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AMD: What Went Wrong?
Barence writes "In 2006, AMD could seemingly do no wrong. Its processors were the fastest in the PC market, annual revenue was up a record 91%, expansion into the graphics game had begun with the high-profile acquisition of ATI, and it was making exciting plans for a future where it looked like it could 'smash Intel's chip monopoly' for good. Now the company is fighting for its very survival. How did AMD end up surrendering such a advantageous position – and was it given an unfair shove on the way down? This article has plotted AMD's decline, including the botched processor launches, the anti-competitive attacks from Intel and years of boardroom unrest."
Intel has had its share of buggy and bad designs, and that's even without going into discussion of the HMSS Itanic. Some AMD chips do great job of bang for the buck, my laptop has a nice dual core one that made the cost much less than comparable Intel chip would.
Still, AMD needs to get more risky with heavy investment into more advanced design and fab. mediocrity just isn't tolerated in processor design.
AMD will never fail because Intel won't let it fail since it is their DOJ defence against being a monopoly. The couple of times AMD got ahead of Intel on technology, like x86-64, Intel started a money losing price war to put AMD back in its place. When AMD is struggling, Intel raises profit margins on its products to help them out. There are also less advertised ways Intel helps keep AMD afloat: Patent sharing, employee no-stealing, joint tools development like OpenAccess, etc. Having worked in that industry I was always surprised that the DOJ never came down on them for those agreements. The patent sharing and joint tools ones are official even though Intel puts like 10X more into them as AMD does. I left that industry after 5 years since I saw it as a dead end since you only have a few companies competing for your skills. As my manager at Intel told me, "I won't give you a raise since you only have one other place that would even care about the skills you picked up here, AMD and we really control them too."
Potentially, AMD is still favored by many people who don't mind tinkering. For instance, for under $100 you can get an AMD x4 with a top end of 3.8ghz or more. My development box as an AMD x6 that was $130 running all 6 cores at 4.2ghz solid. To buy anything comparable from Intel would be well over $400. It's the same story in server land. AMD vs Intel really depends on application. AMD has true physical core superiority. Intel bet on hyperthreading, and it works well for many projects, until you actually need 12 physical cores for number crunching and not just thread spawning. Then it's AMD by a mile.
I use Intel Xenons in my mid to low web/caching servers and I use AMD 12 cores+ in my data servers/larger VM hosts. It just seems to be the recipe that gets me the best bang for my buck, but to each their own.
Also Intel bribed big OEMs to use their processors instead of AMD's. Dell was an especial example of this: in the K7/K8 days they'd make noise every year or two about how they were considering selling AMD-based systems rather than being exclusively Intel, and those of us in IT who wanted /better/ computers would get very excited, but then Intel reliably came along and gave Dell an even better sweetheart deal on their CPUs, which was probably Dell's objective the whole time.
It wasn't AMD's fault for choosing the wrong market; they'd made a far better desktop and mobile processor than the P4, it was just that Intel was abusing its market position.
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That campaign really had a lot of success. The only people who buy AMD are geeks who only do it when it gives a good price performance ratio. It does for me, going AMD simply means you can spend your budget on a fast SSD which will do a hell of a lot more for your performance then a faster more expensive intel CPU with a regular HD.
But people like me are the exception and AMD never really managed to remove "a computer has an intel inside" from the consumers mind. Just try your local electronic store.
Netbooks were a chance, AMD didn't put restrictions on its netbooks but they failed to push high end netbooks before Intel again stole their thunder with smart books. My netbook has got 8gb in it, it makes it a very smooth machine, just light and cheap enough to lug around and not worry about it getting dented or worse, stolen. Netbooks partially failed because they sold with slow HD's and tiny amounts of memory, hurting their performance no end.
AMD just never had the clout to sell its chips on even terms. And it is sad because Intel dropped the ball completely when they believed they had no competition. There is a reason that 64 bit linux is report as AMD64. Intel failed and AMD delivered but for AMD to have truly broken through they need a long string of victories and no losses like Bulldozer.
If AMD wants to succeed, they might consider something that Intel is also thinking of doing. Intel is having trouble gettings its chips into tablets and phones especially, so they have considered making their own... AMD could do a lot better getting their CPU's in PC's if they started selling them. Control the whole supply line and pass the savings on to the consumer and beat Intel and Intel Inside PC makers on price. Intel can't do that for fear of pissing of all its customers but AMD doesn't have many bridges to burn.
Yes, making PC's is a very low margin industry but that is partly because you are buying all the parts from third parties. AMD wouldn't be doing that. The profit on the CPU inside the PC would be part of the profit of their PC. The profit on the graphics card would be part of the profits on the PC.
Risky and unconventional but unless THEY build the PC, they are always going to have a hard time getting their CPU into the PC.
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Dell – then the world’s biggest PC maker – received billions of dollars to “remain monogamous” with Intel. At their peak in the first quarter of 2007, payments from Intel made up 76% of Dell’s quarterly operating income: $723 million against a total of $949 million.
And I really wonder why Intel hasn't been gutted and salted for monopoly abuse, with its CEO and main backers arrested. How can it not be MORE clear than that ?!?
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If you want to buy 5000 computers every year how many companies can you buy from?
If you want to buy one computer a year you can build your own for all it matters. If you want 1 computer every 5 years you probably don't have the desire or skills to build your own, nor is saving that small amount of money worth it for a lot of people.
When apply either of those two constraints Dell IBM and HP were the big dogs for a long time, and they were basically in bed with intel. People who don't have the skills to build their own want to buy from someone with a name brand who will stay in business long enough to honour a warranty, and people who want to buy 5000 computers this year are only going to buy from a big outfit, for basically the same reasons, and because there aren't a lot of places that can supply you will 1000 computers by the end of the week. If you're a really big outfit you're looking at buying something like 20-100k computers a year, and when you start talking numbers like that even your acer, asus and toshiba guys will have trouble keeping up.
AMD has the same problem in two different sectors. They had one really good product, and then someone released a better one. In the GPU business AMD will have the best parts for a couple of month then nvidia will come along and take the crown, and neither of them are competing in the high volume business desktop market that intel has (and has gone so far as to put it into the CPU package). For the CPU business Intel has been toying with them for at least 6 years. How do you know that? Because you can overclock an i7 (or a core 2 series) by 30% on air easily. Everytime AMD gets close to matching the performance/watt, performance/dollar or whatever, intel just ups the clocks a bit and boom, they're back in first place. They're basically a full process (die size) ahead of AMD, and they always have been, which gives them a huge advantage. In the GPU business AMD is doing as well as they can, if you look at the steam numbers they're up around 40% of the market. The problem is that the gaming market, which is where the money is on a per unit basis, isn't all that big. nVidia has a revenue of about 3.7 Billion USD, AMD 6.4, and Intel 54. The money is in volume, and AMD can't get volume because their price per unit, per performance, per watt are all just not up to match Intel, yes, Intel was anti-competitive for a while, but they only need to do that for about 4 years to get themselves back out into the lead by a wide margin.
This comment, and those below, are ignoring the real, underlying issue for AMD: outsourced production. Once AMD made the decision to decouple the design and manufacturing of chips, they were dead. RTFA! Customers who want to buy AMD chips can't get their hands on them. Is that due to underhanded marketing tactics? No, poor decision-making at the top. Having worked at Intel, I've seen how the tight coupling of design, testing and production can work wonders.
Then when you look at the server market, they do not compete at all anymore. Performance per watt and per dollar both lag badly behind the Xeon.
That's untrue in my experience and has been for 5+ years. In the higher-end 2-4 CPU server range, AMD has had the best performance/price ratings for a long time because competitive Xeons are much too expensive. For example, the highest-performing 4P Linux servers (e.g. SPECint2006 rate) are currently Xeon E7-4870 based, followed closely by Opteron 6282 SE, but for the Xeons you'll pay 4 times as much as for the Opterons. A typical server configuration with 256GB memory will cost you ~8000 EUR ($10500) if you go with the Opterons and ~20000 EUR ($26000) if you go with the E7-4870 (and if you can actually find one on the market). More affordable Intel-based servers are not competitive performance-wise with the 6282 SE. If you don't need much parallelism and a lot of RAM, you might be able to get a more affordable offer using Xeons (with 2 of their 4C CPUs e.g.), but even there C32 based Opterons will offer much better performance per Dollar at comparable or lower TDP even (e.g. 2 x X7542 vs 2 x Opteron 4238). We've always been comparing closely when purchasing beefy 1U/2U servers over the past 10 years and Intel has not had competitive offers since their socket 604/Clarksboro Xeons when they allowed decent amounts of RAM (24 FB-DIMM sockets) in 1U compared with socket 940 Opterons (at somewhat sane prices). YMMV if your CPU needs are different, although I'd like to know how ...
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One big thing you leave out: Intel stepped up their anti-competitive behavior, buying off the big computer makers to get them to cancel AMD-based computer lines.
Dell had the Optiplex 740 line. It was a damn good line, very effective, came in $150 under an "equivalent" Intel computer. What was Intel's response? They stepped up their monopolist subsidization and got Dell to back down. Repeat for a number of other manufacturers, and AMD's stuck in a bind again.