Like Intel Corp. (INTC), Advanced Micro Devices, Inc. (AMD) salivates at the prospect of seizing a piece of the soaring tablet market. Two months ago it launched its Z-Series CPUs (code-named Desna), targeting the tablet market.
I. AMD -- The Strongest Tablet Challenger?
The design, which weighs in at a modest 5.9 watts, was reportedly rushed out the door. Work on it began soon after former CEO Dirk Meyer was ousted. Mr. Meyer had advocated that AMD stay out of the tablet business -- a key reason why the board decided he must go.
Just because AMD changed its mind about tablets, though, doesn't make the task at hand any easier. It must vie with an entrenched ARM architecture, which of late has been boasting designs with high clock speeds, multiple cores, and relatively low power consumption.
Still, tablets are inherently graphical endeavor, and AMD arguably has vastly more experience making high quality graphics hardware than its fellow challenger Intel.
Interviewed at the Pacific Crest Securities Technology Leadership Forum in Vail, Colorado, AMD senior vice president Rick Bergman reaffirmed AMD's commitment to the x86 architecture, dispelling persistent rumors that AMD would seek an ARM license from ARM Holdings PLC. He states, "We're excited about what the tablet market can do for AMD."
II. "Just Say No" to Smartphones
Interestingly, while AMD is enthusiastic about tablets, it's very bearish on the prospect of smartphones. Mr. Bergman says the company has no interest at present to make smartphone processors, as the battery demands are too severe to make a quality x86 design.
This position stands in sharp contrast to Intel who has promised to enter the smartphone market in a big way, sometime in the near future. The key word is "sometime" as Intel's smartphone schedule has been pushed back again and again.
In February of this year, at the annual Mobile World Conference Intel was all smiles and promises, proclaiming that it would have Intel-powered smartphones by the holidays, which would deliver industry-leading battery life.
Apparently, though, it was counting on Nokia Oyj. (HEL:NOK1V) to come through in a big way, with the Linux-based "Meego" platform. And apparently it never got the memo from Nokia that it was going to drop Meego and go exclusively with Microsoft Corp.'s (MSFT) Windows Phone 7. Intel CEO Paul Otellini bemoans, "In hindsight, Nokia was the wrong partner to have picked."
That shift has pushed Intel's launch plans back to "the first part of next year", according to CEO Paul Otellini. The phrase "part" is convenient as it could imply quarter or it could imply half -- its as nebulous as Intel's smartphone plans itself.
One pressing issue is that whatever good thing Intel had in store for this year, will likely have to be redesigned to keep up with the latest crop of ARM processors launching early next year. Further there's no real clue on who will be Intel's operating system partner. Apple, Inc. (AAPL), Google Inc. (GOOG), Research in Motion, ltd. (TSE:RIM), and Microsoft all stand firmly behind ARM.
From a broad perspective, Intel's smartphone efforts are akin to trying to jump on a moving train. And as you can imagine, the task doesn't get easier as time goes by.
Some would say AMD is selling itself short. Indeed, if Intel can defy the odds and see a huge smartphone success, that's invariably how analysts will view it. For now, though, most feel that AMD's decision to wait out the smartphone market is more a case of knowing ones own limitations, than a lack of ambition.
III. AMD Desperately Needs New High-Performance PC Core
Mobile matters aside, Mr. Bergman's interview also served as reminder of how desperately AMD needs its new high-power Bulldozer core to launch and be well received. For all its gains with its popular Fusion platform , aimed at notebooks and budget PCs, AMD has seen server sales and sales in the performance PC market languish. Its server market share dipped from 6.5 percent to 5.5 percent on a year-to-year basis, and its PC market share managed an anemic growth reaching 20.4 percent, compared to 19 percent a year prior.
In short, AMD is doing okay in PC sales, because Fusion is doing so well, but it's PC sales could be doing much better if its performance CPU sales weren't declining. Further if its server sales weren't declining, it could be growing, rather than just breaking even.
States Mr. Bergman, "We frankly look back over the last couple of quarters, we've been disappointed with the results we've seen from our server businesses as we ceded some market share there."
Mr. Bergman is confident that AMD can deliver, though. He says that later this quarter AMD will launch Bulldozer-based Opterons, which will deliver 40 percent faster performance using the same amount of power. If it can do that, it just might be able to advance its position in the server space a bit.