AMD Soups Up Chip Server Sales Unit

The chipmaker is taking dead aim at the corporate market.
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Updated from 11:48 a.m. EDT

Advanced Micro Devices

(AMD) - Get Report

has quietly reorganized how it sells and markets its microprocessors to corporations in an effort to expand further into this lucrative market segment.

"We have to take advantage of the technology we have today," says Ben Williams, vice president of AMD's newly dubbed commercial business unit. "Our goal is to be 30% of the entire commercial marketplace by 2009."

Williams estimates that AMD now commands less than 10% of the commercial market, which includes servers, workstations, desktop and notebook PCs bought by businesses. In an effort to better serve this market, AMD recently created a new sales and marketing group called the commercial business unit and changed how it approaches it approaches business customers and its customers' customers.

While AMD has touted its progress in getting the world's 100 largest corporations to buy its Opteron processors -- 75 of them have at the latest count -- Williams says AMD is now ready to expand its target market to the world's 2,000 largest businesses.

This ramping-up is significant in that AMD entered the server market just two years ago but has quickly carved out a foothold, first with its 64-bit capabilities and more recently with dual-core chips.

"We aren't just throwing these goals out there," Williams says. "AMD is making investments in the right areas and putting resources in the right places."

And it seems to be making some progress.

Intel

(INTC) - Get Report

, AMD's primary rival, still dominates the semiconductor market in the home and office, but AMD notched a strong jump in the second quarter for share of x86-based server chips to 11.2% from 7.4% in the previous quarter, according to Mercury Research. Also, AMD said its dual-core Opteron sales rose 89% sequentially in the second quarter.

Over the past three months, AMD has realigned its business group to focus on six specific industries: financial services, manufacturing, telecom, transportation, digital media and entertainment, and oil and gas. Each industry now has an AMD team working with customers to better customize AMD's technology for specific needs.

For instance, Williams says telecom companies wanted AMD's processors to remain good for five years. Out of this came last week's announcement regarding AMD's Longevity Program, which guarantees a half-decade of supplies and support for certain versions of the Opteron processor.

Meanwhile, AMD has stepped up cooperation with IT consulting firms, like

EDS

(EDS)

and

Accenture

(ACM) - Get Report

, IT resellers, and software vendors, like

Microsoft

(MSFT) - Get Report

and

Oracle

(ORCL) - Get Report

. "In this space, it's all about the solution," says Williams.

AMD was able to avoid any job cuts during this reorganization and Williams says the company is even hiring from the outside to fill out its teams. One high-level addition is Michael O'Brien, formerly director of channels at

Sun Microsystems

>

(SUNW) - Get Report

, and now AMD's director of commercial channel marketing.

As the company starts to turn up the heat in its push to convince companies it can help them power their data centers, AMD's main route will be the blade server market, due to their relative inexpensiveness and highly flexible use for business computers. Blades represent the hottest growth area in the business computing market.

AMD says it has a technological advantage in blades over Intel, citing performance-per-watt benchmarks and the architecture of its chips.

IBM

(IBM) - Get Report

and

Hewlett-Packard

(HPQ) - Get Report

have introduced four Opteron-based blade servers already this year and Sun is slated to launch a new server family called "Galaxy," which will include blades, in the coming months.

Williams paints the latest changes as necessary for AMD to "reach the next level," saying technology will take the company only so far and now it must convert that technology into sales and market share.

AMD showed strong momentum in the second quarter and continued execution will be the key. The company's stock has outperformed the

Nasdaq

since its earnings report, but AMD shares, which were recently up nearly 3% to $21.02, are essentially unchanged on the year.

In the past, AMD has struggled both in maintaining its technology advantages and converting them into sustained business. This current reorganization shows a company looking ahead -- not behind -- and that's a good sign.

As originally published, this story contained an error. Please see

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