When I decided to do a Brand Segmentation Project, I thought about two companies that I have almost daily interactions with, and that for me is the Intel vs. AMD fight. Both of these companies sell micro processors for windows computers and Apple computers all over the world. From my experience with both of their products Intel has been known to be a low core gaming and entertainment processor that most people that either build computers, buy pre-built PCs from larger companies, or purchase and sort of Apple computer.
AMD takes the opposite route for their processors; their processors are more geared towards processing and development. Doing some overview about both of the companies, Intel was created in “founded in July 1968 by American engineers Robert Noyce and Gordon Moore.
Unlike the archetypal Silicon Valley start-up business with its fabled origins in a youthful founder’s garage, Intel opened its doors with $2.5 million” (Hall M. 2018 Intel). And then for AMD they were “founded in 1 May 1969. It is an American, multinational semiconductor company located in Sunnyvale, California, United States, and they were founded by Jerry Sanders, Jack Gifford, Edwin Turney, Larry Stenger, John Carey, Frank Botte, Sven Simonsen, Jim Giles.” (Quindara H.
History of AMD). Both companies started off selling the same type of products that being micro processors and other PC components. AMD has since grown from just creating micro-processors, they also create video/graphics cards for windows PCs. Intel does that same but they have their graphics “card” as part of their micro-processors that both PCs and Apple products use.
After doing some research I was able to come back and create a graph “See graph 1 in the appendix”.
The numbers that I used were from Q4 since 2013 until present. As you can see since 2013, Intel never dropped below controlling “70% of the market over AMD this definitely shows that Intel has a much larger fan base, and has created a larger brand awareness to companies that produce pre-built systems. With AMD they owned as much as 25-26% of the market in their best quarter in the graph that I have in the appendix yes, they are still the second and only competition that Intel has they just have a very loyal customer base or niche of users.” (AMD vs Intel Market Share)
Again, if you look at the second graph in the appendix you can see back in 2006 Intel and AMD were neck and neck when it came to who controlled the market for micro-processors. From 2006-2007 Q1 Intel took a huge lead of about 67%, this took a good majority of the market away from AMD which at this point them as the underdog in the market. Now if you compare both of the charts you can see them both starting out around the same and then Intel take the early lead and holding it to the present with AMD only controlling about 25% of the market.
When we talk about market growth it has hard to see the amount of computer sales that have occurred in the past 15+ years. From this article they said that the “Preliminary results for the second quarter of 2018 (2Q18) showed shipments of traditional PCs (desktop, notebook, and workstation) totaled 62.3 million units, recording solid year-on-year growth of 2.7%, according to the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker. The results exceeded IDC’s forecast of 0.3% growth and marks the strongest year-on-year growth rate in more than six years, when the first quarter of 2012 posted growth of 4.2%.” (Traditional PC Market Grows, 2018). The 2.7% growth that was found for 2018 is a large amount especially since the amount was forecasted was only 0.3%. I am not able to find the amount of these devices have Intel or AMD components but from the research that I have done I would have to say at least 70-85% of all the PCs or MACs that have Intel components over AMD.
Both companies take a different approach for pricing their products, “Intel Corporation uses the premium pricing strategy to maximize its profits. In this strategy, the company’s prices are relatively higher than those of competitors, such as AMD. The advantage of this pricing strategy is that it maximizes the profit margin. A main disadvantage is that it is difficult to implement and could fail in a price-sensitive market. Intel succeeds in using this pricing strategy by maintaining a premium brand with a corresponding high perceived value, based on the perceptions of target consumers.” (Ferguson, E. 2017)
With that being said as someone who builds PCs and who knows a good amount about the microprocessors that both Intel and AMD sell, I can agree that Intel does have a premium price for their microprocessors but they do have a superior performance when it comes to gaming, or entertainment. Now for AMD when comparing their prices back to Intel you can see that their most expensive processors that they have produced is only $100 cheaper than Intel’s newest line of processors. AMD has the lowest prices on the market for processors but since they don’t have a large market presence and since over the years AMD has received a negative perception on their value and consumers think it is worth it to spend the extra money to afford the Intel branded processors.
I am going to start off with Intel and work my way to AMD and compare what they target and how they appeal to customers using niche markets or the ways they sell their products to businesses or your average customer. With Intel they have been known and given the brand image that they are the best when it comes to gaming and entertainment and has “always outperformed AMD when it came to gaming benchmarks” As someone who builds computers and has used both AMD and Intel products I can say that this is true when you look at the actual specifications of each chip that they sell they have proved to be much stronger than any line of AMD chip ever sold. Now with AMD they have always been shown to be a high powered, good with development and producing products such as videos, and rendering. They do this through their high core count on their processors that are cheap enough for people to afford. As well as AMD’s processors, they also sell graphics card because of this it gives AMD another target market so they can appeal to more of the customers that want to use AMD products for gaming and entertainment.
When it comes to branding approaches I will start off with Intel. From commercials to online advertising to sponsoring gaming events Intel uses multiple different types of branding approaches. With Co-branding, whenever there is a Dell commercial or when a MacBook is being shown by Apple that is being aired on tv you will see at some point that they mention the Intel processor, and they emphasize the type of processor and give it a “beauteous” look to the chip. And before the commercial ends they show the Intel logo and animation which shows the co-branding that they do. Again, with their branding approaches Intel sponsors gaming events such as IEM (Intel Extreme Masters), throughout the event they do giveaways of their products and they build enough custom computers for the professional teams to use in their event. Unlike Intel, AMD uses co-branding in a different way, they co-brand with publishers and producers of games and programs. As well branding with those publishers AMD is trying to change to change their image to gaming and show that they can compete with their rivals. AMD also uses Individual Product branding with their new lines of graphics cards and their new processors. Radeon for their graphics cards and Ryzen for their processors.
I am going to start off this section with AMD, and talk about their two lines of new graphics cards and processors that they have recently developed. The Radeon graphics cards that AMD has had in their arsenal was created to support their “gaming” vision that they always wanted. Because Intel doesn’t create graphics cards at all AMD had to compete against the biggest graphics card developers NVIDIA. These two companies fight over the graphics card market and still AMD is the underdog in the race. And this is happening because of the long-lasting perceived value that they have accumulated over the past years. Now turning to Intel with their current image issues, because of their recent release of their newest processor that “Intel has been having supply issues at 14nm related to the delayed ramp of its 10nm production and (the company claims) increased demand for its enterprise and data center products.” (Hruska, J. 2018). Because of this issue it can give a bad reputation since Intel can’t produce enough processors to keep up with the growing demand of the customers, drive the prices for the processors up and then cause loyal customers to trade off to AMD.Recommendations:
Starting with Intel, I believe that they should try and create a graphics card to compete with AMD or they should create a strategic alliance with NVIDIA to defeat AMD at both games. And because of their recent issues with supply shortages they need to be able to increase the amount that they are able to produce with each new release of a processor. And for AMD they need to increase the advertising that they use and try to co-brand with some larger business like Intel does with Dell and Apple.
Remember! This is just a sample.
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