Just as Advanced Micro Devices (NYSE: AMD) gets ready to reap the true fruits of its largest acquisition ever, the company is doing away with a few side effects of that deal.
The ATI brand name will soon be nothing but a memory. A $5.4 billion buyout has resulted in the revolutionary Fusion platform, which is expected to propel AMD into steady profits and technological leadership from 2011 onward. But the ATI brand itself has played its part and now only serves to dilute AMD's central brand, according to the company's own market research.
This move is but a small part in a larger overhaul of AMD's branding strategy. The current plethora of confusing product names will be boiled down significantly over the coming months: You won't need to keep track of what makes a Phenom II processor better or worse than an Athlon II or Turion, for example. Instead the company will offer "Vision" categories that summarize the processing power of AMD machines. This goes one step further than Intel (Nasdaq: INTC) and its Core i3, i5, i7 strategy: one brand to rule them all, at least for a while.
If AMD truly sticks to its guns here, it's a great move from two different perspectives:
- In terms of marketing, a consumer can select an AMD-based computer based on listed features and speeds, rather than being led astray by brands that mean nothing.
- The product design team can focus on fewer product lines and align their activities with less duplicated effort. This should lead to improved margins across the board, with the largest effect showing up on the operating margin.
This also boils down to simplified system design for computer builders like Dell (Nasdaq: DELL) and Hewlett-Packard (NYSE: HPQ): With a simpler structure of both graphics and processor products, you can throw more marketing and design budget after a smaller system portfolio, which should lead to stronger end-user marketing traction and higher sales.
The presence of Intel and NVIDIA (Nasdaq: NVDA) in these markets doesn't necessarily muddle the choices any further, because most consumers seem to be pretty clear on the differences between companies. It's the product lineups that need a shave by Occam's famous razor. Keep it simple, silly.
Will a simple, svelte AMD compete more strongly with NVIDIA and Intel, or does a rose by any other name still smell as sweet? Discuss in the comments below.
