Intel displays its Achilles’ Heel

Analysis – Things go up and things go down in the battle between AMD and Intel – two companies that are joined at the hip.

Yesterday’s report from iSuppli that AMD had clawed back market share from Intel displays graphically each firm’s strengths and weaknesses.

Everyone, everything, every company has vulnerabilities, like Achilles. Intel is like an elephant, AMD is like a mouse, and Via is like a creature that lives in the fur of a mouse that doesn’t seem to bother the elephant. The elephant is afraid of the mouse. The mouse is apparently fearless.

Market research firm iSuppli said that Intel’s overall market share in the first quarter of 2009 fell by 2.5 percent, still retaining a 79.1 percent market share. Not quite a monopoly then. And AMD gained market share by 2.3 percent, so presumably the only other X86 company, Via, is still in the game, albeit by a sliver.

But it’s all about the difference between the kind of sales each firm made. According to iSuppli analyst Matthew Wilkins, AMD gained share in all areas of its microprocessor sales, while Intel suffered from sales in the PC and server area.

Intel is thick within the corporate realm, and because of the credit crunch, large organizations decided that they weren’t going to spend very much on upgrading their server farms – it’s entirely possible that both AMD and Intel decided on the same strategy too.

Wilkins said that AMD was particularly strong in the notebook sector – interestingly people are still buying consumer notebooks, but the corporate sector is still holding off from making big buys in that realm too.

He also reckons that Intel widened its market share lead in 2008 because of its Atom chip. Cannibilization is real, according to iSuppli.

Said Wilkins: “Intel’s decline in the first quarter was as a result of the contraction in the PC and server markets, where end-application demand is suffering from the credit crisis.”

AMD, in the last couple of days, has been making noises about entering the netbook market in 2010. Intel is pressing on with some new netbook CPUs on the way. It’s a no-win, no-win game for both companies – but both have to be there. And Via, the little Taiwanese firm, will be squeezed between a ROC (AMD) and a hard place (Intel).

These are iSuppli’s figures for the first quarter of 2009. The market research firm does not disclose how it reaches these figures – we guess that’s proprietary to the firm.

Vendor Q1 09 Q4 08 Q1 08 Q1 09> YoY
Intel 79.1% 81.6% 79% 2.5% 0.1%
AMD 12.8% 10.5% 12.9% 2.3% -0.1%
Other 8.1% 7.9% 8.1% 0.2% 0%
Total 100% 100% 100%