Plugged In: AMD plans to be less reliant on PCs – Austin American-Statesman
In 2012, more than 90 percent of Advanced Micro Devices’ revenue depended on personal computer sales.
Last year, that number dropped to about 70 percent. That’s a trajectory AMD’s leaders would like to see continue as they remake the company into a more diversified chip provider.
While AMD leadership insists that the company isn’t abandoning PCs, there’s a clear acknowledgement that the PC market is not what it used to be.
“Everybody who’s following this knows that the market’s hit a rough patch and there’s a lot of competing devices out there for the consumer’s dollar,” said Kevin Lensing, AMD’s senior director, mobility solutions. “And so we’re not blind to that.”
In other words: “The PC market has shrunk, so our PC business has shrunk,” he said.
With the decline of the PCs and the growth of other devices, AMD has had to change with the times. Part of that turnaround has been to take the company’s technology, which had been PC-focused, and apply it to new markets. Although AMD’s formal headquarters are in Sunnyvale, Calif., the company has about 2,000 employees in Central Texas.
“From the very beginning, our thought process was, how do we take the tremendous assets we have here at AMD and apply them to higher growth markets?” said Lisa Su, AMD’s general manager for global business units, who joined the company about two years ago. “Because it wasn’t about technology. We had very, very good technology. But we needed to figure out: how do we diversify the company?”
Part of that strategy was seen recently, when AMD — which is struggling to regain lost sales in the lucrative market for server processors — unveiled a chip that’s aimed at reviving sales of chips that run servers.
Su gave the first demonstration of the “Seattle” chip, which uses ARM Holdings technology, at a presentation in San Francisco recently.
AMD, the only other maker of processors using Intel’s x86 standard, is switching some of its designs to ARM, betting that the technology that dominates in phones and tablets will find a role in servers. The chipmaker is targeting machines used by companies such as Facebook Inc. and Google Inc. to perform simple functions, such as logging users into their accounts.
AMD also recently obtained an ARM architecture license. That license will allow AMD to design its own ARM-based chips as opposed to just using the available ARM cores. The new chip could be huge for AMD, analysts said, because it could get AMD’s products into the tablet market, as well as Google-made laptops.
In January, the company unveiled its new line of processors, called Kaveri, at the International CES technology show in Las Vegas.
Company officials called the processor AMD’s most advanced ever, with up to 12 compute cores (four perform conventional CPU functions and another eight are for graphics delivery). But the big step forward, according to AMD, is the way the processor is designed. Its CPU and graphics processor are together on the same chip and have equal access to the processor’s memory. That change, AMD says, will deliver superior performance.
The initial processors are intended for PCs and subsequent models will be available for notebooks this year.
But it’s not just notebooks, tablets and laptops that AMD is after. The company has also found gold in the latest line of video game consoles.
Buoyed by sales of game console chips, AMD saw its first-quarter revenue grow by 28 percent, to $1.4 billion from $1.09 billion.
Those results were due in large part to increased shipments of chips for the Microsoft Xbox One and the Sony PlayStation 4 video game consoles. Both sold well in the holiday season, especially the PlayStation 4, which has shipped 7 million units.
Having AMD chips inside gaming consoles was “a great validation of our technology,” Su said. “And it helped us, quite honestly, it helped us return to profitability.”
Aside from servers, consoles and PCs – both desktop and laptops – AMD is also trying to get into lots of other machines, such as casino gaming machines and other devices with embedded processors.
Tech analyst Patrick Moorhead of Moor Insights & Strategy said it’s too early to see if AMD’s strategic shift if working.
“I don’t think we will know for another year,” he said. “AMD has certainly stabilized, but we will need to wait for the growth based on investments made a few years ago.”
By the end of 2015 and going into 2016, Su said, the company would like to see its revenue split more or less evenly between PCs and other sources.
“Five years ago, you got a lot of value from gaining a point of share in the PC market,” she said. “These days, it’s just not the same value; there are other ways to add value. And I don’t want to make it sound like I don’t value the PC market, we do. It’s still a huge piece of our business, but there are just so many other things that we can approach with our technology. So we just want to be balanced.”