AMD to 'reset' goals: servers, embedded, ultra-low power
CEO Read promises 'clear and decisive action'
After his company announced a $157m loss and its plans to lay off 15 per cent of its global workforce on Tuesday, AMD president and CEO Rory Read explained how he and his brain trust plan to pull Intel's only x86 competitor out of its spiral.
First, AMD will "reset and restructure" its business model to reduce expenses by 25 per cent, with a goal of hitting a quarterly break-even point of $1.3bn in revenue by the third quarter of 2013.
Second, it will expand its efforts, as Read told analysts and reporters during a conference call, "beyond the traditional PC market," and put more emphasis on "fast-growing and adjacent markets" such as chips for servers; embedded cores and SoCs for communications, industrial and gaming platforms; and ultra-low-power chips and platforms for devices such as tablets and "ultrathins" – which is AMD-speak for what Intel has trademarked as Ultrabooks.
"Today, approximately 85 per cent of our business is focused on the legacy PC portions of the market projected to have slowing growth over the next several years," Read said. "Over the next three years we intend to drive 40 to 50 per cent of our portfolio to the faster growth markets where our IP is a differentiator."
In addition to the "macroeconomic issues" that each and every industry player has commented on as contributing to the ongoing PC sales lethargy, Read cited another common explanation for softening PC sales: the impending launch of Windows 8.
In addition, he also cited the cannibalization of PC sales by tablets, which he said "continue to grow as a consumer device of choice."
As did Intel president and CEO Paul Otellini during his remarks after his company's disappointing third-quarter financial results earlier this week, Read says that the microprocessor market is in transition. Unlike Otellini, however, he said that the drop-off happened faster than he had expected.
"Shortly after joining AMD, I talked about the fundamental changes occurring in the PC industry," Read said, "These trends are occurring now at an even faster rate than anticipated. We underestimated the speed of this change in our industry and expected to have several years to transform AMD's business."
Those several years simply don't exist. Read doesn't see struggling, sluggish, soggy PC sales – both consumer and enterprise – reviving anytime soon. "We do see the PC market as one that will continue to be under pressure for the foreseeable next several quarters," he said.
And for a company losing money as AMD is, waiting until that market revives is a non-starter.
Read promises "clear and decisive action," but transitioning a PC-centric company to one that does half its business outside of the "legacy PC space" is fraught with challenges – and the way ahead is misty and murky, at best.
As Read reminded his listeners, "A lot of the historical forecasts and trend lines have broken over the past two quarters." Whether AMD can "reset" those forecasts and "restructure" those trend lines will almost certainly decide if Read and his company will be around in, say, three years to paint a rosier picture during a post-results conference call.
Perhaps the most concise summation of AMD's current situation was heard in the final two words of the call, spoken to Read by one of the analysts: "Good luck." ®
COMMENTS
Re: Maybe?
Actually Bulldozer/Zambezi is a perfectly fine upgrade for any older PCs other than for people with a high end Deneb and Thuban CPU. Zambezi is particulalrly good on multi-threaded apps including some games.
Vishera which is in the channel now and officially available on Monday Oct. 23rd, is ~15% better than Zambezi and a good performance vs. cost CPU. AMD's Trinity laptop and desktop are superior in performance to Intel's cost equivalent offerings. Most PC review sites are now recommending AMD Trinity APUs as the better choice.
Only a small segment of consumers buy the high priced top of the line model CPUs. Intel's equal performance offerings typically cost $100-$200 more than AMDs and Trinity, Zambezi and Vishera will all run any software quite well for a lot less than Intel CPUs or APUs.
Re: Some Presence
No where did AMD say they were abandoning their X86 development. They are expanding their product offering, not ending X86 products. Trinity, Vishera, Steamroller, Excavator, Kaveri, etc. are all on track so not to worry about AMD's X86 development. AMD won't be locked out on patents as they have rights to all X86 patents.
http://www.zdnet.com/blog/computers/what-amds-new-roadmap-means-for-users/7540
Wrong again
Too late. AMD Trinity already is in Ultrathins. No one with a clue is buying an Ultrbook even with millions in Intel bribe money. By the time Haswell shows in '13 AMD will be rolling out their next iteration for tablets and netbooks. Thanks for playing. You lose.
Wrong direction (for x86..)
I think AMD fails to understand the mind share they get by having a fast x86 desktop CPU. I also think they are stupidly following sun's path with their CPU's, which can be summarized as failing to focus on single threaded performance. For general purpose systems Its far easier to bolt a bunch of individually fast CPU's with a good memory system together than to build a high performance system using a bunch of subpar ones.
I think intel understands this, and its a large part of why they are doing so well. Not everyone buys the best i7 intel offers, but it gives them the mind share to sell a boatload of i5s. AMD can very well compete with the midrange, but they don't offer some stupidly power hungry (well ok...), stupidly expensive device that no one buys and it hurts them.
And so, it goes with the servers, where I work, its a total uphill battle to even acquire a test rig with AMD, because everyone is like "AMD makes slow CPU's why would we get an opteron".
Now the ARM argument is different of course.
AMD should have started pushing ARM chips a long time ago. I wonder what their approach to 'ultra-low power' will be.
