14/6/2014 AMD CEO: Beyond the Unhealthy Duopoly of PC Chips - Digits - WSJ

http://blogs.wsj.com/digits/2014/05/05/amd-ceo-beyond-the-unhealthy-duopoly-of-pc-chips/ 1/4
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COMMENTS (3)
AMD CEO Rory Read Emi l y Prapuol eni s
AMD CEO: Beyond the Unhealthy
Duopoly of PC Chips
AMD ARM GAMES INTEL MICROSOFT PLAYSTATION SONY XBOX
By DON CLARK
Rory Read, seldom at a loss for words,
has found more reasons to speak up.
The chief executive of Advanced Micro
Devices produced a 28% jump in
revenues in the first quarter, along with
signs that Intels long-struggling rival in
PC chips is diversifying.
AMDs results reflected sales of semi-
custom products for the new Microsoft
Xbox One and Sony PlayStation 4
videogame consoles, chips that include
both graphics circuitry and processor cores (the basic calculating engines of chips.
While sidestepping smartphonesor mobility, as Read calls ithe wants to push AMD
chips into new areas like digital signs, set-top boxes and home cloud devices for storing
data.
But Read, who joined AMD from Lenovo in 2011, has a challenge: AMDs share of the
most popular x86 server chips has dwindled to less than 3%, Mercury Research figures
show. (Intel controls the remaining 97%, a situation that Read says allows it to extra
higher pricing than would ordinarily be possible).
On Monday, at an event in San Francisco, Read is likely to discuss his counterattack.
Besides its traditional server chips, Read is breaking from AMD tradition by embracing
ARM Holdings designs and fabric communications circuitry obtained from its acquisition
of startup SeaMicro.
Read visited the Journals San Francisco office in late April. Some edited excerpts of the
conversation:
WSJ: Where is AMD at the moment?
Read: So at a high level, were executing the three-step turnaround that weve talked
about many times in the past.
The reset restructure, the acceleration, and the ultimate transformation.
Whats really nice about the first quarter, and what was nice to see is that from a
strategic standpoint, all parts of the business began to make important contributions to
the overall results.
WSJ: Talk about videogames.
Read: There was a lot of debate two years ago about whether consoles were going to
have this kind of run, and weve seen a record-breaking kind of launch and momentum.
That was great to see.
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14/6/2014 AMD CEO: Beyond the Unhealthy Duopoly of PC Chips - Digits - WSJ
http://blogs.wsj.com/digits/2014/05/05/amd-ceo-beyond-the-unhealthy-duopoly-of-pc-chips/ 2/4
Back in the day when I joined AMD, what, 95% of the business was centered on PCs.
Tough.
Youre on one or two veins of gold that you can mine and there are really challenges in
that marketplace because of an unhealthy duopoly.
Now we introduced this opportunity with five high growth markets. By the end of last year,
we had over 30% of the revenue coming from the growth segments. By the end of next
year, itll be 50%.
WSJ: Where else might you sell semi-custom chips?
Read: I think what youre going to see is at the home level there will be set-top boxes,
game consoles, televisions that become a kind of sub-cloud layer.
WSJ: A home cloud, kind of.
Read: Yeah, a home cloud that allows you to distribute content and get an enhancement
of the experience that youre having there.
Where were going to play is where youre going to see this intersection of a screen and
computing.
WSJ: Do you think the PC market has stabilized?
Read: I see the PC market continuing to shrink in 2014, kind of settling in somewhere
between a decline of 7% to 10%. I think sales were a bit stronger to commercial
customers than people anticipated going into the year.
The last piece Ill say is I think youll see further consolidation in the PC segment.
WSJ: There are a couple of ailing players.
Read: We could have gone after mobility, but I think that wave has kind of crested, and
were on the backside of that curve. Its awfully crowded and the margins are tough.
What weve tried to look at is where are some of the emerging waves that are just
beginning.
How many companies can create differentiated solutions in both ARM and X86 with
world-class graphics? Thats why Xbox One went with us.
And look at that execution of that ramp. We not only ramped one of those products, we
ramped two at the exact same time. We shipped millions of those products in a six-month
cycle and built over a billion-dollar business from scratch in two quarters.
That was a near flawless execution. And because of that, I think a lot of customers have
a different view about AMD.
WSJ: Lets talk a little about server, where your share of the market
Read: Has gotten much smaller.
WSJ: Has gotten really small. Are you giving up on x86 server chips?
Read: No. So lets be perfectly clear on that. I think that Bulldozer (AMDs recent
processor design) wasnt the game-changer that people had thought it would be.
We went out and got world-class designers and world-class leaders like Jim Keller or
Raja Koduri that came over from Apple.
Theyre working on next generation work in that space, in the server space, in the cores
space. And thats going to be both ARM- and x86-based.
Then you take the third part of our strategy, which is the SeaMicro fabric. I think were
uniquely positioned.
And just a subtlety on that: many of the big players saw what happened when our share
went down so far in the server spaceOnce the competition (Intel) has a dominant
position, they extract the money.
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14/6/2014 AMD CEO: Beyond the Unhealthy Duopoly of PC Chips - Digits - WSJ
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CLEAR POST
3:41 pm May 6, 2014
LicensedIPmarket wrote:
If AMD was smart they would License the Power8 IP from IBM, and continue to sell servers
through their SeaMicro investment/purchase, even if their customers want Intels x86 on
them(AMD makes Money on the deal). AMD does sell servers through Seamicro with their x86
product also, and now with its first ARM refrence design 64 bit server Opterons. IBM is looking
to get out of the fab business(except for its research fabs) and has been seeding the market
with IP (fab and CPU IP) through IBMs technology sharing foundations. IBM is looking for
Samsung and GlobalFoundries(Both IBM technology shareing members) to take its power CPU
based products to the market, GlobalFoundries(indriectly), with some Arm Holdings like IP
Licensing from IBM. IBM is trying to assure itself a low cost supply of Power8 parts for its
proprietary server business. AMD will indirectly benifit from IBMs technology sharing with
Samsung and GlobalFoundries, with a better 14nm Fab process sooner for AMDs CPUs and
GPU products. AMD should look at doing servers around the power8 CPUs and the Linux OS
(IBM may be trying to get a wider market built up around its power8 ISA/IP, but IBM will not be
shareing its proprietary OS with anyone, everyone else will get power8 on linux). AMD should
become more than ambidextrous, and use whatever CPU IP/ISA suits the job, be it x86, ARM,
or IBMs Power(Not to be confused with powerPC). Clearly the Licensed IP market, as Arm
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14/6/2014 AMD CEO: Beyond the Unhealthy Duopoly of PC Chips - Digits - WSJ
http://blogs.wsj.com/digits/2014/05/05/amd-ceo-beyond-the-unhealthy-duopoly-of-pc-chips/ 4/4
Holdings has done with the ARM ISA, could be the way to go with power based CPUs, IBM
appears to be heading that direction with its power product. The mobile market is made up
almost entirely of licensed IP from CPUs to GPUs, as well as chip interconnects/fabrics, cellular
radios, etc, and its looking like the entire CPU market from mobile to server will be going with
the Licensed IP model before much longer.
7:18 pm May 5, 2014
Da Dancer wrote:
Whoa
Dude
Thats all the CEO has
Fossey Hand Moves ?
8:18 am May 5, 2014
stock schmuck wrote:
AMD is coming back and the marketplace will be better for it. When AMD falls behind, Intel gets
lazy and greedy. Customers pay the price.
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