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Intel Corp. late last week said it would cut its outlook for the first quarter of the year as a result of weaker than expected demand and a slight market segment share loss. One of the markets where the world’s largest chipmaker is not particularly strong is the retail market of computers. According to some reports, the arch-rival Advanced Micro Devices dominates U.S. retail desktops.

Intel said that its Q1 revenue is expected to be between $8.7 billion and $9.1 billion, as compared to the previous expectation of between $9.1 billion and $9.7 billion primarily due to market share decrease and lower that projected demand. Historically, Intel’s revenue declined by 7.2% in the Q1 compared to the Q4, according to some analysts. However, the Q1 2005 earnings were $9.4 billion (down 2% sequentially), whereas the decline to aforementioned figures from the Q4 will mean approximately 11% to 15% decrease, much higher than the last year and not inline with historical reductions.

When Intel loses in the market of x86 processors, there is virtually only one rival to take advantage of it: AMD, who is expected to increase some share now.

NPD Techworld analysts claim that AMD’s market share gain can be seen most strongly in the U.S. retail market: in the first seven weeks of 2006, AMD’s share in desktops in that area climbed to 81.5%, while Intel’s has slid to 18.5%, a complete reversal of their historical relative positions, reports Cnet News.com. Moreover, Intel’s share declined to 63% in notebooks, where the company has better positions compared to desktops. The U.S. market accounts for approximately 9% of worldwide PC shipments. Globally, AMD’s market share rose to 21.4% in Q4 2005, nearly 3% from the Q3’s 17.7%, which means that Intel now commands less than 80% of all x86 microprocessor shipments, according to Mercury Research.

But both AMD and Intel will have to suffer from lower prices this year, analysts warn. This year, supplies of computers will raise by 9.3% or more compared to 2005, according to Gartner analyst Miko Kitagawa. By contrast, overall earnings will decline by 0.3%, which means units sell for a lower price than before. The trend looks likely to continue into 2007, when shipments will increase 7.6%, but revenue will rise only 0.6%, according to Ms. Kitagawa. Typically, computers based on AMD processors are slightly less expensive compared to the machines powered by processors from Intel Corp.

Discussion

Comments currently: 6
Discussion started: 03/06/06 05:35:20 PM
Latest comment: 03/18/06 12:47:49 AM

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81.5%? We all know that AMD is doing significantly better in the desktop market than Intel, but THAT much better? I remember it was not at all long ago when 18.5% was considered impressive for AMD...

And Intel's notebook market share seems to be surprisingly low...only 63%? I thought it was more like, well, 83%, probably even more...
0 0 [Posted by:  | Date: 03/08/06 12:18:04 AM]
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