My colleague Tim Green recently commented on a research note that came out, suggesting that Advanced Micro Devices (NASDAQ: AMD) hasn’t been able to gain market segment share with its new Ryzen Mobile processors for laptops. In fact, the report Green cites claims that AMD is actually still losing market segment share in the laptop processor market despite having rolled out new products that appear to be more competitive than the company’s prior-generation chips were.
In this column, I’d like to offer my thoughts on just why, despite AMD’s progress in gaining share in the enthusiast desktop processor market, the company’s new Ryzen Mobile chips don’t seem to be moving the needle.
The AMD Ryzen logo.
Image source: AMD.
Intel’s broader portfolio
Chip giant Intel(NASDAQ: INTC) is the leading vendor of personal computer processors, with overwhelmingly dominant market share in both the desktop and notebook computer markets. However, Intel’s dominance is much more pronounced in the notebook computer processor market than it is in the desktop computer processor market.
There are, in my view, several good reasons for this.
Firstly, Intel’s product portfolio in the notebook market is substantially broader than AMD’s. Intel’s current lineup includes (or will shortly include) the following processor lines, each targeting specific sub-segments of the notebook computer market:
Gemini Lake for the very low-cost and low-power notebook processor segment.
Kaby Lake-Y and, soon, Amber Lake-Y for fan-less notebooks and 2 in 1 notebook/tablet hybrids.
Kaby Lake-U and, soon, Whiskey Lake-U for mainstream, low-power notebooks.
Coffee Lake-U for premium thin-and-light notebooks.
Coffee Lake-H for high-end notebooks, gaming notebooks, and mobile workstations.
This broad range of processors allows Intel to have really good products for every type of notebook computer a computer maker could conceivably want to build. By contrast, AMD doesn’t really have products that can compete against the Gemini Lake parts at the low end, the Y-series parts in very low-power systems, and the Coffee Lake-H parts at the very high end.
The fact that AMD isn’t addressing as wide of a range of computers as Intel probably limits its ability to gain share. However, the story doesn’t end there.
Notebook computers are sold as pre-built systems from computer makers, so winning in the notebook computer market means a company has to win at a platform level.
The reality is that Intel’s portfolio of products that it can bring to bear in the notebook computer market is much broader than AMD’s. Intel not only builds the processors, it also invests significantly in developing reference designs for the system vendors to build off of. In addition, Intel offers complementary components such as Wi-Fi chips, NAND flash, Optane memory, LTE chips, and is increasingly co-developing things like lower-power displays with major ecosystem partners.
AMD simply can’t, at least right now, afford to develop the breadth and depth of platform technologies that Intel can.
More than just products
Another thing to keep in mind is that neither Intel nor AMD sells notebook processors directly to customers; these processors are sold as parts of finished systems to consumers.
In addition to Intel’s extensive co-engineering efforts with system makers that, frankly, I don’t think AMD has the resources to match, there’s also the fact that Intel’s brand is simply much stronger than AMD’s. According to Interbrand, Intel is the 15th most valuable brand in the world, worth nearly $40 billion. By contrast, AMD doesn’t even make the list.
The strength of Intel’s brand among consumers makes it more likely that if a consumer has to pick a computer, that consumer will recognize and trust the Intel brand and go with the Intel-powered computer.
Moreover, Intel’s brand strength isn’t just a product of Intel’s past successes. If you look at how much Intel spends on marketing compared to AMD, they’re not even in the same ballpark. In 2017, Intel spent a whopping $7.47 billion on marketing, general, and administrative expenses. AMD, on the other hand, spent just $511 million — less than 7% of what Intel spent.
It’s just difficult for AMD to fight Intel’s sheer brand power and marketing muscle in the personal computer market, and in particular, the notebook computer market.
More From The Motley Fool
Ashraf Eassa owns shares of Advanced Micro Devices. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Visit the Source: https://finance.yahoo.com/news/why-amd-isn-apos-t-215400630.html