AMD Tries To Make Up With The Channel

In the fourth quarter of 2006, AMD ran into trouble with system builders when the supply of dual core Athlons ran out. Executives said that won't happen again.

As part of its ramped up romance with channel partners, the Austin, Texas company has announced price cuts on its dual core Athlon processors and higher performance per watt Opteron server chips and is working to ensure that the inventory of processors, chipsets and motherboards from its manufacturing partners are in ample supply for solution providers' needs this year.

"We've got to earn our resellers' trust and desire to use AMD products again," said Stephen DiFranco, corporate vice president of AMD's Global Go-To-Market program. "We lost some market share in the channel when we didn't have product to give the channel and we want to get it back."

On Monday, AMD announced that its Athlon 64 X2 5600+ dual core processor's price has been reduced to $326, down from $505 in the first quarter of 2006. The 5200 series is $232, versus $295 a year ago. And the 4600+ series is now priced at $195, compared to $215 a year earlier. On the lower end, the Athlon 64 X2 3600+ series has been reduced to $102 from $138 a quarter earlier.

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Prices for single core AMD 64 processors have also come down a bit, ranging from $78 to $93. Meanwhile, the price tag on the 3400+ Semprons is now $67, down $4 from last quarter. The AMD Athlon FX processor's price has not changed.

AMD also last week announced 10 updated Opteron 1000, 2000, and 8000 series dual core server processors that offer performance as high as 2.8 GHz in a 68 watt thermal envelope.

Meanwhile, AMD is working to ensure that its system builders can access a balanced inventory of processors, chipsets and motherboards in 2007. AMD last week appointed IBM veteran Douglas Gros to head up its global manufacturing operation after the current chief retires in 2007.

System builders said AMD is taking the right steps but is facing tough competition from Intel, which has moved in on system builders in recent months.

"We hold no ill will towards them for any supply issues. That's just the nature of the business and sometimes things like this happen. It's extremely hard to forecast demand and I'm sure they had to meet some heavy requirements from Dell," said Todd Swank, vice president of marketing at Nortech, Burnsville, Minn. "I think the greater problem they're having is the onslaught from Intel's new products. The Core 2 Duo is a very popular product and Intel is aggressively promoting them . Plus, [the Core 2 Duo has] been readily available so when AMD was having shortages, a lot of AMD exclusive customers had to switch back to promoting the new Intel products."

One system builder who declined to be named said the battle between the two chip makers isn't helping his business.

"With this little price-war bloodbath, both AMD and Intel are killing us. People say a price war will only benefit the customer, but that clearly means the end customer. The guys in the channel who are driving the sales take it square on the chin and, frankly, I'm tired of having to get my jaw wired shut every time these guys mismanage their market."