AMD and Intel both are struggling with the shift in computing away from PCs to mobile devices, which has hurt the sales of x86-based CPUs traditionally used in PCs. But they're taking different approaches to regain the growth they've lost. Their back-to-back press events this week showcased the very different paths each sees to succeeding in an increasingly mobile-centric world where ARM-based chips rule.
Intel is trying to get that mobile world to adopt its x86 chips, which it has retooled for power efficiency. For the last couple years, it has sought to get Android makers to use the x86 in smartphones and tablets -- and more recently it's been trying to be the chip of choice for a new generation of Chromebooks. AMD is taking a radically different path, avoiding the mobile world and instead betting on a complex strategy to bridge the gap between ARM-based and x86-based server computing.
Geeky as it was, AMD's news was more interesting because the No. 2 chip maker is making a bet that megacompanies like Google and Facebook are willing to consider servers powered by something other than the traditional x86 processor. Intel, on the other hand, is using the Chromebook to suck up manufacturing capacity left idle by the precipitous drop in demand for conventional PCs. Those Chrome OS-based devices have not sold in appreciable numbers -- they make up less than 1 percent of PC sales -- but the PC makers are still hoping the cheap, Internet-required devices will pick up the slack created by falling PC sales, and Intel has the same hope.
You might think a mass market for ARM-based servers is a figment of AMD CEO Rory Read's imagination, but consider the deal Google struck with IBM in late April: Google opted to build servers using Big Blue's Power architecture, a sign that it is no longer completely committed to Intel's architecture, says Dean McCarron, a principal analyst at Mercury Research.
"Read is making an informed bet," McCarron tells me. "This class of customer is interested in all the price/performance options there, and, if someone hits the right mix, they will buy it."
This week's news aside, AMD is getting interesting again as it moves to shrink its dependence on the ailing PC market. Its last quarter surprised Wall Street with revenues that jumped by 28 percent -- helped in no small measure by its success in selling chips for game consoles to Microsoft, Sony, and Nintendo.
What's more, AMD's management has made some smart moves that are paying off with a newfound credibility with customers, says Nathan Brookwood, a principal analyst at Insight 64.
"They are a much more consistent and reliable supplier,"Brookwood says.
AMD's new opportunity to overcome a legacy of poor execution
Any company competing with Intel in its core markets is going to have a tough time, even if it executes well. But, until recently, AMD was executing very poorly, recalls Brookwood.
"AMD would put something on the roadmap," he says, "and then [former CEOs] Sanders and Ruiz would tear it up. That doesn't make a partner planning to do something with that product very happy."
One glaring example: The Barcelona server chip that was due in 2006 didn't come out until late 2007 because of a significant bug. As a result of such bungling, AMD's share of the server market fell from a peak of 26 percent in 2006 to a measly 2.8 percent in the first quarter of this year, according to Mercury Research.