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Chip maker Advanced Micro Devices Inc. continued the momentum generated by Opteron and Athlon 64 into 2005, particularly by beating rival Intel Corp. in releasing dual-core processors.
Company officials expect to continue that push that technological advantage into 2006. AMDs president and COO of microprocessing, Dirk Meyer, recently spoke with eWEEK News Editor Dennis Fisher and Senior Editor Jeffrey Burt in the companys Austin, Texas offices about the commercial client space, meeting customer expectations and Dell Inc.
Can you give us your thoughts as AMD enters 2006?
I think 2005 was a year that, as a company, we were very happy with for the processor business. We came into the year with a lot of expectations for ourselves, particularly around Opteron.
We went into the year feeling that the product was really differentiated versus the competition, and it was a matter of getting the design wins that we felt we had in the bag into the market and ramping with our key customers, and that happened and those products are being pretty well-received in the marketplace.
I like to talk about Opteron as the thin edge of the wedge relative to our penetration into the commercial space, and when we talk about 2006, one of the things we think about is the opportunities were going to have in the client side of the commercial marketplace.
Thats not to say that we dont expect to continue to gain share in the server space: we do. But contrast 06 with 05 in that well be thinking much more about making our commercial client business really start to ramp.
How are you going to do that?
The first thing youve got to do is get design wins, and as we talked about in our analyst conference [Nov. 15] … about the incremental number of client platforms well have out on the market next year.
The next step is to start to generate familiarity of the platforms across … the ecosystem, which consists of both end users and the channel from which they buy. The latter is a set of activities weve had in flight … for the last several quarters, which is developing relationships with systems resellers and VARs, systems integrators, and so on to make better known who we are, what the value proposition for the platforms is, the advantages that the channel players have. … Thats where well continue to focus in the next year.
AMD has spoken often about how it feels it has a technological advantage over Intel right now, and that you expect that to continue through 2006. Where does that confidence come from?
Ill start by talking about discussions weve had with people in the industry about our server products. The server [business] is really our flagship product line for both us and the competition. We started thinking carefully about changing the underlying platform architecture for systems back before we even introduced Opteron, which was introduced in 2003.
Way back in 1999, we observed that … as the processor industry players have been pushing on the microprocessor analog to Moores Law … that came at the cost of increasing power dissipation with each technology generation to the point where power levels are just getting kind of silly—100 watt, 150 watt, just crazy.
The reason for that is that we as an industry were just focused on optimizing and driving up single-threaded performance in the microprocessor, and we said, You know what? Thats not the right bandwagon to stay on. Lets go innovate in three different areas.
One was, lets go change the system architecture to get rid of this shared-bus bottleneck which is kind of terrible for processor systems. Lets add 64 bits to the x86 architecture and lets architect, in the chip and platform right upfront, multicore capabilities.
The competition clearly has now followed us in the middle of those two, which is the 64-bit transition, but hasnt really yet fixed the platform constraints that they have, and those are way more important in terms of unlocking system performance scaling than what technology node youre in at a given point in time.
As we understand what the competition is up to, while theyve got some improvements in the product line, they have yet to overcome what is the fundamental roadblock to good multiprocessor scaling, which are those two things I listed.
Many industry analysts dont believe it will take Intel that long to catch up. What youre saying is that its going to take them at least another year to do so.
Thats why I always go back and say that we started this in 1999. So the products we have now, we can see that the roadmap and the platform that underpins it all [we started] way back in 1999, and thats not just something that you can flip on a dime. As we understand what the other guy is up to, the 06 roadmap doesnt reflect this shift, nor does the 07 roadmap.
Next Page: Commercial ventures.
Commercial Ventures
How well positioned are you right now for this move into the [commercial] client space? Are these design wins in the pipeline, or are you still in negotiations with systems makers?
Im confident enough that we have enough that will be showing up [in 2006] so well be reasonably able to substantiate a move in our share, but keep in mind, our share is very low, so consider the total commercial client opportunity thats served through top-tier OEMs—we barely participate in that business at all.
Weve had some individual products in the past, and do today with [Hewlett-Packard Co.] and Fujitsu-Siemens, for examples. But were tremendously underpenetrated, so were sitting here in almost the same position we were two years ago with Opteron.
Im not here telling you well have 50 percent share in the market because thats not the goal [in 2006]. The goal is to start making substantial headway, and well have the platform to do that.
Will that strategy mirror what you did with Opteron?
Were recognizing that its a little bit different on the client side. Given what server technology is, its a little bit easier in the server space to really differentiate in the area of product technology, just because performance is so key. Whereas in the commercial client space, particularly for desktops, performance is a little bit less of a dimension that [you can use to] differentiate.
So how do you differentiate?
In the near term, we still have in Athlon [64] and Athlon [64] X2, a platform thats going to have a fair amount of longevity from a software stack perspective. Its 64-bits today. Thats a selling point thats starting to resonate with people.
The other benefit is just the idea that competition is good, and the commercial client space is an area where, generally speaking, there hasnt been. As we talk to big channel players, theyre all wondering, Gee, how do I differentiate my offering vs. Dell [Inc.]?
If youre selling the same Intel-based stuff, and Dell is out there gobbling up share, [you start to think] Maybe I can start selling AMD, which Dell doesnt have. Thats a message you can differentiate on.
Is the Windows Vista launch [from Microsoft Corp.] a good opportunity for AMD as enterprises start looking to transition to that?
It is. In fact, I was reading [an article in Barrons magazine that argued that] given that Vistas really Microsofts first mainstream 64-bit client platform, and given that AMD is the only company that has 64-bits now across the product line, theres an obvious benefit, both for end users and IT shops, [to buy] 64-bit-ready hardware starting now.
As you know, Vista will get released [this] year by big enterprises that arent going to start releasing it across their enterprise client infrastructure until 07 sometime.
There is sort of an inertia within many enterprises that have used Intel technology in the past to continue using it rather than trying something new. How do you plan to break that?
The interesting point is that markets are big, and our next step is not to get to 100 percent, but to get to two and three and five and 10 and 15. So you focus it on the people and the organizations that are a bit more willing to be different. It factors into some of the messaging youll be seeing from us that will be focused on the folks that think to the next level of specificity.
The whole discussion around the enterprise and clients has begun to start to transition in the ecosystem, among end users and OEMs, from one of, Hey, why should I be using AMD? where now its really more one of, Why not? Youve proved youve got good technology. I believe your manufacturing capacity is going to increase over time, I believe your financials are sound and youre a solid, healthy company, and I believe I havent enjoyed healthy competition in this broad sector of the marketplace, so why the heck not?
Youre right, theres a pocket in the ecosystem at large which is, Im going to play it safe. But were not trying to get 100 percent. Were trying to go from three to five to ten to 15 to 20.
What vertical markets are most important to you?
As we look at the big wins weve been getting, it tends to be among all classes, whether its manufacturing or financials. We tend to win based on underlying economics, the price-performance of the platform, platform longevity from a software perspective.
How well positioned is AMD in the mobile space?
Mobile is a huge growth opportunity for us from a product category perspective for two reasons. One, its the fastest growing of the three product categories: server, desktop and mobile.
Two, its the area where we have the smallest share. Im not apologetic about the fact that we have the smallest share in that category. If you look at our history, we were and still are way smaller than our competition, so we focused on a smaller number of categories—desktop, desktop, desktop.
We then focused incrementally on server. Next will be mobile, and the Turion stuff we have the market today is the first example of products that were, to any meaningful degree, built with mobile in mind, although even there theyre highly leveraged from a desktop product.
Despite that, were enjoying success that actually surpasses my expectations on Turion, and I think the example again is simply that the performance is really good for the class of users that care about that, and the channel through which our customers sell really want competition.
AMD has said that it will not offer an entire package, similar to Intels Centrino. That said, youve begun to work closely with a select group of partners to create recommended wireless packages. Can you talk about that?
First off, contrast it to what Intel is doing, which is one of—with varying specificity—youve got to buy Centrino. Thats not what were doing. If you take wireless LAN, for example, we dont want to tell the customer exactly which wireless LAN they should use. However, having said that, we recognize that what our customers do want is to buy a solution with a lot of the engineering done upfront.
So were trying to act a lot more actively as the point for a platform solution that we can offer an OEM hand-in-hand with partners, which is different that just saying, Hey, were going to walk up to the OEM with a prepaid platform with all the components.
So, while you want to give your customers options, you also want to give them guidance as well.
Yes, choice, but not infinite choice. It used to be a lot of our partnerships that were focused a little bit more on just sheer technology enablement, with less focus on business development. Were trying to get a little bit more specific with our partnerships.
Next Page: Exploring international opportunities.
Exploring International Opportunities
Whats the client opportunity for AMD like overseas, such as in Asia?
Its very big, and again, just because the markets themselves are growing. No question the IT market is maturing in developed regions and, less so, maturing in developing regions. For macro reasons, its an opportunity for us.
The other thing Ill say is that, as some of the ways these countries and governments think about IT, they see the IT monopolies that have been built up in the developed regions. Theyre not so inclined to want to see that built up in their countries.
So in these developing markets, you see a more level playing field with Intel?
Increasingly yes. It used to be no, and the reason for that two and three years ago, again, because of our size, we didnt have the feet on the ground in these emerging regions. If you take China, for example. Two or three years ago, we did not have any material team of people in mainland China developing relationships with government entities, universities and so on.
We were largely participating in that market through the channel. Over the past three years, we got together a very large number of capable people in those countries and are growing those teams.
AMD seems to have greater success in recent years hitting deadlines, something that had hobbled the company in the past. Can you talk about this?
Im going to take your statement, which is hitting deadlines, hitting milestones, which is true, but Ill say it a different way, which is: meeting customers expectations. One of the things that [Chairman, President and CEO] Hector [Ruiz] had a little bit of a different orientation around as compared to [founder and former CEO] Jerry [Sanders] is, maybe its OK if were not absolutely the single best in every dimension in terms of product technology. Maybe what we to do is be the best at fulfilling out customers needs and expectations, part of which is taking some element of technology capability and leadership.
But its a slightly different orientation, so it causes us to think a little bit differently about our development timelines, and think of them in terms of meeting our commitments to customers versus getting the fastest damn piece of silicon we can out on to the market next month.
That distinction sounds subtle, but it has a profound effect on the way our organization operates. Theres no question that, culturally, weve rethought it all.
How important is Dell to AMDs long-range plans?
In the near-term, its not very critical for achieving the goals that we have in the next year or two, and the reason for that is, if you look at the two big business opportunities that weve defined for ourselves, one is commercial, which is a gigantic existing marketplace where we are way underrepresented. The other is so-called consumer digital media.
In the commercial space, were still just so small that we have lots of opportunities for growth inside of our current customer base, so near-term we dont need Dell to grow substantially.
Obviously, weve been saying our goal is to break Intels monopoly, and they do have a monopoly. Our goal is to break it, and change for the better the whole dynamic in the industry. In order to do that as fully as we want to do that, it would sure be better to have Dell.
The other part represents not so much a growth opportunity unique to AMD, but a growth opportunity for the industry, and that is based on the fact that entertainment content is increasingly created in digital form, distributed in digital form, consumed in digital form, which is going to drive just a lot more electronic stuff worldwide, both in developing regions and developed regions.
Increasingly, as we see it, the fact that these devices have a huge amount of software content on them, the people who develop those devices actually care about their software development productivity.
It turns out, they develop all their software on x86 platforms and have to port their software to other platforms. As weve been investigating the space, weve seen an opportunity to take x86-based devices into these other form factors that are either PC-like or adjacent to the PC or maybe not even PCs at all, and provide some value. Thats a completely new area for us. In that space, Dell really isnt huge anyway.
As you move into the new year, what are going to be the key challenges? What could trip you up?
I always worry about our execution. There could be terrorist attacks, recessions, something our competition might do to us.
Honestly, weve got to do some things that are hard. Weve done them before. Weve got to ramp our fabs, get our products into the market, continue to improve the capabilities of the people we have worldwide who interact with customers and our customers channels so that we do a more effective job of both selling to end users what exists today and understanding what we should do in the future. Its just blocking and tackling, its not rocket science. Its hard execution.
I think the ecosystem is finally waking up to the fact that they live in an Intel-dominated world, and maybe they have the power to do something about that, and were the answer. So I see we have a great opportunity. We just have to not screw it up.
Editors Note: This story was updated to add Dirk Meyers correct title.