There's little doubt that AMD is in trouble. The company has a broad restructuring plan that involves job cuts and cost cutting. But what AMD really needs is a CPU that is faster and cheaper than Intel's current line-up.
AMD has seen a quarterly profit it made a year ago of $184.5 million eroded down to a loss of $611 million while market research firm iSuppli estimates that One of Intel's strong point is manufacturing and it's shown time and time again that it can out-engineer AMD in various critical areasAMD's market share dropped to 11.1%, down 4.6% from 15.7% in the fourth quarter. Dropping that kind of market share in such a short period of time proves that AMD executives badly misread the market. Quad FX, "Barcelona" coming down the pipeline and hopes that AMD had a loyal customer base did nothing to prevent buyers voting with their wallets and making the leap to Intel.
What AMD needs is a range of CPUs that beat Intel's offerings on both price and performance. AMD's executives seem to be putting a lot of hope in the Opteron replacement “Barcelona” but I can't help but see this as a dangerous thing to do. Sure, it placates investors in the interim but it's a short-term solution. Let's say that "Barcelona" is a winner (and it had better do that if AMD is to stand a chance). What next? They'll have a lead for 6 - 9 months before Intel comes out with something that beats it again.
One of Intel's strong point is manufacturing and it's shown time and time again that it can out-engineer AMD in various critical areas. AMD should have transitioned to using 65nm process early to mid 2006 but its still not managed to complete the transition. By the time AMD perfects the 65nm process, Intel will have pushed ahead with the next-generation Core 2 processors, codenamed "Penryn" which uses a 45nm process and AMD will again be behind.
I think that AMD also made a serious mistake in dropping support Socket 939 and shifting to AM2. Trading enthusiast's ability to upgrade systems for a small performance gain just didn't seem worth it. One thing's for sure, it certainly hasn't paid off for AMD.
In the end, Intel having such a commanding lead over AMD doesn't help anyone (well, except Intel). Competition is a good thing and AMD has a vital role to play in making sure we don't return to the stagnant days of the 486 CPUs.