Intel, AMD, And Reseller Success: A System Builder Weighs In
Good Friday evening, everyone. Chris Angelini here. Earlier in the week I exchanged emails with Jon Bach, president of Puget Systems, who had something to say about the recent EU ruling against Intel.
Having gone from the hardware enthusiast world to the channel world and back to the enthusiast world here at Tom's Hardware, much of what he said resonated with me. I won't steal any of his thunder, but I present the following column to you for discussion over the weekend.
System builders, feel free to chime in with your own thoughts. I know for a fact that Intel puts a lot of effort into its channel efforts, helping small system builders who would otherwise not be able to compete against the tier-ones do just that through programs like ESAA, Cluster-Ready, and Mobile Authorized Integrator, whereby it's possible to build your own notebooks, servers, and desktops on the shoulders of a grander effort. What is AMD doing to make its own products as attractive in the channel? What's the company doing to help SIs get AMD technology into notebooks? How is it leveraging the strength of its Dragon platform to help resellers build better machines?
But I'm getting ahead of myself here. Take it away, Jon.
Introduction
Last week, the European Union fined Intel a record $1.45 billion dollars, citing abuse of its dominant position in the market by giving rebates to computer manufacturers in exchange for exclusive use of Intel CPUs. While AMD celebrated the victory by showing the EU flag on its home page (Ed.: it has since been taken down), Intel is talking of plans to appeal.
We're left to wonder what this ruling will change in the industry. Will it strengthen AMD's market share with system builders and enthusiasts? As the president of Puget Systems, a boutique system builder in Seattle, WA, I'm not here to talk about the merits of competition, or what rebates are/are not ethical for Intel to offer. I'm here to talk about system builders, and why we use Intel CPUs so heavily.
Of course, smaller system builders have not received any payments from Intel to exclusively sell Intel CPUs. This is about sales volume, and that battle is going to be fought with the big OEMs. Even so, I should start by making it clear that even smaller system builders do have incentives to sell Intel products today. Intel has a channel partner program that awards marketing dollars for every Intel purchase. AMD, to my knowledge, does not. If they do, I don't know about it, and that would be an entirely different kind of marketing failure. Either way, I am surprised at how many people have confused these rebates with those the EU is fining Intel over. Rebates for sales volume are common in the industry. Paying companies to not use your competitors' products is where you cross the line to unethical.
But even these legal rebates are not why many system builders focus on Intel CPUs. In fact, in the case of Puget, we have buckets and buckets of these marketing dollars saved up because we haven't gotten around to spending them. With a limited amount of time, and countless other things to do, we just generally focus on the product first and advertising second. So why, then, did Intel receive 93.5% of our CPU sales in 2008? This number is quite typical with system builders. The way I see it, there are three major reasons:
1) Customers are not asking for AMD CPUs
I'm not talking about which CPU is faster, or which has better value. I'm talking about customer demand, which is a large part of shaping a system builder's product line. If we focused on the value segment, as some builders do, I'm sure we'd see more demand for AMD CPUs. As a boutique outfit that focuses primarily on high-performance, highly reliable computers, we simply see larger demand for Intel CPUs. We have always listed both brands; AMD just isn't selling. Could we do a better job keeping up to date with AMD's product line or with giving them exposure on our Web site? Absolutely. And if our customers wanted it, we would. If customers are asking for AMD product, there isn't a system builder out there that will turn down sales in exchange for Intel rebates.
I will say that server CPUs are an exception. AMD has done an excellent job of making its server line more "approachable" than Intel. Whereas Xeon MP processors are incredibly expensive (and are not as readily available in the channel), AMD has made it easy for system builders
to provide dual- and quad-socket servers and workstations.
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"If AMD had a CPU that was compelling enough, you bet that we'd be pushing it in front of our customers. But I have to admit that I know very little about AMD's current processor performance".
So it is clear you don't know enough about both manufacturer's products.
So why should we even bother to read your article let alone listen to your Spintel marketing rhetoric?
Go away and spam someone else.
I imagine Paul gave you a cheque ...
Whats that crap about the cpu coming unmounted and mashing pins?? Bullsh@t.
It is true that AMD cpu's usually demand slightly more cooling, but maybe they need to find better couriers and lay the computers on their side so that the heatsink is facing towards the ground and not hanging on sideways and oscillating.
Doesn't take a genius.
So AMD is the only manufacturer that Tom's readers will never knock? Apple is bad, Intel is bad and if anybody disagrees it's bullshit and marketing spam?
Dear God grow up.
@the above commenters: are you system builders? Have you ever worked for Puget Systems? Can you therefore back up your accusation that they are lying about unseating CPU fans? Personally I have seen it happen with an X2 workstation. Granted, the issue wouldn't have arisen with the person transporting the unit took better care, but nonetheless the hoofing great cooler did flex a bit and pull the CPU out a bit damaging a few pins. I've also had the same issue rebuilding an old Socket 478 P4 system a few years back and since Intel's socket 775 I've never seen it happen since.
Although I do concur that as a system builder Puget should be more aware of AMD's offerings, if their customer base simply has no call for AMD systems then why the hell should you stock them? Certainly if I was going to a boutique supplier and spend an insane amount of money I would want the very best I can get my hands on - no amount of EU fines, bad practice or whatever will take away from the simple truth that Intel have been massively superior to AMD over the past few years - and I challenge you reynod to disprove that.
That's not a pro-Intel stance, sucking up to the company or being anti-AMD, it's quite simply business sense - you supply what the customer wants, and if the customer wants Intel, you supply Intel.
AMD really needs to get a marketing and brand managing face-lift but this article was a little too emotional in those parts that americanbrian and reynod pointed.
LePhuron:
Intel is the only manufacturer THG will never knock as they are scared to death of them ... so is everyone else.
Intel is trully the mafia in the tech space and giving them a bad review could cost these guys their job ... or a couple of fingers.
So it's up to us users to put things into perspective.
Any system builder worth his salt will sell whatever system he can to the customers ... currently in the low end AMD make great sense for Govt and corporate machines as they are much cheaper - the cpu's are half the proce and DDR2 is cheap, not to mention the mobo's are cheaper.
For a business looking at purchasing new machines for an office, they could save a lot of money buying AMD ... without sacrificing on performance.
But those rebates from Intel ... oh ... have they stopped now?
@reynod:
"Any system builder worth his salt will sell whatever system he can to the customers...currently in the low end AMD make great sense for Govt and corporate machines as they are much cheaper"
I entirely agree, but perhaps you've missed the part where this article states this is a comment from a boutique builder, and therefore we're talking uber-performance for uber-cash, and AMD simply cannot compete in that space. If the Phenom II could match or beat an i7 then we'd see boutique builders, such as Puget, offering AMD-based systems.
But it can't, so we don't.
Has it occurred to you that nobody in the tech industry knocks Intel at the moment because there's nothing to knock? The Core 2 was glorious, the i7 is glorious, the i5 probably will be too. However I've seen nothing but disdain for the Atom and indifference for Larrabee. Beyond purely technology, the ramifications of the i7 and the i5 (price and otherwise) have come under a lot of scrutiny and negative press, yet people must still have fingers because they're still typing.
Let's have another article interviewing a system builder for the low-end market and we'll see what they say - does cost-effective AMD come into play here, or do Intel try and bribe or buy them out too?
Really dude, if Intel is this anime-style evil Mega-corporation then I REALLY doubt that "users putting things into perspective" will make a blind bit of difference. In fact, you might even be bumped off too.
AMD doesn't have to compete on the upper high-end to sell.
It has the best value and that's what most buyers are looking for. So something is really wrong if there is so poor demand. The problem is that most consumers think Intel = good; AMD = crap (only buy if you have not enough for Intel). If you're looking for the best and money is no problem surely i'd build a system for a consumer with the best Intel board.
However general consumer is not in this cathegory, and AMD is really the best here.
Those years AMD had better hardware on high-end, only us - well informed people knew it while general consumers thought Intel is the only way to go.
In part this is shops' fault, not the consumer's. It's their responsibility to make consumers aware of it. But as long as their able to sell for higher prices when people choose Intel, why would they talk about AMD as they only sell budget computers with AMD cpu's.
In the other hand it's AMD's fault too as their marketing is nowhere to be seen. You only see Intel everywhere in every publicity channel.
Those are the most relevant points why AMD fails.
My 5 cents... I am a tiny system builder... I built about 10 computers a year for various Clients, friends and companies... Basically the bottom line from my point of view is:
1. It's much easier to buy Intel products although they are usually more expensive. (example - Famous Zotac miniITX motherboard for AMDs - to this very day you still cannot easily buy it, similar Zotac boards but for Intel - available pretty much everywhere).
2. AMD is always cheaper offering great value for money and decent performance. If I build a cheap computer - it's always AMD, if someone wants performance - I go for Intel - reason is simple and already mentioned above.
3. Intel does not invest much in R&D - they usually just recycle old ideas and improve manufacturing process... AMD on the other hand is trying hard to find a solution to beat that using ideas - much harder task in my opinion, much smaller budget and again - no advertising of it - so yes it is AMD's fault as well...
4. For this or other reason I find it somehow "harder" to build a highend AMD computer and even when you assume you can get all the components you want (because in most cases you can) the price of the Phenom2 system will be pretty much close to i7 so... then you look at the benchmarks - these are confusing a bit these days (apparently AMD does well in games) but at the end of a day - I'd opt for Intel as there is a bigger choice of motherboards, you can put more memory in that mooo, and the overall processing power is simply better - even when you opt to spend a bit more than AMD's platform and therefore not giving AMD a chance to satisfy your Customer... You get excited about a new computer - then you look at every component 10 times, compare everything and opting for AMD gives you a "feeling" that you are opting for "less"... featurewise that is... And I think AMD simply needs to change that image first. Hopefully with higher clocks Phenoms will be able to compete with i7s for a while... and maybe if AMD does it right - they could be on top for a while again...
I think the predomiant reason that AMD are second best is marketing... I havn't seen anything marketing wise from AMD to convince me otherwise.
PC builders and maufacturers market performance as the number one attribute of their systems and the midset of public is intel = performance amd = almost as good.
The general puiblic dont care about a phenom II compared to an intel whatever, the general impression is intel is better than AMD. If you gave the public two identical looking computers with identical specs and prices, one with an intel e2200 at 2.2ghz and another with an amd processor clocked at 2.2ghz, most of the public would choose the intel, they dont know (or care) about overclocking, IPC's, heat or FPS and leat of all looking at benchmarks - in pc world where most of them go, they go with a budget and the intention of buying the intel computer that comes with the most accesories i.e. free printer, bigger screen etc.
Holy missed point Batman!
If your competitor stopped you gaining a significant market share through underhand tactics, reducing the money available to you for R&D, marketing and production investments...
Why would you have a reduced market share a few years down the line?
Answers on a postcard to tomshareware.co.uk (or send them direct to puget systems)
On a side though... why Puget? None of us here will ever buy anything from them nor even see a computer built by them...
Question to THG's Editorial team: How many of you guys are there working on this site? It would be an interesting article if you would just take the idea - research the subject a bit here... sent a couple of emails and prepared the results... Why everyone thinks that what happens in the US apply here as well?
I think the point is that the entire article is just another pro-intel marketing scam paid in full by you know who ... Voldem ... um ... Spintel Marketing Division.
Nuf said.
There are a couple of other reasons why system builders would use Intel over AMD:
1) Because you can charge more for Intel products and get more discounts on buying bulk, you can get a higher margin and therefore higher profits. AMD offerings sit in the low-end market where margins are much smaller. Interestingly, a high-end AMD gaming system performs at the same level as an i7 system - just a few FPS difference - and costs a not insignificant amount less than Intel, so AMD need to get their marketing right here.
2) Having maintained both Intel and AMD systems side-by-side over the last 10 years or so, I have tallied up the amounts spent on each keeping them up to date. The Intel systems have cost a heck of a lot more (in the order of 40%) than the AMD systems. Most of this has been down to changes in CPU socket design meaning a new mobo (and often memory as well.) System builders will be well aware of this and the implication that people will buy a complete new system each time, rather than just upgrading the individual components.
??? The bottom line is that AMD CPUs are far more likely to be unseated during shipping (WHAT)
All I can say is this reseller must be talking about old times reminiscing on when his company could afford to run AMD along side Intel as AMD heatsink fixings have changed in resent "years" he should take a look at the world out side Intel he may gain a new insight into Reseller Success.
Honestly the bad excuses so called professional people use to justify there position, it just makes them sound like they know nothing really. I just do not know what this world is coming to.
This article is just a lame way to make Intel look good. I have 13 years experience in the IT bussines, and I can't tell you for sure that 90% of the pc users will buy what the seller says it's good for them. Don't give me this crap about customers not wanting AMD, most of them have no clue about what is inside a pc and they will buy whatever integrators want. I am not a AMD fanboy, I have both AMD an Intel pc's and they each have strong and weak points. The only big difference is the price/performance ratio, where AMD wins by a mile. Intel losses probably because in the price of an Intel product there is a big amount of dirty money they give to OEMs to sell more of Intel stuff.
Whatever AMD has done, there will always be people who follow Intel around like sheep. To be honest, most of the system integrators I speak with who use Intel, have become so complacent they often come up with ridiculous reasons for not looking around at the competition, and I think to myself fine..you keep throwing money into the coffers of a corporation that dragged its heels and still kept prices high.
Despite AMD's smaller budget, I think it's achieved a lot in a very short space of time. The portfolio is excellent and is right for the market, because most people are on a budget and cannot afford the best - most people don't even need it. If AMD is competing on price rather than outright performance then that does not matter to me in the slightest.
I'd wager that most consumers - even today - are sheep. That most people will buy what they are offered, even if you have a technically superior alternative. It doesn't just apply to processors. I have historically gone with AMD because not only was I unable to afford access to Intel, I also didn't like the way they operated, and how they dragged their heels in developing x86 architecture. It took so much of them to catch up as well, that I really do not want to return to the days where they just sit back and watch the market stagnate. Competition is good, and from a technical viewpoint AMD is good competition. The only thing my AMD rigs come back with is praise, and most of the buyers don't know the difference between AMD or Intel, but they do appreciate the right to play HD content and even some of the latest games for a rock-bottom price, as well as the possibility of uprading their older systems to a high standard for even less. That's all they care about but there again, a lot of them believe what they are told and willingly hand over their savings like they would to a snake oil salesman because they don't know any different..
You are so damn funny hehe. I bet you have no clue on how a performace pc looks. First of all the best are water cooled, after them there are a air cooled with large heatsinks. You are telling us that you guys are mounting large heatsinks with the crapy lga 775 push-pins ?
Note to the "performamce" integrator, dude a large heatsink is mounted with bolt-thru kits, never with push-pins. With push-pins not only that you take the risk for the heatsink to get loose, but you also take the risk to bend the motherboard in time.
LePhuronn ure still missing the point. Intel is tops for the last 2 years, fact. The ruling against Intel is for 2002-2007. As far as I can remember AMD had some kickass CPU's then. As a system builder myself i always told the client theres another choice with is better and cheaper. I dont get money from intel but ive got a happy client.
Just my 2cents.
Intel may have (finally) produced some good x86 CPU's, but look at their platform solutions.
AMD has kickass motherboards with HD and decent 3D capability. What did Intel have..GMA graphics? At the low end AMD had it covered, and at the high-end you have systems that are more reliant on the graphics card than the CPU, hence AMD Phenom II's give similar results to Intel Core 2 Quad's and even i7's. Plus, you can upgrade a lot of older AMD systems to use the Phenom II technology and still make use of your existing memory, making further savings.
So I think it's important not to judge AMD purely on the basis of one product, namely the CPU, but rather the system solution. Let's also consider just how big Intel is compared to AMD, and why it may not be a wise choice to compete with a product that is slowly but surely being outpaced by new technologies, such as GPGPU technology.
GPU fabrication is also something AMD has really excelled at in recent years, with many an Intel-based system using AMD/ATI hardware for its price and performance.
Most of the people I build systems for are not corporate clients..they're families with very limited budgets. I don't really see any performance or reliability issues, especially given the intended use and the capability of the AMD platform as a whole. It might sound like fan-boyism but it's really based on what's available at the time, and at what price.
God, Toms seem to be full of $#!% today...
The lawsuit and fine covers what Intel did back when it was second-place in terms of both platform and CPU tech, and had to take major (and highly illegal and deplorable) action to avoid a reemergent AMD suddenly taking a huge slice out of their market share; in the end AMD did win over a lot of converts in the server market, but Intel's practices gave them a false edge in the corporate-business and large-OEM markets. It has virtually nothing to do with the New Era when Conroe made its mark.
And I generally find the above article terrible even by the standard's of Toms ludicrously biased and/or point-missing ways. Who gives a damn what Puget think? They're like politicians - they cater for the elite and thus haven't the slightest clue about actual reality.
I do agree AMD has three lethal enemies: nVidia, Intel, and themselves. Lots of point-missing on their part. Phenom was a bust, balanced by the evolution up to HD4000 which was a real coup. New and updated platforms have been a great selling point and current P2 offerings could be an immensely powerful mid-range powerhouse if you ignore the Spin(tel). But they've missed a trick big-time: mobile and entry-level sectors continue to grow yet there are no new P2-optimised chipsets, no 40nm chipsets, no lower-TDP dual-core P2s for the budget and mobile segments or high-power 40nm integrated-graphics platforms for them to slot into. What about a mid-speed, 65W TDP 45nm dual-core P2 for cheap combined with a strong chipset with (for the first time ever) reasonably strong onboard graphics? 4 HD4000 SIMD units on an all-in-one chipset are easily achievable on the teeny 40nm process, especially with its power economy and fast DDR3 buffer (either parasitic or sideport).
And that's before we get to the flaws in marketing...
For the sake of computing itself.. wake up, AMD! You could be so much better if you followed the market!