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5 Things AMD Needs To Do To Save Itself
The problem in wrapping one's blogging arms around the AMD situation is the disconnect between the company's fine products and its poorly performing business side. Usually when a company does this badly for this long -- six consecutive quarters of losses -- there's something fundamentally wrong with what it's making. Not so with AMD. Its processors are good. More important, their existence has historically served as counterweight which keeps Intel honest, at least in the eyes of the latter's customers. Mostly, AMD's problems have stemmed from its inability to be content as a small No. 2 player, and its burning desire to be Intel's equal (in size and revenue; I would argue they've done a decent job as far as technology equivalence is concerned). It seems AMD has bagged that strategy, which reached its apex with the $5.4-billion acquisition of graphics chip-maker ATI in 2006. Since then, AMD has spun off Spansion, its flash memory operation. It's also shed staff and sought capital (an 8.1% stake went to Abu Dhabi last fall.) Amid all that, AMD still posted second-quarter revenue of $1.35 billion. (Sure, its 2Q loss was $1.19 billion, but it's burdened with all sorts of write-offs. The point is, there's demand out there for AMD chips.) OK, so now to the point of my post. Here are the five things new CEO Dirk Meyer needs to do: Sure, this isn't a commodity market, but it's an area where there are eager customers, your partners are actually reasonably happy with you, you're competitive -- and will remain so for the foreseeable future -- and you can make a profit. What's not to like? The time will come soon when graphics processing isn't just integrated on-board, but on the processor itself. Which means consumers will need to know about it even less than they do now. Better to focus your branding efforts on your bread and butter. The old rationale, that you needed to play here because you had to have a full lineup to be taken seriously, no longer applies. So stick to servers, with Opteron, and high-end gaming desktops, with the Phenom parts. However, this begs the question: What does AMD do with its Turion mobile-processor line? I have no insight into how Turion is faring, business-wise. So possibly it makes sense to re-tune Turion as a mobile part intended for subnotebooks. In which case, as far as my suggestion goes, never mind. There you have it. What do you think? Please leave your comments below or e-mail them to me directly at alex@alexwolfe.net.
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