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AMD Has Retail Edge

AMD cleared a major hurdle when it beat rival Intel as the leading supplier of processors for the U.S. retail personal computer market last month.

According to a report just released by Current Analysis, 49.8 percent of the personal computers (desktops and notebooks combined) sold in the U.S. in October ran on AMD processors, which gave AMD a slight lead over Intel-based systems, which came in at 48.5 percent.

The latest results follow a trend of retail growth for AMD , which Current Analysis says narrowly beat Intel in desktop retail sales for the month of September.

While this is good news for AMD, Intel still enjoys an overall lead in desktop and notebook sales when you factor in systems made by direct seller Dell and other PC makers who aren't in the retail channel.

Still, Current Analysis analyst Matt Sargent says the results are impressive when you consider AMD has been able to succeed at retail without Toshiba and Sony in its camp at all.

On the other hand, leading supplier HP used AMD processors in 77 percent of the systems it sold at retail, according to Current Analysis.

"This is a wake-up call to Intel," Sargent told internetnews.com. "It'll be interesting to see how Toshiba and Dell take the news because they get some advantages by being a hundred percent Intel. But AMD clearly is showing a price performance advantage."

One of the reasons Sargent believes AMD has been able to make inroads at retail is that Intel has been making a concerted push toward higher margin notebook computers versus desktops.

And while there is a clear trend toward notebooks for their portability, Sargent says the latest figures show there is still plenty of interest in desktop systems and it would be a mistake for Intel to move too hard away from the desktop space.

"There is some strategic correctness to Intel's shift to notebooks long term," said Sargent, "but if the market doesn't shift as quickly as Intel wants, it will give AMD a huge opening on the desktop side, and then they are coming on strong with Turion [AMD's mobile processor]."

Microsoft for one continues to support desktops. The software giant has been promoting its Media Center software as a way for a home PC to be a kind of digital entertainment hub.

"But Intel hasn't done much to support that market," said Sargent. "Intel's P4 [Pentium 4] offerings were priced poorly. From a value perspective, you have to pay more for a lot less than what AMD is offering."

But Intel is not likely to be passive about AMD's increasing competitiveness. Sargent says the real indication of whether AMD is making inroads at retail is the upcoming holiday season.

"Christmas is where the real volume is," said Sargent. "If AMD goes down in the holidays, then the October win doesn't mean that much. Where you're likely to see Intel make up the volume is in the special promotions like the $499 notebooks Toshiba and Dell have done in the past and will probably do again later this year."