AMD may have competitive products in the sub-nehalem market. Yet their price advantage means nothing to Intel's brand weight and OEM availability.
First of all, Pentium 4 sold more than Athlon 64 because all the "Intel Inside" campaign made non-tech savvy buyers look for the logo; even thiough AMD had better CPUs. AMD had poor marketing schemes.
A couple of years back, when I fist got interested in technology and CPUs, I was dissapointed to know my machine had an AMD processor. I thought it was just a crappy budget alternative to Intel (because I had not heard of it before), and was desperate to switch to the "great" Pentium 4.
Added to this, Intel's CPUs have been outperforming AMD's since Core 2, so solid product + good marketing = Intel's huge success.
So, even if the Athlon II X4 or some Phenom IIs offer better price-performance than Intel's CPUs, their lower price doesn't make up for Intel's well known name.
Just an example, I ask people about their CPUs, and they say they "think" it's an Intel dual core; or Intel "core dual 2" or "2 duo core"; and in some cases, they actually have an Athlon X2!!!
Lastly, I don't see much AMD prescence in HP or Dell, and since most people buy their PCs from OEMs, I can see why AMD's market share has plummeted. I don't know whether it is poor AMD-OEM relationships or Intel's illegal practices, but AMD CAN compete with lower end products, and they are the important ones (make most sells).
AMD, nevertheless, NEEDS a "conroe" architecture. Their hope is Bulldozer if they don't go bankrupt by 2011. 2010 seems to be a tough year for them.