CES: As processor recedes from view, AMD stands to benefit

AMD at CES unveiled its Fusion platform, a new class of processor that the company is pretty excited about. Here's why changing consumer demand spells opportunity for Intel's rival.
Written by Andrew Nusca, Contributor

LAS VEGAS -- AMD on Tuesday unveiled its Fusion platform, a new class of processor that the company is pretty excited about.

AMD says Fusion "combines more compute capabilities than any processor in the history of computing," a chest thump for sure, but backed by a formidable family of accelerated processing units, or APUs, that combine in a single die design multi-core x86 CPU tech and a DirectX 11-capable discrete-quality graphics and parallel processing engine.

To the average Joe, that's a lot of technical gobbledegook. But if you know nothing, know this: AMD is working to display all of its competencies in one product, heating up its rivalry with Intel considerably.

First, a few facts about Fusion:

  • The APUs cover desktops, notebooks, netbooks and tablets across all price points.
  • Tablets and embedded designs based on Fusion are expected in late Q1 2011.
  • From a user's point of view, you're looking at improved HD video playback, more horsepower for application crunching and all-day (10+ hours) battery life.
  • You'll see the chips in products by Acer, Asus, Dell, Fujitsu, HP, Lenovo, MSI, Samsung, Sony and Toshiba.

If you don't think AMD believes in this thing, consider SVP Rick Bergman's quote in the press release:

We believe that AMD Fusion processors are, quite simply, the greatest advancement in processing since the introduction of the x86 architecture more than forty years ago.


But the real takeaway from this announcement is insight I gained speaking to AMD reps over the phone.

When asked about how this announcement plays against Intel, AMD reps said that pricing its chips lower than Intel continues to help it gain market share.

But it's also a matter of looking past the current market to where it's headed -- specifically, laptops.

Laptops have long supplanted desktops as a person's primary computing device, but since then, it's been a race to the bottom in terms of price. Simply, the laptop you get now for $500 or $1,000 allows you to do so much more, so much better, than what you got for that price even only five years ago.

AMD is looking five years out, to 2015, and predicting that three price bands will be the most popular:

  • $200 to $299
  • $300 to $399
  • $400 to $499

Surely, AMD's competitive pricing with regard to Intel helps here. But it goes beyond that, since the company's APU bet allows for smaller designs that sip less power that ultimately cost less to manufacture.

Take netbooks, the products that currently inhabit these price bands, as an example. AMD's gunning hard for Intel because it has nothing to lose. Until now, AMD basically ceded the netbook market to Intel and its Atom processor. So the revolution is underway, since AMD has no market of its own to protect.

"Aiming for Pentium, we smoke 'em on everything," one rep told me.

But above all of this is a changing consumer culture. We stopped comparing processor clock speeds long ago when shopping for computers, but as mobile devices make up an ever-larger part of the market, there's a distinct difference: many of us don't know what processor at all is in our devices.

(ZDNet readers, of course, aren't the mainstream.)

You could point to Apple for playing a part in this, playing down components (and their manufacturers) at the expense of a more unified product. You buy a new iPhone because it's better than the old one, not because it has one brand of processor over the other.

AMD says it only stands to benefit from this shift. For years, the company has battled its "Intel is premium but expensive" and "AMD is okay but affordable" reputation. (And if you don't believe in how deep this sentiment persists, my cab driver on the way to the airport parroted this back to me in conversation.)

Now, as the processor recedes from the view of most consumers -- does anyone but the geeky 5 percent of early adopters really know what brand of processor is in their smartphone? -- AMD shakes free of history.

That's why AMD reps told me that it's no longer the consumer (who doesn't care) or the manufacturer (who already know the value of their working relationship) that needs convincing -- it's the retailer.

AMD says that despite its low market share in notebooks, it has 30 to 50 percent share in desktops -- which demonstrates to a retailer that AMD can sell when the product is compelling.

Now that the mainstream consumer increasingly cares only about the badge on the lid, AMD sees opportunity.

"It's not 1995 anymore," one rep said. "We want to be a true ingredient brand; not compete with main brand. We're helping [OEMs] take their brand back."

A few more points from our discussion:

  • "You've got to be on shelf. Try to find [products with] Nvidia Ion -- cool stuff, but it's nowhere."
  • Margins aren't changing much, despite plummeting prices. The mainstream is 65 percent of the market, but with inverse revenues; gaming revenues are 65 percent, with inverse revenues.
  • Interesting: margins are about the same between the "mainstream" and "thin/light" categories; likewise for the "gaming" and "performance" categories.
  • Is 3D still a factor? Sort of. AMD is building chips to be ready for glasses-less 3D; until that occurs, they're not expecting much in the way of adoption.
  • In 2011, incubation and attention from developers to drive GPU innovation will be key. In other words: software.

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