Why Apple Should Acquire AMD

slashdotLIKES writes "CoolTechZone.com columnist Gundeep Hora has a new column up that discusses why Apple should acquire AMD and how both companies would be a good fit for each other. From the article, "After private equity groups, let's look at a more strategic acquisition. For that, Apple is the best bet. Yes, I know it sounds way too radical to be taken seriously. However, Apple could drop Intel altogether and adopt AMD for its Macintosh PCs. Sure, the transition is going to take sometime, and it would probably make Apple announce a brand new line of PCs. However, it will be well worth it. We know Steve Jobs is ruthless when it comes to making interesting deals with powerful companies. This makes AMD a perfect match. Obviously Intel isn't going to be too delighted, but other companies don't bother Jobs. We all know he's the type of executive who crafts deals on his own terms. If Intel wants to be associated with Apple, then they won't really have much of a choice."

Comments

Re:Answer without a question

[smilindog2000]

Not only that, but Apple doesn't consume enough chips to make it's business very interesting for AMD. IBM barely seemed to care when they lost Apple's business, and certainly they didn't care enough to bother making the low-power laptop CPUs that Apple desperately needed. Further, AMD barely survives at all through their intense focus on chasing Intel. Apple would trash that focus, and likely cause AMD to go under. Steve Jobs may be a severe a-hole, but I doubt he's dumb enough to fall for a buyout of AMD. Maybe Larry Ellison would like to buy them :-)

Re:I doubt it would happen

[networkBoy]

Apple was lucky in that it had the foresight--or fortune--to maintain a secret Intel-native OS X build for years. It was forsight.
For nearly a decade Steve and the CEO of Intel have had lunch once a year. That shows how long the deal was "in the works".
-nB

Re:This is a crazy and silly idea

[LWATCDR]

Let's get this out right now. AMD's CPUs don't suck. Since the Intel went with the core there is really only one really bad CPU on the market and that is the Pentium D.
AMD does have a new line of chips coming I am really hopeful that they will be a big step up for AMD so we can keep this war going for a while.

Why would Apple buy AMD?
They have a lot of cash laying around.
They like the idea of an integrated CPU/GPU in the mini/notebook space.
They like the new quad core cpus in the Pro/Server space.

Why Apple shouldn't buy AMD?
They have a good relationship with Intel.
AMD has not produced a great notebook cpu/chip set yet.
They have no real need to. Apple is making money hand over fist.
A big question on if AMD would still sell enough CPUs and GPUs to compete with Intel if they where owned by Apple.

Plus you have the potential of diluting the Apple brand name. What would an Apple be? If you have an Apple CPU do you now have an Apple?

BTW Just as a thought. With the technology that AMD is using to build the new quad core CPU couldn't they also build a duel core cpu + duel GPU chip that using hyper-transport to link the GPUs to the CPUs and each other?
You might have a low end solution that that could run Flight Simulator X under Vista!

Re:I doubt it would happen

[jimstapleton]

I'd have to agree with you. Within a generation or two of an Intel CPU model being released, AMD is typically completely instruction set compatable with the Intel CPUs. Ex, the original Athlons didn't have SSE at all if I remember correctly, the later 32bit athlons had SSE and I think SSE2.

So, instruction set wise, they'd be golden. Add to that the addition of the 3DNow instruction sets, and the fact that they could assume they were present on newer Macs, the switch shouldn't be hard for Apple. As you said, EFI would cost money though.

That being said, as someone else put it, the performace of current generation AMD chips (and even the projected next gen performaces for AMD and Intel), does not provide a compelling case for a switch. Then again, the performance generation of Intel chips vs. PPC chips when Apple was official about the switch, did not make a compelling case either.

Re:I doubt it would happen

[mabhatter654]

I think Dell may be taking AMD up instead. Dell needs to be unique... not just shipping department for "WinTel". With their new try at Ubuntu, AMD would be a good choice for OSS solutions.. AMD don't seem to have a problem with OSS, they relied on it to sell opterons. Perhaps a big vendor like Dell would finally get some decent ATI drivers out there because it would make really cheap powerful notebooks. I'd think AMD would intend to fix that, but they need cash for work like anybody else.

Re:I doubt it would happen

[PygmySurfer]

The switch from PPC to intel was a far greater feat than going from Intel to AMD would be. In fact, I doubt there'd be a single software issue... apart from the lack of EFI (which I'm sure Apple could wrestle away from Intel at some outrageous price).

Actually, EFI is nowUEFI, and doesn't really belong to Intel anymore. In addition, AMD and Apple are members of the United EFI Forum.

Another reason for Apple not to buy AMD would be production issues - I believe one of the reasons Apple went with Intel was because of Intel's manufacturing capacity. If Apple buys AMD, they either don't get enough chips, or AMD CPUs become exclusive to Apple's computers - Dell, HP, and all the home builders would be SOL, because there'd be insufficient supply. And if that were to happen, there'd be zero benefit to owning AMD for Apple.

Another problem with this scenario is that Apple essentially buys ATI as well - what then, only ATI GPUs in Macs, in addition to only AMD CPUs? Then there's all the other chips AMD makes. Does Apple just sell off these other divisions, or just shut them down completely?

Help OSX move from Macs to PCs?

[doyoulikeworms]

If Apple bought AMD, could we see OSX working only on AMD processors? It would be neat to build my own rig and be able to install OSX on my ugly beige box legally.

Fiscally Makes No Sense -- Numbers & Links

[knapper_tech]

Alright, someone is making this judgement with a paintbrush when they should be using a calculator.

Apple doesn't have enough cash to buy AMD and currently has only $9.8bn in assets. They also have $6.4bn in long and short term debts. AMD would cost about $7.3bn to buy based on today's market cap. Apple would have to pay about a 20% premium to that at least, making it about $8.8bn. To then pay off AMD's debts, $9.4bn including the latest senior note offering, Apple would need that ammount of cash in excess (or at least enough to make a dent.)

The biggest reason an AMD buyout could make sense would be: A) Apple and AMD do business with each other, and thereby can be more tightly integrated so that the pair profit more than the parts. B) Apple has the cash to pay off AMD debts so that AMD can quit getting slaughtered on interest payments ever quarter. Apple could do business with AMD, but its not likely to streamline any part of the production process for either company. There is the notion that an Apple halo could be beneficial for AMD (DAAMIT). There is the unlikely possibility that Apple management would bring new life into AMD and all the sudden AMD would get twice as much innovation done and all their chips would have white substrates that collect fingerprints and come with click-wheels.

You can see where I'm going with this. Apple doesn't have the cash to buy AMD and then turn around and pay off the debt significantly. The two combined companies would together still have so much debt that instead of just AMD being at risk of bankrupcty, Apple would be dragged in as well.

That said, if you're a level 75 venture capitalist with full merits and $18bn floating around, buying AMD isn't a bad idea. The gains in interest would instantly boost AMD's earnings by hundreds of millions per year, not to mention create a stonger DAAMIT to continue exploiting the natural tendency towards duopololy in this competitive, capital intensive industry.

Buy AMD. Make it healthy. Sell it back to the street for three times what you paid in ten years. Then go find something to do with $54bn dollars.

Apple already cut a deal with Intel

[Andy_R]

Think about what Steve Jobs had to offer Intel or AMD at the time they decided to drop the PowerPC. AMD and Intel are at war over market share, and Steve held over 2% of the market by volume (and given Macs are not cheap, a bigger share if you go by $ value), and was offering exclusivity. AMD and Intel knew that if they didn't get that 2%, the other would. That's an incredibly strong bargaining position for Apple.

We don't know what's in the deal that was stuck with Intel, but given Steve's reputation for hard bargaining and Intel's desire for market share at any cost, I'm willing to bet it makes any chance of moving to AMD pretty unlikely - just look at where Intel are sending the world's entire supply of 3Ghz 4-core x86 chips.

Re:I doubt it would happen

[t_ban]

That being said, as someone else put it, the performace of current generation AMD chips (and even the projected next gen performaces for AMD and Intel), does not provide a compelling case for a switch. Then again, the performance generation of Intel chips vs. PPC chips when Apple was official about the switch, did not make a compelling case either.

Performance-wise, AMD and Intel are close enough so that that won't really matter to Apple if they really switch over. That wouldn't be their reason, if they did. Their reason might be integration. Apple is typically a company that wants to fuse hardware and software together and brand the result as a unified product. They don't want customers to think along hardware/software lines. They had some bad experiences with IBM providing their hardware, so they switched to the Intel architecture.

It is possible that they shall now want to bring the hardware side of the Mac totally under their own control. I can very much see Steve Jobs wanting to do that. But as an astute businessman, he wouldn't take the double risk of changing the architecture and sinking a lot of money into acquiring a chip manufacturing company simultaneously, in case the move failed. Naturally, he would first switch to the new architecture and then, if that succeeded, proceed to buy out a manufacturer.

And what better target than AMD does he have?

I don't know if it will be good or bad, if this happens. I guess all depends on whether Apple will then sell processors separately, or subsume AMD's total productions into Macs. Because then Intel will be virtually without a competitor, and that can't be good.

Re:I doubt it would happen

[Ilgaz]

If they coded Rosetta properly it shouldn't really take much of a transition to go to AMD except the change in hardware. However, if they had PowerPC, intel, and AMD Apples on the market it would make it more like a PC. Something Apple doesn't want and something that other Apple users don't want. There was a lot of fuss over switching to Intel. I can just imagine it would be even worse if they switched again so soon. What else Rosetta can do? You emulate a current, perhaps more modern, totally unique RISC CPU via CISC. That CPU also happens to have a custom instruction set which can only be compared to SSE3 (velocity engine or altivec).

I mean I don't know what Steve Jobs said but besides the bus speed/ram speed (g4) and portability problems (PPC970 never meant for portable), G4/G5 have some very impressive specs.

Its not like we are emulating a outdated 68030 CISC chip on a newly shipped, modern RISC monster from same company. That is why nobody had any performance problems on 68k-->PPC. You can't possibly get that level of performance. Apple abandoned PowerPC not because of being outdated, they abandoned because IBM didn't give a heck to Apple's needs, Motorola didn't care and the future lies on portable.

Worst wild-ass guess ever

[kindbud]

Dvorak, put away those leaves, they aren't tea leaves.

Sun buying AMD is much more likely and actually makes sense. Sun's SPARC design is at the end of its life and the company is nearing the end of its transition to the x86 architecture. Sun knows how to run a chip business, server business and software business, and wants to keep running those businesses. AMD has their chip. It's a good match.