AMD Up, HP Down in the Numbers Game

People will be eating hamburgers and hotdogs this Fourth of July, but
today Gartner had to eat a little crow. It reissued its Q1 2008 server sales
figures after receiving updated information on HP server sales and realized
that the change was enough to warrant issuing a correction.

Gartner reported
last May that worldwide server revenue rose 4.3 percent in the first quarter
of 2008 to $13.6 billion. However, the company received new information that
caused it to change the figures on HP sales.

Without getting into details on the process, Gartner research vice
president Jeffrey Hewitt explained that the estimates are based on financial
results that don’t go into this level of detail, so Gartner does a lot of
its own detective work to come up with its own numbers.

HP (NYSE: HPQ) revenue is made up of a bunch of different server
segments, and there were changes in the average selling prices (ASPs) to
some of the servers. The number of servers shipped does not change, only
revenue derived from them, he explained. However, it was enough to affect
the overall Q1 number and cost HP it’s top spot in server revenue over IBM
(NYSE: IBM).

So Gartner felt it had to clarify the numbers. “It’s been years since we
reissued data in a relatively short time from what we published,” Hewitt
told InternetNews.com. “We’re pretty loathe to do that, but this was a case where we got additional
info after the fact and felt we had to make some tweaks here. We realized
it’s not something we wanted to wait on.”

Hewlett-Packard’s revenue was initially put at $4.010 billion, for 29.6
percent of the overall revenue and 10.3 percent year-over-year growth. That
was enough to put it just ahead of IBM, with $3.912 billion in revenue.

The revised numbers now put HP revenue at $ 3.773 billion for 28.3
percent of the overall revenue and 3.8 percent year-over-year growth. IBM’s
$3.912 billion remains unchanged and it moves into first place, barely.

It’s hardly bragging rights for IBM. “The overall outlook doesn’t change
in term of long term or short term. It’s one of those things where we
decided based on the input, we needed to adjust ASPs,” said Hewitt.

Next page: Up slope for AMD

Page 2 of 2

Up slope for AMD

There’s some upside news for AMD. After several consecutive quarters of
bleeding money, customers and marketshare, iSuppli said the company is
finally gaining customer share. It’s still marginal compared to Intel,
but up is better than down.

In the first quarter of 2008, Intel accounted for 79.7 percent of global
microprocessor revenue, up 1.2 percentage points from 78.5 percent in Q4
2007. However, Q1 08 was down 0.7 percent compared Q1 07.

In contrast, AMD lost market share on a sequential basis in the first
quarter, taking 13 percent of global revenue, down 1.1 percentage points
from 14.1 percent in the fourth quarter of 2007. On the other hand, the
company managed to increase its share by 2.2 points compared to the first
quarter of 2007.

AMD (NYSE: AMD), though, saw some year-over-year growth. It went from
10.9 percent in 1Q07 to 13.0 percent in 1Q08. That first quarter number was
actually down from 14.1 percent in Q4 ’07, but given seasonal shifts, that’s
about in line.

“Intel was the short-term winner in the first quarter microprocessor
market,” said Matthew Wilkins, principal analyst, compute platforms, for
iSuppli in a statement. “But over the previous 12-month period, the trend is
reversed, with AMD growing its share.”

About half of AMD’s long-term growth came at the expense of Intel
(NASDAQ: INTC), said iSuppli. The remainder came out of the market-share of
smaller suppliers.

In good news for both companies, iSuppli found that robust demand is
keeping ASPs up from the fourth quarter, the busiest quarter of the year, to
Q1, one of the slowest. The firm said this was an indication that price
pressure has decreased and the pricing war between the two microprocessor
suppliers has abated.

iSuppli’s latest global PC forecast calls for unit shipment growth of
10.5 percent in 2008.

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