AMD Loses a Key Samsung Design

Another AMD PC design win is snatched away by Intel, further highlighting AMD's struggles in PCs.

Feb 11, 2014 at 1:00PM

When Samsung (NASDAQOTH:SSNLF) held an event late last year at which it launched a flurry of new products, among those products was a pair of laptops. The first was known as the ATIV Book 9 Plus, which was a high-end Ultrabook with an Intel (NASDAQ:INTC) Haswell processor. The second was its cheaper sibling, known as the ATIV Book 9 Lite. This one was powered by an Advanced Micro Devices (NASDAQ:AMD) Kabini APU.

Samsung gives AMD the boot; Intel wins again
In an unfortunate turn of events for AMD's notebook-processor strategy, Samsung just updated its ATIV Book 9 Lite with a "Y" series Haswell part from Intel, booting AMD's Kabini right on out. For those of you unfamiliar with Intel's slightly zany naming scheme, the "Y" series of processors from Intel are the company's convertible/tablet-oriented low-power variants of its high-end Ultrabook processors.


(Source: Digital Trends)

While some AMD investors may claim that Intel is "buying" this socket back, the fact of the matter is that in devices such as the MacBook Air and other Windows 8.1 laptops, Intel's Haswell products have been exceptionally well-reviewed and praised for their high speed and low power consumption. However, AMD's Kabini product -- as much as AMD tried to tout it as revolutionary -- led Engadget to say this about Samsung's ATIV Book 9 Lite:

But why should you even care who makes the CPU? Because the performance here is absolutely dismal, that's why. Not only does the Book 9 Lite trail its competitors in benchmarks, but it's also sluggish in day-to-day use. Many times, we noticed a kind of ghosting effect as we dragged around windows and opened new files and applications. Other times, programs became unresponsive. The bottom line: It's a little too easy to overwhelm this machine.

Samsung likely went with AMD since AMD probably offered Samsung a really good deal on the chips -- and Samsung and Intel are increasingly becoming enemies. Unfortunately, this is a situation where going with a sub-par processor likely cost Samsung sales, as the reviews clearly indicated that it was a poor performer. On top of that, it doesn't help that Samsung's PC competitors were all using Intel's superior Haswell products. AMD's Kabini is likely well-suited as a competitor to Intel's Bay Trail-M in sub $500 PCs, but it had absolutely no place in a $650-plus premium machine from Samsung.

Foolish bottom line
While some AMD bulls seem to believe that the pricing premium that Intel charges on its parts is unjustified, the proof is in the pudding. In highly competitive markets like PCs, there's no room for products that offer worse performance and battery life than the competition. With the competition all flocking to Intel's Haswell, and with the ATIV Book 9 Lite garnering significant criticism for its poor performance, it was the right business decision for Samsung to update this machine with Intel inside.

This win for Intel isn't what makes AMD's position so tough, but it is reflective of a broader problem for AMD: Its products simply aren't competitive, and the company's financial situation isn't comfortable enough to allow for too many more mistakes -- or for increased investment to overcome these problems. AMD better deliver with its next-generation Beema SoC and with its higher-end Kaveri in notebooks, or the market-share losses to Intel will continue. In a PC market that's declining, that would be doubly bad for AMD.

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Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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