February 2001 Industry Update

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Motherboard makers have become increasingly concerned with the present market, and the proliferation of chipset makers. One manufacturer expressed dismay at the fact that there may be as many as eight (8) chipset makers by the end of the year, and offering motherboards for each chipset and each segment would require over 250 models!

The result of this is that motherboard makers are starting to specialize and focus on particular market segments. This has always been the case for the smaller manufacturers, as they have discovered they can do a better job focusing on one particular niche than the larger manufacturers who are trying to be all things to all users. Unfortunately, with the larger manufacturers now starting to focus on specific markets too, this may push some of the smaller manufacturers out of the market.

Most of the large motherboard makers seem to be targeting the workstation/server market, which will put some pressure on Tyan, Supermicro and IWill, who are smaller and cater primarily to this market. Those manufacturers with a lot of Socket A products will be focusing on the gaming market, since that is where Athlon currently dominates. A few manufacturers are concentrating on providing OEMs with specific solutions, and not doing much in the consumer space. Very few will be offering anything other than a token number of models for the low-end except for OEMs, due to extremely low prices and margins. Even the volume pushers are having a difficult time making any profit down at the bottom. Expect this market segment to give way to the Web-enabled appliances in the very near future.

As indicated in the past few Industry Updates, 3rd party P4 motherboards seem to be selling very poorly. This was confirmed by yet another of the top 4 motherboard makers recently. Though there are some P4 motherboard sales by systems integrators, the volume is extremely low. This would indicate that almost all P4 volume is through OEM sales. With Intel shutting down one of their motherboard manufacturing plants (see the PC Market section), and the reported accelerated production schedule for the DDR Brookdale chipset, it would seem to lend credence to this observation.

Many of the motherboard makers I have spoken with believe that there is still some growth potential for Socket A boards during the first half of this year, and a little bit of growth for PIII boards. None that I have spoken with (about half of the top 20 makers, and three of the top 5) believe that P4 has any chance of making a dent in the market until the VIA P4 chipset appears, which is estimated to be near the end of Q2. Overall, the general consensus seems to be that AMD should gain some additional market share in the first half of the year, then possibly give some back to Intel when the Brookdale chipset appears and P4 system prices are much more competitive for equivalent components and performance.

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