Can AMD Regain Your Trust?

Ten months ago, San Francisco system builder Polywell Computers took possession of a defective Advanced Micro Devices motherboard and sent it back to the board's manufacturer. It took two weeks to get a replacement.

It's a familiar, frustrating ordeal for many AMD system builders, who say they can get a replacement from market leader Intel in 24 hours.

The AMD Validated Solutions (AVS) program, which was introduced six months ago, is designed to end that nightmare. The program promises to deliver a new set of services similar to those rival Intel has provided for partners for years—a 15-month stability guarantee on motherboards, a 48-hour return service for motherboards, telephone technical support and access to a 24x7 partner support site.

To date, eight desktop boards have shipped under the AVS program, and AMD plans to ship server boards with the same support and benefits for partners later in 2007, executives promise.

Partners say it's too early to rate AMD's competence in handling returns and exchanges because the AVS program is in its infancy. Still,they are happy to have validated solutions available to sell and a better, faster return materials authorization (RMA) policy that's beginning to take root.

"Last year we got a lot of hassles for RMAs, and now it's easier," said Sam Chu, CEO of Polywell Computers. "AMD has been difficult to deal with in RMAs. They asked too many questions and then we had to go through tech support and it ate up a lot of our administrative time. They've resolved some of those issues. It's much better than last year. Now, we send one back, and AMD sends us back one right away."

System builders such as ZT Systems also expect the upcoming launch of AMD's much-anticipated Barcelona quad-core desktop and server processors—and the planned AVS solutions based on them—will restore AMD's price/performance advantage. "Everyone is really waiting for Barcelona," said Pat Wong, director of marketing at ZT Systems, Secaucus, N.J.

AVS is one of several channel initiatives AMD has under way this year as it prepares to debut its Barcelona processors in mid-2007. AMD also wants to build its base of VARs and resellers to reach SMB customers, and to do this, its commercial system group is working with distributors and ISVs to create stronger SMB solutions and executing deals with the established channels of IBM, HP and Dell to grow its share of the SMB business, said Kevin Knox, a vice president in that group.

"We are going into 2007 with the first product geared and targeted at a segment where we haven't paid attention, frankly," Knox said in an interview with CRN in late December. "It will be significantly higher than what we've ever done before in the systems channel, which is separate from our components business," he added.

"AMD has become very competitive with Intel over the past three years. Major hardware vendors are providing more options about which processor to buy, which is giving AMD more market share," said Tom Raisbeck, vice president of technical services at Nortec Communications, a VAR in Falls Church, Va.

While some partners expect AMD's share to keep growing long-term, analysts are not so sure. A price war, shortages and weak consumer sales contributed to a $611 million lost in the first quarter, and its market share slipped after 14 quarters of successive gains. In early April, AMD said it would cut costs in 2007 by $500 million and restructure internally to elevate its earnings and cash reserves.

Despite the cutbacks, AMD plans to increase spending on its North American channel marketing, Gary Bixler, a key channel executive who AMD brought back in April to oversee worldwide channels, told CRN. Still, the company is facing a channel backlash as it struggles to balance demand from its system builders and increasing roster of top-tier OEM partners.

Next: The processor market and battle with Intel