AMD to enter (high-end) netbook market; Maintains fourth quarter outlook for now

Updated: AMD on Thursday addressed the two big elephants in the auditorium during its analyst day: The netbook market and the fourth quarter outlook. AMD announced plans to  enter the netbook market selectively.
Written by Larry Dignan, Contributor

Updated: AMD on Thursday addressed the two big elephants in the auditorium during its analyst day: The netbook market and the fourth quarter outlook. AMD announced plans to  enter the netbook market selectively. And CFO Bob Rivet said AMD isn't cutting its fourth quarter outlook following Intel's sales warning, but will provide an update on the quarter in early December.

Rivet said he debated what to say following Intel's fourth quarter warning that sales would fall short of expectations, but thought it was premature given that AMD's analyst meeting was focused on future plans. "We're not going to change our guidance," said Rivet. "There's still plenty of time in the quarter. We'll give you an update in early December."

Simply put, Rivet won't update AMD's outlook until Dec. 4 when he speaks at a Credit Suisse technology conference. However, Rivet sounded partly optimistic that AMD, with its best line-up in a few years and an Asset Smart deal to unload debt, can grow faster than the industry.

While Rivet's comments were important to folks wondering about the short term, the long run issue was whether AMD would tackle the netbook market. AMD allayed concerns that it would be a netbook market no-show. AMD, in a presentation, detailed a roadmap that puts the company into the high-end netbook market in the first half of 2009. The netbook market is dominated by Intel's Atom chip.

AMD, which has outlined a plan to be profitable in good times and bad while focusing on executing better, said that it will stay focused on the small business and value laptop segment, but it can't ignore the netbook market any more.

Randy Allen, senior vice president of AMD's computing solutions group, outlined the company's roadmap. Allen said the goal is to provide ultraportable and netbook support without the computing compromises. Speaking about the netbook market, Allen said "most of those have been purchased as the nth device in existing markets." Contrary to what was expected netbooks haven't overtaken the emerging markets.

"There are compromises in performance in those mini-notebooks. Because it has limitations it hasn't been accepted by other regions," he said. “It was a compelling business decision to go after where the market was moving,” added Allen.

Also see: Does resurrection start with Shanghai?

AMD unveils ‘Shanghai’; Aims to better compete with Intel

Here's the roadmap for AMD on the client side of the business. The server roadmap was detailed when the company launched its Shanghai server lineup (click to enlarge).

As you can see from the chart, AMD is planning a dual core chip dubbed Conesus for the ultraportable market. It will dabble in mini-notebooks too. In 2010, AMD will follow up with Geneva and Ontario in 2010. What remains to be seen is whether AMD can dent Intel's lead.

Allen was pressed about how its netbook chips would stack up against Atom. Allen said its chips won't be a direct competitor. "Atom is targeting markets we're not even going after. We'll be playing in a lower price point but with a full PC experience. We're not going as far down as Atom," said Allen.

Other key questions about AMD's entry to the ultraportable and high-end netbook market:

  • Will consumers care about performance in the chips or just price?
  • What will AMD do to Intel's Atom chip margins?
  • Does the leapfrog strategy that works so well for high-end server processors apply for these cheap devices?

Other odds and ends from AMD's analyst day:

  • CEO Dirk Meyer declared that AMD's goal is to "be profitable in good times and bad." He added that AMD's goal should be attainable given that the company competes with Intel in server and client chips and primarily Nvidia in graphics chips. There's a $46.5 billion total addressable market to be had and AMD is part of a duopoly on both sides of the equation. Meyer promised that AMD will "execute better."

  • Chief Marketing Officer Nigel Dessau said the company had lost its brand focus. The plan now is to focus on the "processor aware" audience (IT folks and enthusiasts among others).

  • Dessau also noted that AMD has made a lot of progress lining up OEMs (click to enlarge).

  • Allen talked up Shanghai, which wasn't all that surprising. And he reiterated the roadmap.

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