AMDs profit warning last week may signify a deeper change in the processor market as the trend that favored the No. 2 chipmaker may be reversing. Intel seems to be doing well since its recent launch of the Core 2 Duo chips and its aggressive marketing seems to have paid off.
AMDs profit warning seems to be the result of the price war the company launched in order to compete with its rival's new product range. AMDs choice to go with a native quad core design, has delayed the launch of its products. The company thought it could benefit from the drop in sales as consumers await the launch of Microsoft's new OS; Vista. The imminent launch of Vista however, may spark a sales boom which could increase Intel's lead. If the Vista deployments begin to build some momentum and PC sales overall improve dramatically, then everyone will benefit and it could lift AMD, said an analyst.
Intel's main gains against AMD have been in the important server market where it has benefited the most from its quad core chips. AMD will not be able to launch its own similar chips until mid 2007, experts suggest that it's native quad core design may prove to be better than Intel's but it is unlikely that any such performance win could be adequate to dramatically change things. A lot will depend on the pricing policy that AMD will follow with its new chips, a decision which could however, push the company even deeper into debt.
For the time being Intel is basking on the glow provided by the success of the Core 2 Duo chip but it has come at a price as the company has had to sell parts of its business and focus, almost exclusively, on its core activities. Soon AMD will also have a similar product available and that should make selecting a PC a much more interesting and appealing task.
