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A 1-2-3-4 Plan For AMD To Beat Intel

By - Source: Tom's Hardware | B 45 comments

Analyst Opinion - Intel had a surprisingly strong quarter. AMD went the other direction and is now taking a number of actions that probably should have come right after the ATI merger. The difficulty the company is facing is one of competing with a vastly larger and better funded competitor in a market largely defined by standards that its rival sets. In short, it has always been Intel’s game, its home field. And even in the beginning, AMD only got what Intel gave them.

Intel lost its way a few years ago and AMD moved aggressively against them. But the litigation between the two firms reveals that Intel had the power to block AMD even when AMD had better products and while that will likely result in fines and penalties to Intel, it won’t change Intel’s natural dominance.

So, is AMD screwed? Should they pack up and go home? Well, in a way, Microsoft had a similar problem with IBM in the enterprise in the early 90s and Microsoft, who was at an even greater disadvantage, prevailed. So, how do you beat a dominant competitor?

Rule 1: Change the battlefield

The entrenched vendor has a problem the challenging vendor doesn’t have: It is tied to the status quo and isn’t willing to make major changes that would destroy the current revenue model. But the world changes and if you can ride or drive a change more aggressively than the dominant vendor, you can emerge dominant yourself. That’s how Google beat Microsoft.

In a way that’s what Apple did with the iPod and may still do with the iPhone. Apple created something vastly different, based on a back end service that the other hardware manufacturers could not emulate. Microsoft moved around IBM not by targeting IT, but by focusing on empowering users who drove Windows into enterprises, which eventually crippled the dominating power of IT.

What if you looked to Google as the disruptive force that is showcasing how companies could build their own hardware and successfully deploy it? What if AMD worked with Microsoft to get special multi-user licensing for Windows so that PCs could be shared and resources dynamically sent to those who needed it? If one AMD multi-core processor could be used by a family, wouldn’t it carry a higher margin and wouldn’t the solution be less than Intel’s? What if AMD designed systems that were vastly easier to upgrade as components, allowing people to upgrade without buying new systems or ever being intimidated by a bare motherboard?

Change the battlefield from price to value and given that software doesn’t work well with more than three cores anyway, shift to a shared resources model.

Rule 2: Focus

Large and complex companies tend to do lots of things at once and can get very distracted as a result. This is what happened to Intel after Andy Grove stepped down. Suddenly, Intel was in consumer electronics, hosting, IT outsourcing for others and, generally, Intel did not keep its eye on the core business. This will always be a problem for a large company. There are simply too many things going on for the executive management to stay focused on all of it.

Pick the areas where Intel is most exposed - graphics, OEMs, Microsoft and end users - and resource them. This is actually a set of things that AMD has been known to do well, but they tend to under resource the efforts, which has reduced the returns substantially.

Google is more focused than Microsoft, Microsoft was more focused then IBM, and Apple is more focused than any other tech company. When you are smaller, you need to focus at what you’ve got and drive it home. But, it can be fatal to try to put resources on everything your vastly larger competitor is doing because that competitor, in terms of absolute investment can always outspend you. The trick is to husband your resources so you can outspend your rivals on critical point projects, while they try to cover everything.

There is an interesting file floating around the web which uses PowerPoint and animations to show the history of the Second World War. You can actually see the point where Germany, which was unbeatable, overextended itself and then got beaten badly. AMD needs to let Intel overextend and pick and fund key strategic efforts in markets where the playing field is more even. Consumer, MIDs/UMPCs, cell phones, and home automation largely don’t care about Intel inside and are looking for something they currently aren’t getting (which is why you see lines for the iPhone but not for any new PC).

Rule 3: Quality over quantity

Think of the Spartans at Thermopylae (the movie 300 was over the top, but makes the point): They were the best trained (highest quality) solders of their time and while they eventually got their butts kicked, they took on a vastly larger force and held them for a prolonged period. They didn’t do it by going man to man; they did it by focusing on quality over quantity. You might think of this as another way of saying focus, but it is more than that. It is setting a quality mark higher than your competitor is willing to set - and making the market understand that quality.

Think about it: Does Apple compete on price or do they compete on perceived quality? Often, we define products by performance, but there are other measures that are often more important. We don’t, for instance, all drive cars with big V8s. Toyota beat GM and Ford not by having more cars, more lines, or more resources. They beat them by having better gas mileage and better quality at similar prices.

There is a large number, I would argue the majority, of buyers who would like a PC that would last for 7 or 8 years that would never crash and that would use less power. AMD will probably never sell more processors than Intel does, but they could build a platform that could be seen by some as better. Then the goal can be to expand the "some". That’s what Apple is doing in the face of incredible odds. I mean, look at the combined resources of Microsoft and every OEM on the planet, yet Apple, instead of going under, is growing at an incredible speed.


Rule 4: Fund great marketing

Apple outspends HP, the largest and most powerful PC manufacturer by an estimated four-to-one in PCs. This is because HP has to fund marketing across a broad portfolio of products. Marketing is what got folks into lines for the iPhone and it is what gets customers to prefer one ingredient brand over another.

Marketing is also not a factor of just money, but of skills and capabilities. Intel and AMD are engineering driven companies. But, as Motorola recently found out, an engineering driven company can be wiped out by a marketing driven company, if marketing is designed into the challenging (Apple iPhone vs. Razor) product.

You can do everything else, but if you can’t promote your product, you might as well have retired early.

Wrapping up: AMD has the potential for great things

AMD can’t continue to run at Intel head on. Intel is bigger, better funded, more deeply entrenched and isn’t making the mistakes it once made. To win, AMD needs to not just embrace the concept of the little guy taking on the larger force. They need to become the Spartans capable of providing a higher quality offense that is up to challenging Intel’s dominance.

It is that alone that will decide if AMD kicks Intel butt or has their butts kicked by Intel.

Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.

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  • -2 Hide
    Anonymous , July 21, 2008 11:21 AM
    AMD should build a research and development factory in Israel, like Intel did.
    The Israelis engineers are those who develop the core and the centrino,
    which helped Intel overcome the Athlon architecture.
  • -1 Hide
    hannibal , July 21, 2008 11:41 AM
    Intel has been there and done that allready... I even think that AMD shoul build development factory to India or China...
    ... And it does not take away the thing that Intel can put easily a lot more money to the research than AMD. AMD have to work in the areas where the money is not the desiding factor.
    They need a co-operation with many companies. If Intel do everything, they allso block out meny companies. AMD should focus an co-operating with different companies that can develop together something that is more than the sum of their efforts.
    And even then Intel is huge threath to companies like AMD. The fusion may be ansver for cheap one chip low power computer. The Intel will have the speed monsters for far future. But who knows if IBM can Help AMD to level the playing field and AMD can compete with their High-metal gate 32-22nm prosessors, but it seems very unlikely. Intel can move to the next prosessing tecnology so much faster rate because all of that money.
  • 0 Hide
    eklipz330 , July 21, 2008 12:04 PM
    i look forward to the day when my computer is AMD based...
  • Display all 45 comments.
  • -1 Hide
    jimmysmitty , July 21, 2008 1:20 PM
    hannibalIntel has been there and done that allready... I even think that AMD shoul build development factory to India or China...... And it does not take away the thing that Intel can put easily a lot more money to the research than AMD. AMD have to work in the areas where the money is not the desiding factor.They need a co-operation with many companies. If Intel do everything, they allso block out meny companies. AMD should focus an co-operating with different companies that can develop together something that is more than the sum of their efforts. And even then Intel is huge threath to companies like AMD. The fusion may be ansver for cheap one chip low power computer. The Intel will have the speed monsters for far future. But who knows if IBM can Help AMD to level the playing field and AMD can compete with their High-metal gate 32-22nm prosessors, but it seems very unlikely. Intel can move to the next prosessing tecnology so much faster rate because all of that money.


    Um IBM already helps AMD A LOT with their technologies such as the IMC and their current process, 45nm. Its not about AMD being able to work with other companies since Intel works with them too.

    Yes Intel works with a lot of other companies to bring much better hardware such as PCIe and faster USB solutions and many more. But what AMD needs to do is take these technologies it gets from IBM and incorporate them wisely.

    Heck if AMD wasn't so stubborn and didn't head on a naitive quad at 65nm and waited till 45nm like Intel has done maybe they would be better off. This is especially true since in most markets except the server where quads are better. But in the rest if they had gotten a dual out that was better than C2D they would have been better off. Then they could have used the incoming money from the duals to work on a quad.

    So in all reality AMD made a lot of wrong moves and in truth I am going to doubt they will even be able to truly take Intel head on. I am sure they will challenege Intel like they have done before but never push them to the bottom.
  • 2 Hide
    modtech , July 21, 2008 2:42 PM
    As the article stated, Intel is much much bigger than AMD. They have more funds for research, engineers, manufacturing facilities, marketing... you name it. Direct competition in such a situation is futile. BTW jimmy you're slightly wrong about AMD being "stubborn" about native quad cores. You think they wouldn't have preferred the simpler and cheaper route? This is AMD we're talking about you know. The problem was the way the K8's memory controller connects to the system, you can't tape two of those together and make it work. As for annonue's comment hold on a second and think, that's a pretty stupid thing to post. The quad to buy is still the aging Q6600, which is somewhat disappointing as I expected a full cache 45nm quad to replace it at the same price.

  • 4 Hide
    Mathos , July 21, 2008 2:46 PM
    jimmysmittyUm IBM already helps AMD A LOT with their technologies such as the IMC and their current process, 45nm. Its not about AMD being able to work with other companies since Intel works with them too.Yes Intel works with a lot of other companies to bring much better hardware such as PCIe and faster USB solutions and many more. But what AMD needs to do is take these technologies it gets from IBM and incorporate them wisely.Heck if AMD wasn't so stubborn and didn't head on a naitive quad at 65nm and waited till 45nm like Intel has done maybe they would be better off. This is especially true since in most markets except the server where quads are better. But in the rest if they had gotten a dual out that was better than C2D they would have been better off. Then they could have used the incoming money from the duals to work on a quad.So in all reality AMD made a lot of wrong moves and in truth I am going to doubt they will even be able to truly take Intel head on. I am sure they will challenege Intel like they have done before but never push them to the bottom.


    You're not reading what the article was about though Jimmy. You're still banging your head on it has to perform better in benchmarks. Which isn't what the article was really about. 60+% of AMD's issues are Lack of Mass market advertising. How often do you see a TV commercial about any of AMD's products, video cards or otherwise? The answer to that one from my experience is Never. The only place you see AMD ad's is on computer tech sites, and computer enthusiast magazines. And more rarely in mags like Maxim or playboy. The main force that allowed Intel to outsell AMD in the P4 Netburst days wasn't performance, but the fact that when you turned on the TV, you'd see a commercial for the P4, think they were still using the blue man group at the time. And then you'd see a commercial with the dude your getting a Dell guy, where at the end it was say featuring Intel Pentium 4 processors.

    It doesn't have anything to do with Native quad at 65nm. The biggest thing AMD is guilty of there is not catching and fixing the TLB bug before they tried to release the processor. At which point the TLB bug was then blown waaay out of proportion by Intel fanboys, keeping most people from buying phenoms until b3 revision. The place where the TLB bug hurt AMD the most was the server market, where buyers that were waiting to upgrade to Barcelona were forced to instead go with Intel due to the delays. And even now, even though Barcie is better than the Xeon, it's still biting them in the rear due to that delay.

    OEM Manufacturers don't care about which processor runs faster on given benchmarks. They care about which processor they can get for cheaper. And they care about what is going to run stable. For a long time Intel had the advantage here because they could provide an entire platform to oem's that was guaranteed to work together, mainboard, chipset, igp and processor. AMD now has the ability to do this, but how many OEMs are selling systems based off AMD Phenom, 780/790g/x/gx/fx boards, and radeon graphics? And when you look at tray prices and see dead even, on certain area's it says something. Go do some research, by looking at Walmart, or bestbuy.com, then come back and tell me the ratio of pc's for sale that have Intel processor, to AMD processor, even in area's where the AMD would perform better or cost less at stock. So that should tell you, even today that something that isn't suppose to be, is still going on today.
  • 6 Hide
    martin0642 , July 21, 2008 2:54 PM
    Build a research factory in Israel? Research factory? Sure, and while we're at it we'll buy a lot next to Stonehenge, cause it's lasted a long time. Then we can grab a spot next to the grand canyon because it's symbolic of how a small force can do great things, and lastly we can get a studio apartment above an apple store because their so snazzy.

    Now all we need is some crystals to channel the "negative energy" and a shamanistic necklace to speak to the wolf gods so AMD can come out on top. I'm glad it's really just that simple, we can all go home now.
  • -3 Hide
    Mr_Man , July 21, 2008 3:18 PM
    Intel: 3 cores? This is madness!
    AMD: MADNESS? THIS - IS - SUNNYVALE!
  • -2 Hide
    NightLight , July 21, 2008 8:20 PM
    Quote:
    It is tied to the status quo and isn’t willing to make major changes that would destroy the current revenue model.


    I don't agree. Intel always pushed forward, even when there was
    less competition. There was never a real lack of progress in new products. The only difference was the pricing. That's the only thing AMD is good for at the moment, to keep intel's prices (relatively) down.
    If anything the industry is moving too fast, and logically, the weakest
    shall fall. In this case, AMD.

  • 0 Hide
    kelfen , July 21, 2008 8:55 PM
    NightLightI don't agree. Intel always pushed forward, even when there was less competition. There was never a real lack of progress in new products. The only difference was the pricing. That's the only thing AMD is good for at the moment, to keep intel's prices (relatively) down.If anything the industry is moving too fast, and logically, the weakestshall fall. In this case, AMD.

    Yea look at the 4xxx series of thier graphics cards. NIVIDA was at the top for two rounds but... they are now on top
  • 6 Hide
    zenmaster , July 21, 2008 9:04 PM
    Rule #1 - There are already devices out there that do this, but they don't sell well. And if AMD was to design this and figure out a model so that MS got some type of royalty as you say, this would mean AMD would need to significantly raise prices to allow for MS to gain a share. And since you are asking for MS tie-in, I doubt they would be that interested in an exclusive deal.

    Rule #2 - Focus? Focus? Are you serious? AMD has more fingers in more pots than Intel. Do you expect them to sell the Graphics or the CPU business? What about Rule#1? You just told them to diversify and now you tell them to Focus. Maybe you should focus?

    #3 - Quality over Quantity? You don't think AMD is trying? So now they just need to decide to make good stuff? I must say that is a brilliant idea.

    #4 - Marketing? Yeah..OK. So, a company bleeding massive amounts of money who is slashing products needs to do research to design better products, design totally new products in a market that does not exist yet while focusing and do less stuff and then find non-existent money to saturate the media with Advertising. Well, it worked for Apple because the MAC OS is very good for some people. When AMD does all the rest, they could then advertise. The Market leader can always advertise and say buy me because I'm the leader and the standard. Those who are not, actually need to give a reason.

    Perhaps next time try to give some substance?
    I realize it will be hard because AMD is in a tough spot.
    I'm not saying I could offere a solution.
    But I did not write an article outlining a series of contradictory and impossible "rules" for AMD to follow.
  • 1 Hide
    DXRick , July 21, 2008 9:44 PM
    AMD's tried to compete with the "same but cheaper" strategy, which bombed. People (like me) still see them as offering less for the same price. This is the same perception people have of the US auto industry, even though their relative reliability has improved.

    It isn't just because of their CPUs that this perception continues. They have done nothing to distinguish themselves in the chipset and integrated graphics areas. They rely on 3rd parties to develop chipsets and make motherboards. They have done nothing with their merger with ATI.

    So, how can advertising help much, when they have nothing special to advertise??
  • -1 Hide
    gaiden , July 21, 2008 10:09 PM
    To me there are two things that are attractive about AMD. 1) the price/performance for most of their products. 2) the merge of AMD/ATI. Though losing revenues, from a my point of view as a consumer, AMD seems to be picking up some slacks and moving forward with new products. I built quiet a few budget pcs for my relatives and all are AMD based, I'm talking about sub-$400 or even $300. while Intel based maybe possible, but bang/buck ratio seems to be greater. That, was one advantage i saw with AMD-its affordability for the budget consumers. Dont deny it. Everyone of us has a couple of these email/online social network type of relatives :)  what i'm trying to say is that AMD (with ATI in mind) has enough source to put out their own mini budget consumer level PC at very competitive cost. Though this may not work in U.S. or possibly Canada. i think they should aim this plan on smaller countries where affordability is everyone's #1 concern. When comparing buck for buck on components AMD truely shines. AMD should reach out for China, India, and many other eastern countries because that is where they have a chance in a fresh start and compete for that majority of the budget pc consumer mass. AMD is not dead-they just need to repackage themselves. In a way HP have done the same thing and they are keeping up with all the other successful pc giants just the same. AMD, you guys have all the tools, try a new image in new places, go wild...

  • 1 Hide
    dario77 , July 21, 2008 10:12 PM
    isn't anyone going to point out that the only reason apple has been allowed to continue is that they dump their toxic waste in little brown people's villages to save costs??

    apple...marketing to the very people who would be aghast by their environmental record.
    and every one of these nimrods say "save the planet!!" as they check their iphones...

    you're f@#$#d, as a species, you know...
  • 2 Hide
    Anonymous , July 21, 2008 10:18 PM
    You could tell the quality of the article by the title... it's scary to think Mr Enderle is an analyst!

    Problem A - Why does AMD need to 'beat' Intel? This is the fundamental problem that has as much to do with AMD's problems as anything else and the problem with most of these type of articles. Their goal should be to be a successful company, not beating another company. Until they realize that they are tilting at windmills. They are treating everything as one size pie and needing to fight with Intel to get a bigger slice of the pie... how about growing the pie? Or making some cakes? The article alludes to this but when it is titled how to beat Intel - it still seems that is the mistaken mindet.

    So how do you do that... stop comparing yourself to Intel at every turn! What is AMD's mission statement, beat Intel? Make a name for yourself, not the little guy trying to break the evil monopoly - this plays for a while, but eventually gets old. Settle the lawsuit and get some short term cash inusion instead of making this personal (as Ruiz clearly has done) and viewing it as a potential lottery ticket. This is kind of like an aging star on a professional team - you may not get the value you think is worth for them, but at some point it is time to move on to a new direction and get what you can for them.

    How is AMD viewed? Simply as the small competitor to Intel; they have no brand image! The fanboys will say price/performance or graphics, but to the mainstream world they are simply a small competitor to Intel. This gets to the marketing point but while you are setting up great marketing, you need a product to market. "We are cheaper" (ummm, I mean better value) is not a marketing campaign - it is the birth of a commodity business.
  • -2 Hide
    master9716 , July 21, 2008 11:48 PM
    I think you guys are forgetting that laser processors are coming .

    Amd should ask itself what sells? when amd was going strong it was because their processors ran at higher FPS in games than intel eventhough in cpu benchmarks it was slower. So I think they should do the same because when buying a processor most everyone lookst at how much fps it can push.

    If AMD builds a new like of dualcore processors dedicated to make graphics run faster then It will outsell intel if the price to fps ratio is good. Just like they did in the begining
  • 1 Hide
    exit2dos , July 22, 2008 12:26 AM
    #1) Are you suggesting that the world's largest software company should give preferential treatment to AMD? Doesn't MS have enough problems with the EU?

    Secondly, AMD doesn't have enough marketshare for third parties to create special form-factors and interfaces for a propietary system. AMD could try doing it themselves, but it didn't work for Apple (which now uses regular PCI cards, etc.).

    #2) "Consumer, MIDs/UMPCs, cell phones, and home automation largely don’t care about Intel inside and are looking for something they currently aren’t getting"

    Did you listen to the Earning Conference Call last week? AMD is selling off it's mobile and HDTV business to focus on CPUs and GPUs.

    #3) "There is a large number, I would argue the majority, of buyers who would like a PC that would last for 7 or 8 years that would never crash and that would use less power. AMD will probably never sell more processors than Intel does, but they could build a platform that could be seen by some as better."

    Crashing is usually a software issue, and AMD and Intel are both doing there best to use less power. To have what is perceived as a "better platform", you need to be able to back up your words. Right now, Intel hold the performance lead amond enthusiasts, so there is very little chance that AMD could get the "Better Platform" title.

    #4) You have to have funds in order to fund great marketing.


    AMD just need to continue to put out reliable products. They are very competitive now on the GPU front. They are also, a reasonable alternative in the low to mid-end OEM desktop and laptop front. Hopefully, with Hector no longer leading, they will quit the FUD-spreading and outright lyning about their performance and roadmaps. There is nothing wrong with being #2, and there best bet is to quit trying to be #1 when you don't have the superior product.

    IMO, AMD should just concentrate on being a value-alternative at the moment. They've played that role for years, and grew as a company. The next time Intel stumbles (and, eventually, they will - history repeats itself), AMD will be in a postition to lead in performance again. Only this time, they better not sit on their thumbs when they have the lead.
  • -1 Hide
    jv_acabal , July 22, 2008 3:01 AM
    "AMD needs to let Intel overextend and pick and fund key strategic efforts in markets where the playing field is more even." - I think with the current state, the weak or even field in the dominance of Intel is the IGP. AMD had a great move in putting a powerful graphics into their recent mobos. Their IGP's will surely beat Intel GMA and this is a great factor when we talk about 'value.' In the lower arena, where processors (Intel or AMD) don't matter much, better value mobos, such as AMD's, could be the deciding factor for customers to choose for their platforms. I know AMD is on this one already. Just keep it up ("focus"), AMD, and use the funds you generate for product improvements ("quality") and make "great marketing".
  • -1 Hide
    Xec , July 22, 2008 3:11 AM
    Simple
    -release a 8core cpu ($300)
    -dual cpu motherboard with 5 16x pci-e 2.0 and ddr2/3 mem ($350)
    -beefy gfx card that can fully handle crysis maxed out($400)
    -get valve etc.. game companies to sign on with amd cinema 2.0
    -create some kind of playable amd cinema 2.0 demo game


    All = (win win)
  • -1 Hide
    Lans , July 22, 2008 4:21 AM
    Like others, I have my reservations about the steps outlines.

    1.)
    I think the idea of changing the battle field is a good one but I also believe AMD has been trying already and that the example cited will probably not work. I think the perfect example why the idea of working with Microsoft on a shared resources model will not work is Athlon64, Windows XP x64, and Intel's eventual adoption of AMD's x64 technology. That is to say if Microsoft did with AMD, AMD wouldn't be able to enjoy it for long before Intel has something similar. Maybe shared resources model will be different but is highly highly unlikely to be a "ace in the hole" for "beating Intel".

    I think AMD should have done a lot better on the consumer side (in the Athlon/Athlon64/pre-Core2 preiod) and that the lawsuit against Intel was warranted.

    I personally believe the best AMD can do is to be on a level playing field with Intel (50-50 market share and the occasional balance shift of who has 60 and who has 40). AMD can "beat" Intel but definitely not in the sense of AMD and Intel's roles reversing.

    2.)
    Focus is good.

    3.) and 4.)
    "perceived quality" and marketing? There is just no way AMD is going to win this one when Intel can simply out spend AMD in marketing! I also agree that a system not crashing has much more to do with Windows than with the hardware! Haven't AMD been doing (relatively well) until the recent screw ups?

    I think AMD should just do a variation of 1.) and 2.)
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