AMD x86 server market share tops 22% – report

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AMD x86 server market share tops 22% - report

Sunnyvale (CA) – AMD celebrates the third birthday of its Opteron processor with a rapidly increasing segment share in the x86 server market. At least according to findings released by Mercury Research, the Opteron chip now accounts for 22.1% of the worldwide x86 server market – traditionally the highest margin microprocessor segment.

Given the fact that Intel is approaching what may be most significant transition from one microarchitecture to another in the firm’s history, it is not surprising that AMD can take over more market segment shares in many of Intel’s traditionally strong markets. Especially in the x86 server segment, where Intel has missed to address industry needs for more power efficient processor solutions, it was to be expected that the firm would continue to lose revenues to AMD, at least until the Core-based Xeon 5100 series, code-named Woodcrest, will be available.

What is surprising, however, is the pace at which market shares are moving towards AMD. If Mercury research is right, then AMD’s x86 server market share jumped from 16.4% to 22.1% between Q4 2005 and Q1 2006. AMD suggested that it sees its momentum in this market still accelerating. While these numbers have to be viewed with caution – IDC for example put AMD’s Q4 2005 x86 market segment share at 10.9% – it is an indication that AMD may have won more market shares in Q1 than Intel could be aware of.

During the firm’s Q1 earnings conference call, chief executive Paul Otellini told analysts that the company may have lost more market shares in Q4 2005 as previously estimated, but mentioned that the firm’s Q1 2006 market share was believed to have remained stable. Declining microprocessor sales were attributed to lower sales industry wide. In its digital enterprise group, which includes server processor products, the firm’s microprocessor revenue was $3.89 billion in Q1 2006, down about 21% from $4.93 billion in Q4 2005 and $4.94 billion in Q1 2005. Profit from this traditionally high-margin market segment, was $1.36 billion (including profits from motherboard and chipset sales), down 44% from $2.45 billion in Q4 2005 and down 43% from Q1 of 2005.

AMD did not provide specific numbers about its Opteron sales in Q1 of this year, but mentioned that its overall processor sales declined only slightly from $1.31 billion in Q4 2005 to $1.30 billion in Q1 2006. Compared to Q1 of 2005, overall processor sales were up sharply from $750 million. Intel’s combined processor sales dropped from $6.86 billion to $6.24 billion in the same time frame. The revenue decline in Intel’s digital enterprise group was partially offset by gains in the mobility segment, where Intel’s revenues climbed from $1.92 billion to $2.35 billion.

Related article:
AMD more than doubles Opteron shipments in slowing server market
Intel to launch Woodcrest, Conroe and Merom in Q3