10 Things AMD Needs to Fix Now

Ramp as Quicklyas Possible to 45 nmThe first, and probably most important, job for AMD is to bring its chip manufacturing to 45 nanometers from the current 65-nm process. The switch will give the company’s processors an additional performance boost-

Quickly Bring ‘Puma’to MarketNotebook sales continue to drive the PC market, and AMD needs to bring its new mobile “Puma” platform out as soon as possible to counter Intel’s new version of its Centrino platform. The new mobile platform, which is scheduled to launch in the second quarter of 2008, will help AMD appeal to its core consumer base and give the company a fresh way to counter what Intel will offer to enterprise and small business customers.

Re-embrace the ChannelFor a while, AMD focused much of its attention on its top-tier OEM partners to increase its presence and brand recognition within the enterprise market, but somewhere along the way the company turned away from the channel partners that bring its processors into the white-box market. It’s time for AMD to re-embrace the channel to help it move more product.

Jettison the Consumer Electronics DivisionDuring a recent conference call with analysts, CEO Hector Ruiz and President Dirk Meyer all but indicated AMD would sell off its consumer electronics division in order to concentrate on its core businesses: x86 microprocessors and the graphics division it acquired through the ATI purchase. The consumer division has pulled in revenue of about $100 million per quarter but has not performed as the company hoped.

Focus on SMBsand ConsumersThese are two areas in which AMD’s processors stand to beat Intel’s on price performance. Consumers and small and midsize businesses are looking for the best prices, especially when it comes to notebooks.

It’s Time to Implement ‘Asset Smart’AMD’s “asset smart” plan remains a mystery, but analysts say they believe it will be a way for the company to improve manufacturing or simply outsource more of the process to a third party. Whatever the plan, CEO Hector Ruiz and company need to take advantage of fabs and start producing more product. The company’s facilities are being underutilized at the moment.

Get the Expenses Under ControlIn the last quarter, AMD’s overall operating expenses exceeded $840 million, nearly half the $1.5 billion in net revenue for the period. That kind of spending amid the debt from the ATI acquisition leaves balance sheets bleeding red. So far, the company has signaled that it will cut staff-

Better Virtualization, Better Power ConsumptionThey’re the hottest buzzwords in the industry. Intel has said it intends to increase the virtualization capabilities in its next generation of Nehalem chips and AMD now has a chance to push its own in the Opteron, such as improved support for virtual machine migration. On the power side, the switch to 45 nm should help the company build chips that consume less power, a selling point in the notebook market where users demand better battery life.

Develop an Alternativeto Intel’s AtomAMD remains silent on the low-cost PC front that Intel has tackled with its new, low-watt Atom processors. If Intel is correct, this market for low-cost notebooks alone could be worth about $10 billion. AMD should be grabbing at the market, too. One option involves the company’s low-volt Geode processors, which would make a good fit but would need technical adjustments to deliver the performance needed for the latest PCs and Internet devices.

Stop Competing Against Intel on PriceWhen it comes to price, Intel has the advantage and the company seems willing to discount deeper in order to maintain its market-share lead. If AMD continues to cut prices, it will never be able to keep up with its larger rival. AMD needs to continue to distinguish itself through chip design, such as the technical achievement it offered in placing four cores natively on a piece of silicon, the integrated memory controller and hybrid graphics.

What’s Your Opinion?eWEEK has gathered its opinions on the subject; now tell us what you think AMD needs to do in order to bring itself back to profitability and match Intel with technology.