Can AMD close the deal?

AMD looks set to carve out a healthy chunk of the local processor market, if last week’s AMD roadshow was anything to go by.

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By  Mark Sutton Published  May 10, 2003

AMD looks set to carve out a healthy chunk of the local processor market, if last week’s AMD roadshow was anything to go by.

The roadshow, which was in Dubai last week and had been in Saudi the week before was one of the best attended channel events I have seen in a long time.

And judging by the amount of questions that the audience were pitching at Pierre Brunswick, AMD’s regional sales manager for this part of the world, the resellers hadn’t just come in to escape the heat, but really wanted to get to grips with the product line.

AMD and local distributor Sky have certainly come up with a host of options to suit the local market. On show was everything from boxed processors to complete PC solutions, with a number of interesting options for local assemblers in between.

Something that really caught my eye was the Star Express range—a boxed offering that consists of an AMD Athlon XP Processor pre-installed on an MSI mainboard, with a Cooler Master fan ready mounted. The boards are all pre-tested, meaning the systems builder can take the package and just build the solution around it, without having to deal with the ‘difficult bit’ of installing the chip.

At a premium of around $6 to $9 more than the cost of just the components, the Star Express box lets resellers cut out the need for highly trained assembly staff, and also makes assembly a lot quicker.

Add a wide range of traditional barebone PCs and some new server level products courtesy of AMD’s 64-bit Opteron, and the vendor looks like a very attractive proposition for resellers.

But AMD has a problem—or rather several problems. The company knows about these, and Brunswick tackled them head on in his presentation, describing them as the AMD myths. In no particular order they are the megahertz myth, the Hyper Threading myth and the heat myth.

The Hyper Threading myth refers to the fact that AMD doesn’t believe that Intel’s Hyper Threading technology (HT for short) really creates a great increase in performance. Instead AMD has a technology called Hyper Transport, (also HT for short) which provides a performance boost. Confused? I’ll leave the technology alone this time, but two new CPU architectural breakthroughs, both called HT? Will customers want to know the difference?

The heat myth is down to the common assumption that AMD chips run hotter than their competitors. AMD says this isn’t true, that improvements have been made in their chip architecture, which address the heat issue.

The final fly in the ointment is the megahertz myth. AMD has been making noise about this one for some time, basically with regards to the fact that out and out processor frequency doesn’t directly mean better performance.

Now that Intel is in the same boat as AMD, in that some of its newer processors out-perform other Intel processors running at a faster frequency, it looks like the consumers will start to hear more about the megahertz myth, but there is still a long way to go to get the message across. Which is the one problem I have with AMD’s strategy.

The resellers all know about these problems. They were some of the questions that cropped up time and again at the roadshow. The resellers are interested in the products, very much so, but they are crying out for some help in dispelling these myths, to turn consumer interest into sales. AMD’s response, however, is that they will educate the resellers, and let them convince the buyers. ‘We are engineers’ says AMD, ‘we will build the best products, and leave the marketing to you, the sales professionals.’

Which means no massive marketing spend from AMD to reach the end customer. You might think ‘he would say that’ what with helping vendors spend their marketing dollars being the business of publishing companies, but from a channel point of view, I think the job is almost done—AMD has the resellers and they want to sell the products.

The problem is convincing the punters that AMD is a viable option, and to do that, AMD is going to have do a little bit more than rely on its resellers—no matter how good, the marketing needs to be done not just on a one-to-one basis, but to a broader market, through other mediums than just sales staff. Otherwise the goodwill that AMD has in the channel may end up coming to nothing.

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