Advanced Micro Devices must work hard to rebuild its momentum in the Asian server market, even though the chip maker managed to retain many customers in the face of repeated delays of its Quad-Core Opteron processor.

"There was no wholesale shift to Intel," said Tony Parkinson, vice president and general manager of industry-standard servers at Hewlett-Packard Asia-Pacific. "The AMD guys are very loyal."

That's good news for AMD, but Asian shipments of AMD-based servers still did not grow as fast as the overall market in recent quarters, according to Rajnish Arora, director of enterprise server and workstation research at IDC Asia-Pacific. "That's a sign they're not doing too well. Usually, if someone is doing well they are growing faster than the market," he said.

Server industry sources confirmed that assessment, indicating sales of Opteron-based servers dropped off sharply during the first quarter of 2008.

While IDC has yet to release data for the first quarter of 2008, it found that AMD steadily lost market share through the second half of last year. AMD's share of the Asian x86-server market peaked during the second quarter of 2007, with 9.9 percent of the market, before falling to 8.1 percent during the fourth quarter. That decline was largely due to rising shipments of Intel's quad-core Xeon 5300 processors, also known as Clovertown, Arora said.

Things may soon change.

With the Quad-Core Opteron delays now firmly behind it, AMD has a chance to regain its footing in the server market. HP, one of AMD's biggest customers, recently refreshed its server line with new systems based on the Quad-Core Opteron, including an eight-processor system that will ship this month. Dell has also started selling Quad-Core Opteron servers and other companies will soon follow suit.

In a best-case scenario for AMD, pent-up demand for Opteron-based systems would result in higher sales during the second and third quarters of 2008, as customers finally purchase long-awaited server upgrades. "That could be possible, but there are no numbers available to support that," Arora said.

AMD must now work hard to rebuild the momentum it lost amidst repeated delays of the Quad-Core Opteron. "They have to start all over again," Arora said, calling the delays a "lost opportunity."

The IDG News Service is a Network World affiliate.

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