Advanced Micro Devices: Life beyond Intel
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Case Code : BSTR039
Case Length : 14 Pages
Period : 1987 - 2002
Organization : AMD, Intel
Pub Date : 2002
Teaching Note :Not Available
Countries : USA
Industry : Semiconductor
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
Battling it Out
In 1993, AMD announced the launch of the K5 project which was to directly compete with Intel's launch of the Pentium (1993) and Pentium Pro (1994) processors. But, by the time AMD came out with the final product in the market (in 1995), it was too late.
Pentium had gained immense popularity, due to its superbly crafted marketing campaign and also because at that time there was no other processor which was equally powerful. In 1994, AMD entered into a long-term alliance with the leading PC manufacturer Compaq Computer Corporation, wherein Compaq agreed to use the Am486 microprocessor for its PCs. In the same year, the Digital Equipment Corporation served as a foundry for the Am486 processors. In the same year, AMD won the ongoing court battle against Intel for the right to use Intel's microcode for the 278 range of processors. Though it won the legal battle, AMD realized that it would have to work hard in order to strengthen its position in the market. The company strengthened its relationships with various original equipment manufacturers (OEMs) and focused on improving its infrastructure, software and technology...
The War Goes On
In 2000, Intel came out with the Pentium 4 processor to compete with Athlon. However, Pentium 4 could neither match Athlon in terms of speed nor performance.
The 1.4GHz Athlon processor along with the Double Data Rate (DDR) memory outperformed the 1.7GHz Pentium 4 processor (which ran only on RDRAM) by 40% on various performance measurements (benchmarks) like desktop publishing, digital imaging, multimedia and voice recognition applications. Intel also faced problems when supply could not keep up with the demand for Pentium 4. Moreover, since Pentium 4 was priced much higher than Athlon, the issue of price-performance anomaly remained unaddressed. Above all, Athlon was priced much cheaper than P3 - while a 600 MHz Athlon cost $1429, a similar Pentium processor cost $1849. Soon, the Intel-AMD battle focused more on the clock-speed issue, especially in the 'below gigahertz' market (chips meant for low-end systems)...
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