed down 11.5 percent, or $2.91, to $22.60 on Wednesday trading on the Nasdaq. AMD's stock ended the day up 1.5 percent, or 51 cents, at $33.37.

6 comments

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Leap ahead?
So, this is part of Intel's 'leap ahead' marketing campaign I take it? *chuckle*. Looks like AMD has got them on the run.

AMD - www.leapsbeyond.com
Posted by ssway (2 comments )
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That's great for Fanboys.
The rest of us care about stability and the availability of chips and most importantly, the software that runs on the hardware.
Posted by aristotle_dude (165 comments )
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Congratulations AMD. You've earned it...
Intel is still the corporate desktop processor and chipset of choice for "Managed" (imaged) systems due to their unreactionary roadmap. This is the same roadmap that is clearing the way for AMD to gain ground in the consumer area. Dell (that is spelled I-N-T-E-L) is feeling a bit left out of the consumer market but that not just a matter of their not offering AMD but of a growing concern amongst consumers that you will poor customer service.
Now that AMD has a growing server and consumer product market they need to affirm a "Managed" roadmap to start the capture of more enterprise desktops. To do this AMD will need to either partner with a chipset company or develop their own and ensure that it will be available for a typical enterprise timeline, like 12 to 18 months.
Posted by fred dunn (793 comments )
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Intel now backing Apple..
With Intel backing Apple (whos market value has surpassed Dell's) don't you think it would be a good move by Dell to begin offering PC's with AMD processers in them? I think it might help out Dell considerably because with the launch of their XPS its obvious they are trying to satisfy gamers, and a large portion of gamers (and benchmarks) consider AMD superior to Intel.
Posted by Schumps (1 comment )
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The trend will reach the 3rd world soon
American consumers are more aware of the technology leadership of AMD, the 3rd world people are more aware of INTEL's brand. But the the trend will propagate to the 3rd world soon.

<a class="jive-link-external" href="http://sharikou.blogspot.com" target="_newWindow">http://sharikou.blogspot.com</a>
Posted by sharikou (106 comments )
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