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AMD Announces A Shift In Focus From PC Processors
slughead writes "Forbes Magazine is reporting that AMD will no longer compete with Intel to make faster, smaller, and more efficient processors. Just as Mac users would be worse off if Windows didn't exist, Intel users will be much worse now that AMD will no longer compete. You see, there's this thing called demand, and when there are no competing products in a market, a good or service will always increase the price to the economic equilibrium, unless forced not to by the state (forget that right now, communists!!). In English: you're going to get less new technology, and higher prices on existing technology." On the other hand, AMD is definitely not exiting the chip business -- they're just trying to branch out from chips for microcomputers.
I really don't see anywhere in the article where it actually says that "AMD will no longer compete with Intel to make faster, smaller, and more efficient processors."
There's something else called supply which is what actually changes when a more aggressive supplier enters the market, moving the equilibrium price to a new spot on the same demand curve. As long as you're handing out patronizing lectures on microeconomics...
What I'm listening to now on Pandora...
AMD will probably still have the best bang for your buck desktop processors but they wont be as fast, and that is all right with me. I never buy the absolute fastest cpu as I do not like to pay out my ass for the litte bit of extra performance that is not absolutely necessary.
Viral software licensing is not freedom, it is in fact GNU/Socialism.
It seemed that AMD couldn't make money even when the Athlon was the hottest thing going (literally and sales-wise), simply because the PC market is so driven by price. It takes far more R&D costs to come up with a processor that can compete with the latest from Intel, and the profit per unit is probably abysmal.
To compete with Intel, they were finding that they had to compete in every area, in order to please the OEMs it was courting. They had to make a mobile chip, they had to make a low-cost chip, and a multiprocessor-capable chip, and now they're hard at work on a 64-bit chip. All of which will sell a fraction of what Intel will sell but with similar R&D costs.
It's just another example showing that it's very hard to compete against an entrenched monopoly.
___
Cogito cogito, ergo cogito sum.
Their president said that they're branching out into different markets, and Forbes went on the comment that this is a shift away from an emphasis solely on the PC market. But nobody said that AMD is going to stop making chips for PCs.
I don't see this as necessarily being a bad thing. The consumer computer processor market is a funny market today--the fabs cost billions to construct, the research costs millions and these chips are some of the most complex things ever created--and you can get then for $50 basically.
What's the point of every home user having a 3.0GHz processor? I'm not saying "640k should be enough for anyone" but at the moment, few applications (minus gamers) even need a 1ghz processor to shine--processors will no doubt continue to improve but until some radical paradigm shift in computing, it won't be that big a deal (memory, 3d cards, bandwidth are where I see the possibilities for a lot of improvement).
Let AMD get into market where the r&d is lower, and the margins are higher, this sounds like a good thing to me.
Sadly, the AMD 64 bit processor has now slipped to "the first half of 2003". It was supposed to ship in Q4 2002 not so long ago. I wonder if it will ever ship. This is bad. Intel's Inanium is not a place you really want to go.
AMD's prices are just *dirt* chip, this is why they aren't making any money. An 800mhz PIII chip costs 89$, on pricewatch (which I would never buy from by the way). 87$ buys you an Athlon 2100 cpu, which is just about 1ghz faster then the intel part. AMD's processors are an amazing value, but AMD has to have trouble making a profit on them.
Religion is a gateway psychosis. -- Dave Foley
Comment removed based on user account deletion
I think this is in the best business interests of AMD. I am a software developer by trade, and gamer by hobby. For years I was on the bleeding edge of technology (and paying a hefty sum for the bragging rights). I used to dabble in overclocking/custom cooling and really "pushing the preformance" on my machines. But the truth is, right now, as a software developer (VS.net[C#/C++], Java, Perl, Python) and a gamer (Worms, Warcraft III, Natural Selection), I simply feel no pressing need to upgrade my system.
In the days of 3.06Ghz HT boxes and 64bit processors... my systems are meek by comparison... My primary machine is a Sony Viao Laptop 1.0Ghz (AMD) with 512 + 40gig IDE (15.1 inch screen). My gaming machine is a 1.7Ghz (P4) with 1024 + 120gig WD (Special Edition). Yet despite my primary machine being 1/3rd the fastest(and more so if you count the advantage of HT) in the industry -- I feel no pressing need to upgrade.
The bottom line is, nowadays I don't feel like I am waiting for my system todo what I ask it too-- and until that feeling returns due to more powerful [or more bloated] software, I don't think I will be running out to buy a machine based on CPU.
If AMD is cheaper, cooler and does everything I need to in a smarter way (sound like Transmeta's plan anyone?), they will get my bucks.
Many people choose the higher price/performance ratio of AMD proc's over Intel. But you have to keep in mind that many disciminating in-the-know users still prefer Intel's slight lead in motherboard (chipset) stability. A quick look at any x86 server-class rig will show you that Intel is still recognized for their stability. (Note: I'm not trying to start a fight here, as I own procs from both companies, but you have to admit not many servers run AMD stuff.)
The other big factor is marketing. Intel spends much more money marketing their stuff, and they seem to be doing it in an efficient way. AMD is still thought of by many people who don't know any better as a "cheap imitation."
As far as R&D goes, they seemed to be doing quite well until recently. Maybe someone else can shed some light on this for us.
"God is a comedian playing to an audience too afraid to laugh." -Voltaire
"That would just result in you having a PC that got slower and slower with out telling you untill it was crawling along.. Intels P4 thermal managment just underclocks the CPU until the temp is safe or the PC is so slow you cant work on it any more."
a.) Nobody's complaining about P4's overheating to begin with.
b.) I'd rather my computer slowed down than making a constant whining noise until it just turns off all together.
Intel handles overheating much better than AMD. Ironic since AMD's the king of running too hot.
In fact before AMD started hounding Intel in the x86 market they made a wide range of processors and chips! I do electronic repair work for the military and I see plenty of older and newer boards with chips from AMD, Motorola, and TI. Not too many from Intel.
I understand the vision they have about future computing, if you try to shove a AMDXP or PIV in ever piece of hardware you will limit your capabilities greatly. There are times when a RISC processor will do a better job then a chunking x86.
Sure their stock took a hit, but those damn investors always freak out when change is in the air.
This SIG pulled due to lack of funding. (This damn war is costing too much!)
and it sounded like marketing-speak. however, I think some concern is warranted, particularly when you read between the lines (which always requires a bit of interpretation and speculation, but still...)
A shift away from the PC market could mean that they will no longer be trying so hard to compete with intel. The comptetition has arguably been good for BOTH companies, and even better for consumers. Isn't that what is often argued here, that competition against microsoft (in the form of linux, OS X, etc) would be a Good Thing (TM)? Improve quality? Lower price? yes?
I think we are justified in asking the question, and being concerned about this move. I'll repeat my call to the AMD employees that read this site... more information, please. Don't be shy... the worst you can be is an Anonymous Coward!
I love your nick, by the way...
Even if a man chops off your hand with a sword, you still have two nice, sharp bones to stick in his eyes.
A modern fab is a billion dollar investment. Given that AMD can't charge a premium for thier chips and that thier credit is not as good anymore I don't see how they can expect to conitnue the race to make smaller faster chips against Intel. Intel has very deep pockets and more production capacity so in a way the Mhz race is how Intel is pushing AMD out of serious competition. Deemphasizing the cpu part of their business is a smart move for AMD but not good news for consumers.
contrary to what a lot of the above posts say, there _is_ a hint that AMD will be withdrawing (to what degree, who knows) from the processor market. but i think the most interesting part of the article is where it mentions that AMD will be raising $300 million in convertible notes.
what does that mean? it means they're not really retreating. i think it means that they're going to be broadening their efforts; they'll stop focusing so much on processors for PCs, and dedicate some resources to other places.
they did very well with their flash memory division for a while (nevermind how it's doing now). that shows that they are able to succeed in areas other than the PC processor market. this gave them a taste for pursuing interests besides processors. additionally, their bitter struggle to compete with intel, and it _is_ bitter and brutal, led them to realize that in order to truly succeed as a company, they're going to have to work on multiple fronts instead of tying their success on one admittedly difficult marketplace war.
in short: nevermind the hype about AMD retreating. focus on the interesting aspects of the article. focus on the fact that they're taking a risk in raising $300 million and lowering their credit rating. then think about _why_ they're doing it.
Is there a way to mark this whole thing as a Troll?
Plain and simple, they lost. And its a shame, because they came into the game losing (post-K6, beginning Athlons). At the peak, less than 6 months ago, they were the favorite chip among hobbyists, and really had the better, cheaper, faster chip. They were winning (in the way that it counts, at least to me).
What a shame, especially when they realize that Intel can beat them in the areas they are focusing on too.
are "fast enough" for consumers, at least for the time being, and are looking at a PC marketplace in the near future where MOST (typical users) will be satisfied with their PC experience for several years to come. With a shrinking market for NEW PC cpus they should logically look elsewhere to sell their product, elsewhere being other consumer markets, whatever they may be.
A fool throws a stone into a well and a thousand sages can not remove it.
Intel isn't exactly betting the farm on the PC market, either. Although Itanium isn't quite as do-or-die for Intel as the Hammer series is for AMD, they both know full well that making CPU's for PC's will be a shrinking part of their revenues. Making chips for servers is the market they are both shooting for. The margins are much higher and the market is actually growing at a good clip, unlike the PC market.
So I guess this may be bad news for folks who want really cheap bleeding-edge performance on their desktops. But business users don't need any more performance on the desktop than they already have, and even gamers are increasingly looking toward GPU's and not CPU's as the most important factor for performance in their systems. Intel and AMD are laying their bets in the server room.
Given that AMD already has the technology in hand to deliver more bang-per-buck than Itanium and with a smooth and solid migration path, this may be the most sensible move they've made in years.
Just as Mac users would be worse off if Windows didn't exist,...
A more appropriate comparison would be:
Just as Windows users would be worse off if the Mac exist
I don't think AMD is leaving the x86-compatible CPU market anytime soon. I think AMD was just unfortunate that the current market conditions won't allow for the company to be profitable in the CPU market; what AMD wants to do is expand into building other specialty products that will better insulate itself from market conditions. If you look Intel's wide range of products they are heavily into networking, specialized-market RISC CPU, and so on.
The thing is that AMD--unlike previous competitors in the field like Cyrix--has demonstrated that can produce CPU's that are very competitive performance-wise against Intel's products. The Athlon XP 2800+ --which should ship any time now--has proven it can keep up with the Pentium 4 2.8 GHz CPU in most benchmark tests. Intel can't sit on its laurels with the new Pentium 4 3.06 GHz CPU that has the Hyperthreading functionality; they very well know that the Barton-core Athlons due the first quarter of 2003 will probably keep up with the Pentium 4 3.06 GHz, because the new Athlons will not only sport 512 KB L2 cache on the CPU die but also other changes to the main CPU core to improve performance.
Like other people stated here, home users usually need top notch CPUs mostly for games.
But other then AMD you also have nVidia and ATI with their graphic processor units that just get better and better. And lets not forget that Intel pretty much failed trying to compete in this field. Even now, lots of gamers spend more on a video card then on the CPU.
Yes, I can't really understand why AMD would pull out of potentially the most lucrative area of the chip market, having gained an extremely tough-to-gain foothold there!
/., well for us 1GHz is plenty.
They aren't pulling out of the PC processor market, they are saying that demand for high end processors is weak and the cost of R&D to produce 5GHz+ chips may not be made back. So they are changing their focus away from competing with Intel on the very top end. When the market picks back up and suddenly everybody is demanding enough processing power to run their own simulation of a thermonuclear detonation, then AMD will spend more R&D money on top end processors. They won't stop producing Athlons, they will stop investing huge chunks of money into making faster chips.
For most people like myself who only use their computer for 3D gaming, software development, video & image editing, writing papers, checking email, talking on IRC and reading
Much of this is a response to the fact that they're asking for a $300million note, and the market they are in is depressed.
Education is a better safeguard of liberty than a standing army.
Edward Everett (1794 - 1865)
it's not a troll, i remember paying $700 for a p200 (just the chip) the day it came out oh so many years ago and now i would have to pay someone to come throw away the same machine (if i stil had it anyway)
and i worked at the store i bought it from
AMD is saying that besides desktop chips, they are also moving into workstation and server chips. How exactly is this "pulling out from competition with Intel"...? Quite the contrary, they will now be competing not only with the Pentium and Celeron, but also with the Xeon and Itanium (and with chips from Sun, HP, etc.). And judging from the support they're getting before even releasing the Hammer, I'd say their future looks quite bright indeed.
I'm sorry for the rant, but for the last couple of years Slashdot has become a swamp. Half the articles are from someone pushing their personal agenda ("Microsoft sucks", "Apple rules", "Person X is a bastard", etc.), and the other half are simply wrong. The readers then comment on the Slashdot "news items" without even bothering to read the original articles (thus propagating the ignorance) and finally the moderators mod things as "interesting" or "insightful" without bothering to see if they're even remotely true.
RMN
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First of all, AMD does have diversity in chip manufacturing. They make flash memory.
Second, cutting employees doesn't mean you pay less taxes. The pre-tax charge that you link you has nothing to do with taxes. This pre-tax charge is a one-time expense associated with the restructuring. It mostly represents the severence pay they'll be giving people.
I've read your story submission (which slaughters any reasonable economic theory) and this. You shouldn't try to write about finance until you get an education.
That which does not kill me only makes me whinier
AMD has a very effective roadmap ahead for Athlon, where it basically goes head to head with Celeron. Athlon is smaller and faster there. Hammer is expected to debut at 3400+ ratings and Opteron is expect to hit 4000+ and higher in 2003. Besides being faster, these chips will have native 64 bit capability which P4 lacks. They will smoke P4 across the board, and have a smaller die size to boot.
If AMD can execute (every sign is they can) they should take off during any tech recovery. Believe me, when Hammer starts selling like hot cakes, the CEO will sing a whole different tune! :-)
Galileo: "The Earth revolves around the Sun!"
Score: -1 100% Flamebait
Wow, XP 2100 and P4 1.7 run at the same clock - look at the diff in price (well, the XP runs 33MHz faster, even)
arg. Don't you know that an Athlon and a Pentium with the same clock speed are not the same speed!! Clock speed is just one variable in CPU speed.
You notice how it says XP 2100? That means it's equivalent to a P4 2.1 gigahertz! (Actually, it's faster than a 2.1 gig.)
Don't go bashing something you don't know anything about.
If you don't understand any of my sayings, come to me in private and I shall take you in my German mouth.
AMD is thinking on the right track.. they are essentially saying that they will expand their market because there IS something as 'too fast' (for the workstation market, anyway)..
/w 128mb ram is more than enough for web-browsing, email, and an instant messager and fast enough to use any bus architectures required to access your devices such as cameras, pdas, mp3 players. Why should people upgrade if there is no need? Sure, there may eventually be a need for real-time digital editting in Grandmom's computer.. but it isn't needed yet.. so why should Grandmom buy a computer that can do that??
Sure, chips will keep increasing in speed.. but they can't increase so drastically their uses drastically overshadow the uses of their target audience.
A 400mhz Celeron
Computer purchases will slow down considerably in the next few years (and it has already begun) until there is a new 'killer app' that requires something more..
Perhaps when we finally have 3d capable desktop software, we may begin seeing more upgrades... and even more when 3d capable screens are available (holographic 'screens'!).
The point is that the consumer market has been leveling while the chip speed as been flying higher.. there isn't any money in doing R/D if nobody is buying the product! So they want to start looking into other markets, the markets of which the consumers are shifting their eyes to. Digital Cameras, PDAs, Wireless networking, etc.
AMD is standing on one leg, they need another foot otherwise they may topple once the chip market levels. Intel has already done it, they are making wireless equipment and webcameras... they know that when the chip-market is doing poorly, they have a little leg to stand on.
Or at least it's to the point where there's no point to it all, except for the people who just have to buy an $75,000 Lexus, because they perceive it as being better than a $25,000 Toyota. Sure, it may be better but it isn't three times better, nor is it worth the higher maintenance costs and poorer fuel efficiency. But you really can't argue with those people anyway.
Here's where we stooped to: Intel reports a 9% increase in raw clock speed, which translates to a 4% increase in synthetic benchmark performance, and the power consumption increases by 15% at the same time. Great. Or NVidia ships a new graphics card that requires an external power supply and has all these great features that are effectively worthless, because it's just barely getting to the point where a game can require hardware T&L--something that's several generations old--and still make a small profit. Never mind all the stuff in later generation cards. Unless you're John Carmack, there's no incentive for developers to support this stuff, especially when an entire game console costs half as much as new video card.