AMD: A Time To Make A Kill

Ameet Arurkar of Intelisys started selling AMD CPUs a little over two months ago. Since then he has launched his own brand of AMD-based PCs called 'AMDELL' - a name chosen to reflect his commitment to the brand. It was his plan to sell only AMD-based machines, but now he is also selling Intel-based machines to customers who demand it. 

Till a year back, The Best used to sell almost 400 AMD CPUs. But six months ago, the company discontinued its AMD business and is concentrating only on Intel. Today it sells over 3000 Intel CPUs throughout India.

A Mumbai-based dealer used to sell over 3,000 AMD CPUs six months ago. He spent over $30,000 from his pocket on advertising, after AMD assured him that it would foot half this bill. But now with almost a year coming to pass, and no reimbursements in hand, the dealer has decided to shift focus from AMD to Intel.

What do these above cases have in common? All of them swear by the product's quality and technology, but, at the same time lament about the inadequate support extended to them by AMD. What they would like to know is how does AMD intend to make a dent in the Indian market by being indifferent to the problems faced by their dealers. 

As dealers for AMD, channel partners face their toughest challenge in convincing a customer to buy the products. Says Ameet Arurkar, MD, Intelisys, "Most techies and gaming customers are aware of the product's capabilities and insist on them." But what about the other end-users? 

Says a Mumbai-based dealer, "It is the end-users that AMD should have concentrated on. But where Intel spends over 40 percent of its revenues on advertising, AMD turns a blind eye to it." 

But Sanjeev Keskar, AMD India's Country Manager, disagrees saying "AMD regularly runs advertising and promotional campaigns like the recently concluded AMD Shop Décor Contest, which got an overwhelming response from close to 400 resellers in New Delhi and Mumbai. We also have the web-based, sales-linked incentive program, 'Resellers Rewards', as well as the reseller technical accreditation." AMD has also set up Athlon Centers, a one-stop information and demo center in conjunction with channel partners.

No comparisons please!

True, AMD has been slow to move in the market. But to be fair to the company it has been present in India for only two years now as compared to dozen years of Intel. Says Sanjeev, "AMD is focusing on India as a strategic market and is trying its best to make sure that we increase our mind and market share here."

Manabesh Hota, CPU Specialist at BBS Electronics rushes to AMD's defence. "It is unfair to expect AMD to be as popular as Intel. This is happening largely because people expect newcomers to succeed to the benchmarks set by the existing players," he states.

AMD distributor, Zeta Technologies' Maulik Shroff, supports him. "Since we started selling AMD almost nine months ago, our business has registered a 50 percent growth." 

Even Jayesh Sheth of Great World Technologies, AMD's master reseller in Mumbai believes that AMD is focusing on India as a high-growth market. 

RMA issues resolved

Talks with various erstwhile and existing AMD dealers has thrown up a single course of action for AMD -- strengthen marketing efforts. Says Sandeep Parasrampuria of The Best, "The AMD operations in India are not organized. There were many support and replacement issues that we used to face with them." And it was because of such recurring problems that The Best decided to stop selling AMD.

Sanjeev admits that RMA was an issue, but adds that AMD has now worked out a new policy to ensure that dealers are not affected. That is why starting June this year, AMD has even decided to reimburse dealers the import duty with respect to

RMA.

Dipping sales, but rising hopes

Recently AMD announced its second quarter sales ($985 million), which saw 17 percent slump compared to the previous quarter's result ($1.189 billion). The company had anticipated sales slipping by about 10 percent when it announced its first quarterly result in April. 

While AMD stated that the decline was due to the weak demand for flash memory devices, it admitted that competitive pressures in the PC processor market had also depressed company's average selling prices. 

Sanjeev throws some interesting figures to show the growth that AMD has witnessed from quarter to quarter. 7.7 million processors have been shipped worldwide in the AMJ quarter. He adds that the company registered a $4.1 billion turnover in 2000-01 as against $2.8 billion the year before. He adds that worldwide, the company market share has now increased to 17 percent.

According to sources, AMD has roughly 15 percent market share in India, while Intel, its leading rival, has over 80 percent. One reason for this, according to partners, is that the top AMD management does not have strong focus on the country. Sandeep Parasrampuria echoes this sentiment, "The level of information transfer from the parent company to its Indian office and from there to its channel partners is very low, as compared to its competitor."

Maulik of Zeta Technologies denies this. "The information flow from AMD is not bad at all. We get timely mails and letters from them," he says.

States Sanjeev, "Our parent company is making a sizeable investment in the country. Our Indian team works 16 hours a day trying to ensure that our channel is able to push our products. We know the importance of the channel and are striving to strengthen them by giving proper incentives."

At the moment it is the 1 and 1.2 GHz Athlon and the 750 and 800 MHz Duron that are the star performers of AMD in the country. It has OEM tie-ups with IBM, HP and Compaq. But in India, so far, there aren't any local OEMs who have come forth to provide AMD-based branded machines.

AMD has a product roadmap, currently leading to the 64-bit computing in its Hammer family of processors. It is also planning to shift its process technology from 0.18 to 0.13 micron. 

Bottom line

There is no doubt that AMD's processors have the right mix of three Ps - product, potential and performance. But they lack the other important P that can take their product places and that is 'promotion'. Not until AMD starts promoting its brand, can it expect to increase its market and mind share in the country. 

Sanjeev, however, points out that AMD is already working towards this and in the next quarter, India will see a much stronger avataar of the company. "Give us just another three months and we will show what we can accomplish," he says. Amen!

Vinita Suvarna-Bhatia in Mumbai