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Can Advanced Micro Devices, Inc. Outflank Intel With This Low-Cost Platform?

By Anders Bylund - Mar 6, 2014 at 4:26PM

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AMD just launched a processor meant for easy upgrades at a low total system cost -- a market that Intel largely ignores.

Advanced Micro Devices ( AMD -3.40% ) missed the boat on the tablet and smartphone revolution. That fact is not up for debate. But the microprocessor designer may have found a new lease on life in traditional PC systems -- aimed at emerging markets.

AMD just announced a new platform that's shooting straight for that specific market. The AM1 platform gives a new home on the desktop to AMD's laptop chips, developed under the Kabini code name.

AMD is reaching out to developing markets with desktop-format Kabini chips. Image source: AMD.

AM1 promises to put Kabini's very capable all-in-one feature set in a socketed format, giving cost-conscious users both respectable power and a path to future upgrades. Laptop chips typically come soldered to the motherboard, leaving little room for low-cost partial system upgrades.

That's exactly the tune that AMD is singing about this new product. AM1 provides "a multitude of options for consumers and system builders looking for upgradeability packed into an extremely affordable solution," says AMD's client business VP Bernd Lienhard.

Shooting brand new products right into the low-cost market segment is not a new strategy for AMD. The company has a history of undercutting arch rival Intel ( INTC 0.35% ) in terms of raw pricing, as the larger company generally prefers to just let older products slide down and fill cost-sensitive market needs.

One crucial aspect of the AM1 launch is that AMD's hardware partners are expected to build motherboards with:

  • low cost, of course

  • established industry standards like micro-ATX formats

  • support for newer standards like USB 3.0 and SATA 6GB/s

Put these details together, and you should be able to pair your new system with a largely obsolete case and power supply, do it cheaply, and still get access to newer technologies. It's a shake-and-bake system with a huge flexibility factor.

Maybe that's what it takes to build market interest in emerging economies like the BRIC bloc, Latin America, and Africa. If so, then AMD is onto something with this AM1 launch.

Mind you, it's not a safe bet. AMD has been down the low-cost road before with some success, but the company still holds a minuscule market share next to gargantuan Intel -- in every segment that matters. Even if the AM1 low-cost strategy plays out as planned, the company stands on a brittle fundamental platform, and is only suitable for speculative investing.

In other words, don't back up the truck to load up on AMD, and only invest money you could afford to lose.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Intel Corporation Stock Quote
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INTC
$49.37 (0.35%) $0.17
Advanced Micro Devices, Inc. Stock Quote
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AMD
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