Advanced Micro Devices Inc. (AMD), the biggest rival to chip maker leader Intel Corp., has seen rapid growth in India in three years, particularly in the personal computer segment, but wants to raise its share of the overall market to the “mid-twenties” in the next three quarters from around 18%, according to a top AMD sales executive.
Although Intel continues to have dominant shares in each of these markets, AMD has chipped away at the giant’s grasp over the Indian market.
AMD’s share in desktop computers in India in 2006 was 21%, doubling from the year ago, while in notebooks, its share was 8%, up from 2% in 2005, says research firm International Data Corp. (IDC). In x86 servers, its market share was 9% in 2006, up from 5% the previous year. The company designs and produces microprocessors, graphics and media solutions for the computer,
communications and consumer electronics industries,
Strategy: AMD’s Rick Hegberg says India and China are the firm’s topmost priorities.
“We have a market share in the mid-20% range in our global business and we see no reason, why in the next three quarters our India business cannot acquire that same share,” Rick Hegberg, senior vice-president, worldwide sales for AMD, said in a recent interview.
India is the focus market for AMD given that market growth for the firm’s products had stabilized in China. “India and China are the number one priorities for us and are our fastest growing markets, even outgrowing the pace of each others markets. But, India is where we will put in a lot of focus and attention as we already have stable and steady growth coming from China,” Hegberg said.
AMD’s prime objective is to continue winning over more original equipment manufacturers, widely known as OEMs, which, in turn, will enable business?with?large?enterprises.
Last year, the company announced Dell Inc. as its customer. Early this year, AMD partnered with Toshiba Corp., the latest in a string of partnerships with Hewlett-Packard Inc., Sun Microsystems Inc., IBM Corp., Lenovo Inc. and Acer Inc.
It counts HCL Infosystems Ltd, Wipro Infotech Ltd, Tata Consultancy Services Ltd and more recently Zenith Ltd among its Indian customers.
AMD has typically done well in the government and education segments, and the next step is to target customers among the consumer desktop segment and a range of companies.
“These customers are important for AMD India as we develop more products that have processors and chip sets that will be sold in India. This will help us expand market share by acquiring more business from large multinationals and increasing our regional base,” said Alok Ohrie, managing director for AMD India Ltd, the chip maker’s local unit.
Analysts, however, are sceptical about how quickly and how well AMD will be able to create a strong presence here.
“The numbers show they have had a good start. But it is not going to be easy for them in India. They still have a long way to go, as they still do not have a major acceptance as a brand or a technology provider by customers,” said Piyush Pushkal, manager for computing products research, IDC India. He added that AMD must break its image as the provider of the best price advantage and begin to associate itself more with performance and quality.
Emerging segments, too, hold promise. “Gaming is a good story for them. They should use the ATI acquisition more strongly than anyone else to leverage the potential that industry has to offer," Pushkal said. (AMD bought ATI Technologies Inc., a graphics processor company, for $5.4 billion, or Rs24,516 crore, last October.)
“The animation and graphics market is a huge opportunity for us,” says Hegberg.
AMD aims to double its distribution and retail partners from the current 1,000 in the next one year. From 2001, when it had only “a couple of people” working out of its office here, the company is now in six of India’s largest cities, and in another seven locations where it has one-person operations.
It also has four large distributors in India. The biggest challenge for Hegberg will be to scale up quickly in India in face of strong competition from the well-established Intel brand. “Clearly, Intel has got a headstart. What keeps me awake is how quickly we can gain the hearts and minds of our customers here,” he said. “But we know Intel is not going to make life easy for us.”