AMD taps servers for future growth

Microprocessors for desktops and laptops "bread and butter" for chipmaker but server business will play bigger role in determining AMD's future, exec says.
Written by Liau Yun Qing, Contributor

SINGAPORE--Chipmaker Advanced Micro Devices (AMD) plans to focus more on its server business as it is a higher-margin business compared with chips for desktops and laptops, even though the latter is the company's "bread and butter", one executive shared.

Greg Poole, director of field applications engineering at AMD, told ZDNet Asia in an interview Tuesday that making chips for desktops and laptops is its "bread and butter" business.

"If you look at the client computing business, which could be considered as our 'bread and butter', I'd say we have substantially more revenue generated from the client business including desktops and notebooks," he said.

However, this area is "largely a commodity business now" and is difficult for the company to hit the margins it wants to, the director added.

This is why the chipmaker will be focusing on its server-based products as these promises higher returns, Poole stated.

"The server space is extremely important to AMD and we are investing heavily to be successful...[With server processors,] you're providing mission-critical applications and solving the big problems of the world so you need more robust and reliable solutions. We know where our future needs to grow."

Poole's point was backed up by the company's third-quarter financial results. In the report released on Oct. 27, AMD stated that its computing solutions segment--which includes server processors--reached US$1.3 billion and was partially driven by "double-digit growth in server processor revenue driven by significantly higher ASP (average selling price)".

The Austin-based chipmaker will have to arrest the drop in server market share in the second quarter of 2011 though. According to IDC's findings, AMD slipped 0.6 percent to 5.5 percent in the global server and workstation processors segment during this period. Its main rival Intel, on the other hand, rose 0.6 percent to reach 94.5 percent, according to the ZDNet Asia report.

Quizzed how the company plans to increase its market share, Poole declined to comment saying he is not equipped to answer as he's "the engineering guy".

Working toward cooler servers
The executive did point out that enterprises' server requirements are evolving. In the past, the main consideration for server chips was "performance, performance, performance", but this has changed to include total cost of ownership (TCO) as well, he stated.

In an effort to help IT managers decrease their overall datacenter TCO and justify expenditure, Poole pointed out that AMD's latest Opteron server processor offers 16 cores and include more compute capability in a smaller footprint which, in turn, leads to lower power consumption in one's data center.

The chip also has power saving features such as thermal design power (TDP) capping that allows IT managers to set the parameters for power consumption and core power gating, said the director. This, he noted, would also help companies in saving energy consumption and costs.

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