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.

Comments

AMD no longer competing with Intel?

[Anonymous Coward]

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."

Re:AMD no longer competing with Intel?

[xmnemonic]

It's just typical slashdot pessimism.

Re:AMD no longer competing with Intel?

[Tablizer]

I really don't see anywhere in the article where it actually says that "AMD will no longer compete with Intel [PC chips]

It does not explicitly say that, but it seems like "CEO speak" for pretty much that. Here is an excerpt from the article:

AMD, which has fought a losing battle in recent quarters against Intel Corp....for the top spot in processor speed and performance, said that making semiconductors smaller, cheaper and faster was no longer the key for an effective strategy....In a shift away from the slowing personal computer industry.... AMD said it would begin working with a wider variety of companies to sell its products. (emph. added)

They would have said, "we are going to expand our product line" if they did not really mean a retreat in "regular" x86 chips.

Sounds like a pull-out from mainstream x86 chips to me. I don't know how else to interpret it. If you *don't* make them "smaller, faster, and cheaper", then you are not going to sell very many. Nobody wants to buy a larger, slower, and more expensive chip.

Too bad, though. Lack of competition will decrease choice and progress. Intel can now slow down it's R&D and it may be longer before we see quantum chips and true AI. Worst of all, no realistic simulated customized porno. There goes my 3-breasted Klingon babe fantasy (sniff). I'll miss you AMD.

Re:AMD no longer competing with Intel?

[WatertonMan]

There have been fairly consistent rumors that AMD will, to increase revenue, be helping manufacture the 970 for Apple and IBM. This, of course, isn't designing chips. But it is almost certain Apple will be moving away from Motorola. Thus if IBM can't supply the volume they may contract to AMD. This would give them cash to survive to find various niche markets - probably the embedded market - to sell to.

I don't think this means a pull out from x86 chips, but perhaps a change in what x86 they focus in on.

If AMD does move towards the PowerPC it makes sense. It is a market that has been largely devalued by Motorola and Apple is hungry for chips. I've read that Steve Jobs and the AMD CEO are old friends. So Apple may even offer incentives that will keep AMD afloat and be a win - win for both sides.

Of course many of the rumors are very silly. (i.e. the rumors going around that OSX will run on AMD's Hammer chips - difficult if not impossible due to the difficulty of emulating PPC code on a x86 platform) However there may be a core of truth to them. Certainly AMD hasn't been making it competing with Intel.

Demand?

[Otter]

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..

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...

Re:Demand?

[ahfoo]

And since we're talking supply rumors now, I might as well toss in my favorite long running CPU supply rumor which is that both AMD and Intel are doomed by off-the-chart fab growth in China.
In fact, AMD has been increasingly outsourcing to UMC for 130nm and we learned last month that SMIC has bought 130nm tools from Europe despite, or more likely because of, Bush's bizarre antics in foreign affairs.
As the PC economy continues to tank, Taiwan's UMC and TSMC will eventually get the green light to finish the fabs they've already started in the mainland and there is going to be a massive glut of CPUs priced so cheap that IBM, Intel and AMDs CPU businesses will be worthless.

desktop

[Clay Pigeon -TPF-VS-]

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.

Good move for AMD, not so good for consumers.

[Space Coyote]

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.

Re:Good move for AMD, not so good for consumers.

[fferreres]

It's just another example showing that it's very hard to compete against an entrenched monopoly.

No, this is just an example that in industries where marginal cost in negligible, it favours the creation of a monopoly in the mid or long term.

That actually happens in ANY industry that has this cost equation. The math is very simple. The offer curve is flat, so the one that has the most R&D has a higher return, and so in the next phase they have more cash to spend in R&D.

It's the famous winner takes it all, and if AMD lives today is because Intel is better of having them around than not.

RTFA - AMD not leaving the PC business

[lpontiac]

There's nothing in the article to suggest that AMD is abandoning the PC chip market.

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.

Not a bad thing

[Moridineas]

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.

Intel's pricing power

[Animats]

That's sad. Before AMD got into high-end desktop CPUs, Intel was edging the CPU price up towards $1000. After AMD started beating Intel now and then, CPU prices dropped to the $100-$200 range for anything below the latest and greatest barely-works part.

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 - needs to raise prices

[Monkelectric]

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.

Smart Move AMD....

[metacosm]

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.

Nothing new here

[Martigan80]

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.

Damn

[TCaM]

Is there a way to mark this whole thing as a Troll?

Maybe AMD thinks CPUs...

[foniksonik]

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.

If you folks haven't noticed

[edhall]

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.

-Ed

Ahem.

[MtViewGuy]

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.

Re:That's just great.

[Wavicle]

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!

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 /., well for us 1GHz is plenty.

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.

DO THE EDITORS EVEN BOTHER TO READ THE ARTICLES?

[Rui del-Negro]

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
~~~

Forbes?

[Glock27]

I wouldn't normally consider Forbes an authority on technology issues - and this article doesn't convince me in the slightest.

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! :-)