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Amd Customer Concentric Approach Explanations

FLORIAN VIDALINC

ISM/ ISEG SUP5 2F

MBA Program

PROFESSIONAL MANAGEMENT SKILLS ASSESSMENT

Due to the 4 November, 2010.

CONTENTS LIST

Executive Summary 3

Introduction 4

1. What would it take amd to see a significant increase in its market share processors used in corporate desktops and notebooks? how can the success of opteron in the server segment be leveraged to other segments? 5

2.What do you make of amd’s “power campaign”? Is the value proposition it highlights compelling to end users? 6

3. How concerned should amd be about intel’s imminent new product plan? will they hamper amd’s growth plans? 7

4. WILL AMD’S CUSTOMER CENTRIC APPROACH BE A SOURCE OF ADVANTAGE OVER INTEL? 8

5. WILL IT YIELD COMMERCIALLY VIABLE INNOVATIONS THAT ARE DRAMATICALLY DIFFERENT THAN THOSE INTEL WILL DEVELOP? 10

Conclusion 11

LIST OF REFERENCES AND BIBLIOGRAPHY 12

EXECUTIVE SUMMARY

For years, AMD held the place of a distant follower of the large microprocessor market leader, Intel. Up to there, the competitor Intel holds a “push” strategy by creating consumer needs thanks to technological innovations. Those were linked with strong marketing campaign in order to facilitate a quicker adoption process of their new product line. However, in 2003, AMD change its traditional strategy to use a widely different one by switching into a blue ocean strategy. Indeed, AMD has changed course to become a “starter” firm. AMD has decided to launch at first its own brand server microprocessor range, called “Opteron” before one of Intel. At this moment, the firm made the decision to initiate the moves of server segment and therefore take heavier risks in term of investments, sales, pushing partners to adopt their new technology, reliability of their new products and also regarding their credibility of the market.

Corporate desktop segment is for mass market, not a niche as server segment. So the investments required have to be higher and bigger to build an image of credibility, brand awareness to corporate segment which do not really the product line of AMD. The problem of “Power Campaign” is that it focused on the brand image of AMD and not enough about their product line to push them to adopt a specific product more efficient in performance and energy consumption. It does really not highlight compelling to end users who are only looking for an efficient product: the technologic side of product is not enough accentuated.

Customer centric approach is a new marketing and strategic point of view of the market and of the demand for AMD. But this strategy focused on customer is feasible for a niche market because needs could be almost at the same level whereas in desktop segment, it is not the case in mass market, it requires an important part of investment of funds to adapt their product line then, to adapt their infrastructures to customized demand and developing new products requires a very important budget, cut manufacturing costs and to increase the manufacturing yield of the company. It will a hard task to do but if they manage to find some followers, it can succeed.

INTRODUCTION

By way of an introduction, we have to do a small overview of semi conductor industry and see where the second worldwide larger microprocessor designer and maker, AMD, is. The high gross margins rate of chip makers compared to the other actors of the value chain IT goods industry (PC, server and mobile) shows us that microprocessors and software/ device (Microsoft) are the two key points of the industry. For example, Intel and AMD, microprocessor maker had respectively a gross margin of 56.7% and 39.3% from 2003 and IBM and Dell, PC manufacturers, got 37% and 17.9% in 2003 (Exhibit 8). It is competitive industry drives by the dominant Intel which have known in 2003 a rupture thanks to AMD. This company is a distant follower of Intel which has a really dominant position on the...
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