AMD to concentrate on grey market engineers

By , agencyfaqs! | In | November 15, 2000
As chip makers aggressively target the grey market, the fortunes of major chip companies like Intel, AMD, and Cyrix could be decided by the grey market

Sabil Francis
NEW DELHI, November 15

Advanced Micro Devices (AMD) says it makes faster and better processors. Yet its nearest rival Intel outsells it with ease.

Officials of the Sunnyvale, California-based company, which this year made a profit for the first time since 1995, do admit that there is a problem of communication with the Indian consumer, who sees AMD as inferior to the Santa Clara, California-based Intel's Pentium range. As one disgruntled user puts it, "The problem with AMD chips is that you open more than 10 applications on your computer, and wham!, the whole thing conks off."

Company officials, armed with statistics on how the high-end AMD Athlon‘ range outperforms the Intel Pentium III processor, and how the AMD Duron‘ range outperforms the Intel Celeron processor, are foxed at the Intel-loyalty of Indian consumers.

There could be good reasons for that loyalty.

In the branding game, Intel has been able to beat AMD hands down. First, an advertising blitz positioned Intel as an up-market brand able to do wonders. Moreover, Intel has taken resource to such strategic tricks like prominently putting the Intel logo on computer boxes, a practice that gave it a lot of visibility. So much so that small-time hardware dealers who operate the India's grey market in computers took to putting the "Intel Inside" logo on every computer box they sold.

It's a bit late in the day, but AMD is finally waking up. AMD's new marketing and advertising strategy will emphasise on the superior performance of AMD processors, and this time around, will be backed up by an aggressive marketing strategy. Says Chong Kum Shiong, area channel manager, AMD Far East Ltd, who looks after South East Asia and India, "Our communication will be this: buy an AMD processor, and you will enjoy the best that money can buy."

One of the key thrusts will be in making the AMD buyer feel a part of the family. For this, it has launched "AMD and Friends", a scheme that gives each customer an e-card with a personal security number, with which anyone who buys an AMD processor can use to log on to the AMD network, and get help. The aim, says Shiong, is to create brand loyalty over a period of time. Which would be quite in tune with the brand name Duron, derived from the Latin "durare", meaning, "to last".

The company is also trying to enthuse its network of distributors, which stands at a woeful three for the whole country. Alongside, it is also targeting the grey market aggressively, candidly acknowledging that winning the loyalty of those scruffy hardware engineers is the only way it can attain its target of 30 per cent of the market share by the end of 2001.

A huge chunk of the computer market in the country is in the hands of these rough-and-ready engineers, especially in the value segments that the Duron processor is aimed at. AMD will have to compete with companies such as the Taiwanese VIE Technologies, makers of the Cyrix brand, which is looking at the same area. VIE is trying to convince the budget PC buyer to ditch both Celeron and AMD with the logic that the average PC user does not need such high-speed, high-performance chips.

In the Intel-AMD war, AMD hopes to repeat the US experience here. Since August 1999, when it released the Athlon range, AMD has drawn blood in the no-holds barred computer chip war. Strong reviews for its products, combined with improved manufacturing strategies, allowed the company to gain market share and customers from rival Intel. It also gained when Intel ran into a processor shortage in 1999, when it released a new version of the Pentium III. High demand, coupled with manufacturing difficulties, made Pentium IIIs, especially the fastest versions, tough to find.

However, in the Indian market, where the difference of a couple of hundred dollars is a huge difference, budget PC buyers may prefer cheaper chips to higher performance. And it is them that the grey market engineers will finally listen to.

So, as companies battle for the loyalty of the small-time hardware engineer, the fortunes of their India operations may be made or unmade in the cramped workshops of the grey market operators.

© 2000 agencyfaqs!