– Jon Bach –
Pentium4 vs. AMD AthlonXP
In looking at Intel’s position in the market, we have to be impressed. In 80% of today’s computers, Intel processor chips have been and will continue to be the standard for some time. But how did they get there? I can think back to the days when an AMD processor was thought of on the same level as Cyrix, and under those conditions, Intel rightfully held the lead position.
However, in the time since then, AMD has made up a lot of ground, and now offers processors that many people feel to be even superior. It is highly effective marketing that has served Intel in the last years. With their already dominant position in the market, well strategized marketing campaigns are all they need to stay on top. The actual quality and value of their processors is no longer the issue — the consumer opinion of their value has taken over as the prominent drive behind their sales.
The sweetest thing about their position is that they have a lot of help. With the market share so large, Intel receives large support from all of the major computer manufacturers. Gateway, Dell, Compaq…they all are heavy on the Intel market. This is not surprising! When 80% of their customers come looking for an Intel-based computer, it is in their best interest to comply! Not only that, but it is in their interest to help push Intel sales. So now we have every main manufacturer putting out advertising for Intel. “Intel Pentium4 inside” is a slogan that has caught on with the consumers.
If Intel processors really are superior, as the consumer opinion believes, then what is wrong with the fact that there is a near-monopoly situation going on? Nothing! If Intel really is better, then we should all be using them, just as we all use Microsoft for our operating systems. Some products are simply more suited for the average consumer. However, in taking a look at the computers from the major manufacturers, we are given some very large clues about the way they do business, and the way they feel about Intel processors.
Common Setup Characteristics
When we look at the computers from the major manufacturers, we see one striking trend. The processor is the best part of the whole system. Not only that, but the processor is sometimes the only part of the system of any value! In that single characteristic, we can draw a very important insight — the large manufacturers do not care about quality systems or optimal arrangements. They care about making sales. They know that to the average consumer, “Intel Pentium4 inside” is the only slogan they know. When they are looking for a computer, the only requirement is that it has a Pentium4 processor. That is why the rest of the system can be poor quality — the processor is the only thing making the sale. So why aren’t they using AMD processors? The same reason. Why attempt to change the minds of your customers when you can make a quicker sale by giving them exactly what they want!? And there lies the perpetual nature of Intel’s marketing. By retaining a large market share, manufacturers are happy to go along for the ride and get a piece of that market!
Making Up Lost Ground
Under the conditions outlined so far, it seems nearly impossible for any secondary manufacturer to make any gain in the market. It is very impressive that AMD is doing just that. They aren’t doing it with clever marketing techniques or manufacturer contracts. Their strength is simple — build faster processors, and sell them cheaper. It is working. Over the last few years, AMD has made amazing gains, and is placed very well in the market. The graph below is certainly out of date, but it clearly shows the growth of AMD.