AMD Wants to Be Tech's Next Apple-Sized Turnaround

You certainly can't call Advanced Micro Devices (NYSE: AMD  ) a company of small ambitions. Last week, AMD vice president Roy Taylor told hardware blog Bit-Tech that his company might soon follow in the footsteps of Apple (NASDAQ: AAPL  ) and IBM (NYSE: IBM  ) , two companies in the tech industry with the most legendary turnaround stories.

The upside for investors would be massive. For comparison, let's take a look at how much Apple shares have grown in value since the launch of the first iMac in 1998, which was the first major new product of the second Steve Jobs era:

AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts.

And here's IBM's boom following its 1993 hiring of Lou Gerstner, who's frequently credited with spearheading IBM's turnaround:

IBM Total Return Price Chart

IBM Total Return Price data by YCharts.

Pretty impressive! So, how exactly does Roy Taylor expect AMD to follow in these deep footsteps? Here's the relevant quote from Bit-Tech:

But, thinks Taylor, with the company's new generation of APUs (a [central processor] and [graphics processor] combined on one chip), it is well set for the future. A large part of this will be driven by AMD having secured deals with Nintendo (NASDAQOTH: NTDOY  ) and Sony to have its APUs in the Wii U and PS4 (and it's long rumoured the upcoming new [Microsoft] Xbox will also feature an AMD chip). With these processors in place there is significant incentive for developers to work hard on making their games and apps run well on AMD hardware, which in turn may drive uptake of AMD [chips] in other sectors of the market.

Chips in consoles. For reference, the entire lifetime global sales of the current-gen consoles (counting the original Wii as well as the Wii U for Nintendo) to date is roughly 250 million units. The Xbox 360 has been out since 2005. The Wii and the PS3 have been out since 2006. Nearly 210 million smartphones were sold in 2012. Over 350 million PCs sold that same year. And you want to focus on a segment of technology that's not only sold less than a tenth as many units per year as these two primary groups combined, but one that's got increasing competition from mobile devices as well? The Wii U, which is the only true "next-gen" console available, is already showing disappointing sales on the market. The original Wii sold over 7 million units in its first year on the market. Nintendo's already cut first-year estimates for the Wii U to around 4 million units.

It's one thing to be ambitious. But if you're going to shoot for the moon, don't try to do it with a rocket that's already failed to lift off the launch pad. Steve Jobs understood that. So did Lou Gerstner. That's why Apple and IBM today bear almost no resemblance to the companies that originally handed those executives the reins. AMD's chip competitors have shifted with the market. Will AMD's executives realize that they need to shift as well, or is their strategy going to keep the company stuck in the old ways?

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.


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  • Report this Comment On April 09, 2013, at 11:30 PM, rav55 wrote:

    The most relevant comment that you made was game developer support for AMD APU's. But you really do not understand fully the implications.

    Currently there are NO multithreaded GUI intensive games. Yes there might be a few that are compute intensive such as chess that make use of multicore cpu's but the gaming industry has not adopted multithreaded programming. This is why Tom's Hardware does not benchmark CPU's in multicore mode but rather single core mode only. You might have spent $1000.00 for the latest multicore Intel CPU for your gaming rig but it only runs the game on ONE core and then dumps it to the GPU. That is going to change as developers start writing multithreaded games to run on AMD APU's. Using an integrated graphics AMD instruction set that will leave Intel and nVidia out.

    Heterogeneous (HSA) computing when adopted by gaming developers will change the face of computing. AMD produced x86-64 and named it AMD64 and of course Intel produced Intel64 and it sucked. The original specification was created by AMD, and has been implemented by AMD, Intel, VIA, and others. It is fully backwards compatible with 16-bit and 32-bit x86 code. Now here is where it gets interesting; the next iteration will be an instruction set that fully incorporates graphic instructions for on-die APU. This has not be settled yet and that is what the whole HSA Foundation with AMD, TI, ARM, Mediatech etc, has such promise. But it has not gained huge momentum, yet; that is why the game consoles market is so important.

    Game developers will be encouraged to make full use of the computing power (1.8 teraflops) of PS4 and XBOX Next or whatever. That will trickle down into the mainstream development of PC games butmore importantly it will signal the adoption of the HSA Foundation instruction set Open-CL and it's evolution.

    The more programmers and developers working on consumer applications of an instruction set translates into broad industry acceptance.

    nVida and Intel are not part of the HSA Foundation.

    I am going to make one other prediction here. When game developers start writing multithreaded games using a fully integrated graphics intructions set that allows the full power of say an 8-way x86-64 cpu with an on-die GPU then that will be the end of discrete graphic GPU's. Furthermore, right now, PCIe is only used for discrete graphics. Intel is only required by the FTC to support PCIe through 2016. Interestingly enough this is about the same time that Intel stops paying nVidia for the patents it stole to use in the'Bridges. Intel is also trying to move into the concept of HSA computing with Knight's Corner. But Intel's solution Xeon Phi is only 1.01 Terflops and costs about $2300.00. AMD has created Jaguar at 1.8 Teraflops and over the course of 7 years will be putting it in about about 186 million Microsoft and Sony game consoles.

    Gaming developers will start writing and optimising their products for Jaguar APU. This alone is reason enough for lower margins; broad market acceptance of the HSA Foundation standard.

    Go to the HSA Foundation website and you will see that Intel and nVidia are not part of this at all. Intel is going it's own way and nVidia will be left with Tegra.

  • Report this Comment On April 10, 2013, at 1:00 AM, opto50 wrote:

    Rav55 provides more comprehensive and convincing information that the author of this MF article, in my opinion.

    Just examined on a physical and architectural sense, AMD's Jaguar design at 28nm is very compelling in terms of power, performance and price.

    You can just imagine how the Jaguar console wins provides impetus toward design wins for tablets, hybrid ultrabooks, smart retail displays and a broad range of new smart device technology.

    Lastly, speaking of Apple, when they see AMD delivering millions of Jaguar-based chips for consoles and other devices, you just know their designers are asking why the hell are we using a bigger, hotter, expensive Intel Haswell when AMD has the better solution?

  • Report this Comment On April 10, 2013, at 10:58 AM, jpanspac wrote:

    I think they're more likely to follow in the footsteps of Circuit City and Montogomery Ward.

  • Report this Comment On April 10, 2013, at 4:34 PM, kevikom wrote:

    I work in the tech industry and for the most part Favor Intel. I am not a fanboy for either side, I look objectively at the tech. I like the idea of HSA. It seems to have support from almost every major player including Samsung( excluding Apple,Intel, Nvidia). I have read several articles but AMD has been known in the past to hype something and fall short.( Barcelona). This being said I plan to take a risk and have been purchasing AMD. for the last few months. why? well this time they have support. Sony and MS ( and Nintendo) all have selected the new tech from AMD. HSA is about more than just hardware. If you only need to Code once that saves a boat load of money. So if moving from Game console to PC to tablet can be done with only a few tweaks what do you think programers will optimize?. I am taking a small gamble this might actually pay off( not betting the farm but a nice investment)

  • Report this Comment On April 10, 2013, at 8:59 PM, cnyap wrote:

    I think processors have to be a tough business in all markets. Smartphones surely have razor thin margins, so would they make much profit in that market? And how many companies/processors compete in that market? How fragmented?

    But not many CPUs can run Windows, and there's a huge barrier to entry (patents and cost).

    PC's are not very profitable anymore though, and it's hard to believe AMD is getting top dollar from the console companies. And the better the consoles become, the fewer who bother buying high end PC's which do have decent margins (with an expensive AMD graphics card in them).

    Supplying components is a tough business...

  • Report this Comment On April 10, 2013, at 11:49 PM, rav55 wrote:

    @jpanspac

    AMD is not a retailer. Use a better metaphor.

    Folks like you shorted Apple when Bill Gates took it back. Then Apple defied Newton and went sky high.

  • Report this Comment On April 10, 2013, at 11:56 PM, rav55 wrote:

    @kevikom

    I agree with your assessment. Intel makes a better CPU for multicore compute intensive software. Like if I was in a race to see how fast I could calculate Pi to a bazillion decimal places then I would certainly spend beaucoup bucks on an i7. And in fact chess software now runs faster on Intel cpu's than AMD.

    But since I real don;t care if my computer is is three microseconds faster at finding Pi to a bazillion decimal places, I base my expense on useability. AMD provides a better user experience for half the price.

    But now they have changed the market. While nVidia does have market share with Cuda running on their gpu's, the very simple fact that the cost of thei gpu's is increasing because the mid-range price entry point is drying up due to both AMD APU and Intel 'Bridges.

    When graphics intensive programming uses the full power of mulicore cpu's before dumping to a gpu core then discrete GPU's for anything but the most graphic intensive professional rendering will be unnecessary. AMD is going here with HSA. The end of PCIe is only a few years away.

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