Hard Case: Signs of Life at AMD?

Posted 11/17/2009 at 11:47am | by Loyd Case

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In the past year, AMD seems to have been taking a sort of “strategy du jour” approach. We ship low-cost processors! We do low-power CPUs! Our parts are great for overclockers! We love home-theater PCs!

Those messages weren’t really different from anything Intel, the 900 pound velociraptor in the CPU  business, would offer up, but there was always a tinge of desperation. This became more noticeable as Intel slowly and methodically stripped away whatever technology edge AMD had. Intel’s Nehalem was really the last straw: AMD couldn’t even claim “true quad core” any longer.

The exception to this has been the company’s graphics division. For several years now, analysts have suggested that AMD’s acquisition of Toronto-based ATI was a distraction, and likely to bring down both companies. In the past twelve months, though, the graphics division has been surprisingly resilient. This, despite all the soap opera shenanigans that have plagued AMD--the latest being Hector Ruiz’s resignation as chairman of Global Foundries (the former AMD fab business), due to the Galleon Group insider trading scandal.

As the CPU division was forced to ship underperforming products that often sucked too much power, the graphics guys were kicking serious ass. The Radeon HD 4000 series GPUs weren’t the fastest you could buy, but they did have the best price/performance and forced Nvidia into an unanticipated price war. ATI then delivered the Radeon HD 5800 series, which proved to be the fastest GPUs available on the market. AMD has been selling all the 5800s they can manufacture, and would likely sell even more, if it weren’t for yield issues with TSMC’s 40nm manufacturing process.

Even with the successes on the graphics side, AMD still seemed like a bifurcated company: CPUs on one side, graphics on the other, with some platform (chipset) technologies the only link. Now, however, AMD is positioning itself as the only company with a unified approach to GPUs and CPUs. Nvidia, AMD notes, is only a GPU company while Intel is still only strong on the CPU side.

We’ve heard inklings of this, with the earlier announcements of its Fusion CPU, a melding of graphics functionality onto the CPU die. Now, however, AMD is taking its approach to CPUs–the melding of graphics and central processing–and applying that idea to its overall corporate strategy. AMD is trying to position itself not as a GPU or CPU company–instead, it’s a single company with feet planted firmly in both sides of the computational equation. Only AMD, with its expertise in building CPUs and GPUs, can really take advantage of the coming age of visual computing.

It’s about time.

To be sure, it’s a risky approach. Trying to excel in both arenas may simply result in creating mediocre products. On the other hand, the strategy plays to AMD's last real strength. Intel is struggling to get Larrabee out the door. Its current integrated graphics products are an also-ran compared to AMD and Nvidia’s chipset-level graphics. Nvidia, meanwhile, can’t get its Fermi architecture out the door, and continues its ongoing verbal and legal tussle with Intel.

So AMD has an opening it can exploit, however small and tenuous. Whether or not AMD will be successful depends entirely on execution at this point. On one side, AMD has a world class GPU design team which has been firing on all cylinders. On the other side, the CPU designs have been… less than competitive. AMD has had a poor track record in picking a strategy, then executing a product plan based on that strategy. It’s attempting something new, melding a CPU organization and a GPU team into one focused organization. Will the company pull it off? Or will we look back on AMD two years from now and wonder what happened?

I’m hoping AMD will pull it off, because I want multiple companies competing in both the CPU and GPU space. It’s competition that will drive creative and cool products, while consumers will benefit from reasonable price structures. But the stars are not necessarily aligned, and AMD’s competitors on both sides of its house are behemoth by comparison. Success, if it comes at all, will be a tough slog.