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Frontpage Slideshow | Copyright © 2006-2010 orks, a business unit of Nuevvo Webware Ltd.
Friday, 23 July 2010 11:04

How AMD failed to materialize its ATI dream

Written by Fuad Abazovic
amdati_logo2009

Two out of three goals in four years
AMD acquired ATI back in the summer of 2006 and one of the first announcements was that AMD got ATI for Fusion, chipsets, graphics and platforms, but in early 2007 we had a chance to meet with executive Vice President, Computing Products Group at AMD Mr Mario Rivas who told us the three key goals. Lets me remind you that Mario departed from AMD shortly after this article, here.

He mentioned three goals and it is interesting to take a look at the goals today, three and a half years on, as AMD failed in two out of three so far.

The first point was to get graphics, as AMD cared about graphics and they did a decent job so far, at least in games market. The GPGPU market is almost nonexistent for AMD, but at least they have a desire to try to make some money there. AMD's has also managed to churn out quite impressive IGPs over the past three years, and it's still going from strenght to strenght.

The second point was to profit from DTV, handheld market that was supposed to grow to a 2 billion a year. Well, AMD sold that business to Qualcomm for a lousy $65 million as it could not grow it past $400 million so argument two went down the toilet. Spending $5.6 billion and selling its second most important business units for a $65 millions doesn’t sounds like a good deal, unless someone has made you an offer you cannot refuse. Qualcomm got a lot of multimedia and graphics patents from ATI and can continue to compete.

The third and probably most important reason is called Fusion. It was scheduled for late 2008 or some point of 2009, it got canceled a few times and we expect its first iteration to at least launch in limited numbers with the Ontario 40nm part, which was supposed to take on Intel's Atom.

The real Fusion, Llano is scheduled for 2011, probably the latter half of the year, but we are not sure about the schedule as it tends to shift. So, as you can see $5.6 billion spent to buy ATI was not something that helped AMD improve its performance in the short term, but from 2011 on, it will all make much more sense.

AMD also sold a big chunk of its fabs, all except a 28 percent stake, to Abu Dabi-based investment fund ATIC, the company managed to survive the first four years and become profitable. If only AMD hadn't made such a big mess with K10 and the overblown TLB bug and if only they could beat Intel the in mobile segment, or at least get more competitive, it would truly become a great company.

AMD is getting better, there is no doubt about that, but the company failed to fulfill most of the long term goals of its $5.6 billion acquisition. The costly ATI acquisition was followed by K10 issues and by the time AMD got back on track the economy took a nosedive, at the worst possible time. However, AMD has managed to recover some ground in the desktop market over the past several quarters, thanks to its affordable Phenom II and Athlon II parts. In recent weeks, AMD also scored several significant design wins in the mobile market and it's currently dominating the graphics market with a massive lead over Nvidia.

AMD is getting better, there is no doubt about that, but the company failed to fulfill most of the long term goals of its $5.6 billion acquisition. The costly ATI acquisition was followed by K10 issues and by the time AMD got back on track the economy took a nosedive, at the worst possible time. However, AMD has managed to recover some ground in the desktop market over the past several quarters, thanks to its affordable Phenom II and Athlon II parts. In recent weeks, AMD also scored several significant design wins in the mobile market and it's currently dominating the graphics market with a massive lead over Nvidia.
Last modified on Friday, 23 July 2010 14:35
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Comments  

 
-118 #1 Naterm 2010-07-23 11:52
Since when is AMD dominating nVidia is the discrete graphics market? I realize they have slightly better price/performance levels on the desktop and have sold the bulk of DX11 equipment, but how much does that really matter?

nVidia owns the lions share of the discrete market and AMD barely capitalized on their recent troubles. I think nVidia got like 80% of the Capella platform design wins. Mobile matters a lot more than desktop going forward, that's what people tend to buy.

DX11 isn't going to matter until the next generation of consoles launches in a few years. By that time, the current GPUs will be far too slow to render those games effectively.
 
 
+67 #2 yourma2000 2010-07-23 12:04
Another pathetic dig at AMD by faud, the fusion chip is late but atleast it's coming unlike larabee, and if AMD hadn't bought ATI then the graphics company may still be lagging behind Nvidia today

Quoting Naterm:
Since when is AMD dominating nVidia is the discrete graphics market?




AMD have been dominating the discrete market for a while now, also the mobility market
 
 
+49 #3 Fud_u 2010-07-23 12:18
Quoting Naterm:
DX11 isn't going to matter until the next generation of consoles launches in a few years. By that time, the current GPUs will be far too slow to render those games effectively.



Isn't obvious that every new generation is better than the previous? DX11 is a huge improvement form DX9 and will likely to be there for for quite a while and will likely to be there in the next generation of console. Also, your 80% is a bit overstating. I had no idea where you get that number.
 
 
+23 #4 BernardP 2010-07-23 12:33
Executive Summary: AMD pais waaayyy too much for ATI.

To the factors mentionned by Fuad, it should be added that Intel's Core architecture torpedoed AMD dominance with the K8, and forced them into a price war at the worst possible time.
 
 
+52 #5 The_Countess 2010-07-23 12:42
in q1 of this year AMD had 42% of the total discrete market share with momentum clearly behind it with a 8.2%point increase in market share

and it has just under 50% of the discrete mobile market share, with a even stronger momentum with a 9 percentage-point increase.

the only thing keeping nvidia's market share up is fanboys and their old chips

and that price/performance advantage is a little more then 'slight'
AMD's watt/performance lead is very large, and the production cost/performance advantage is even bigger.

Nvidia is also set to loss next to all of its IGP business and intel wont allow them to make chip-sets for the i serie CPU's
 
 
+28 #6 anno 2010-07-23 13:13
Faud, you're forgetting that the scandalous practices by Intel probably had a very big impact too - bigger than one would expect based on lost sales. AMD had a hugely better architecture but couldn't reap the benefits, and thus had less to spend, and thus ended up with a worse product, and thus again didn't have as great an income as they could have. This is a weight that kept on getting heavier.

Of course I know that it isn't just Intel that got them in trouble (having to do fab research and also running them as a relatively small company was killing them too), but to leave it out of this story is dubious, in my opinion.
 
 
+35 #7 nele 2010-07-23 13:14
Quoting The_Countess:
and that price/performance advantage is a little more then 'slight'
AMD's watt/performance lead is very large, and the production cost/performance advantage is even bigger.


Yup, but AMD's biggest advantage is time. Even if Nvidia manages to launch competitive products, i.e. if GF106 and GF108 turn out great, AMD will have its next generation ready in a matter of months.

It gets worse in mobile, as Nvidia will need a few months to start shipping mobile DX11 parts based on the new cores...

If the GF104 is anything to go by, and it is, things don't seem all that great. Granted, the GF104 is competitive, but it's facing ATI's HD5800 series, which has already been around for 9 months... And the GF104 is still bigger and costlier to produce.
 
 
+26 #8 pogsnet 2010-07-23 13:14
@Naterm

Do your research, Nvidia is on big negative net profit now. ATI sells millions of GPUs while Nvidia is thousands only, that is quarter per quarter, do not include your past years earning since we are talking about current. Clearly ATI has the lead now.

@back to topic

I think AMD wants to focus what masses like not the GPGPU where only few people is up to, but they are also trying but slowly I guess. They focus on performance/price/efficiency/features all combined.
 
 
-75 #9 kalouille 2010-07-23 14:57
Quoting pogsnet:
@Naterm

Do your research, Nvidia is on big negative net profit now. ATI sells millions of GPUs while Nvidia is thousands only, that is quarter per quarter, do not include your past years earning since we are talking about current. Clearly ATI has the lead now.


Youre the one who should do your researchs since NVIDIA is dominating ATI in the discrete graphic department.Maybe you live in a different planet and have no idea about youre talking about.
 
 
-59 #10 Naterm 2010-07-23 15:06
Guess people don't want to hear that which conflicts with there belief system.

Despite all of nVidia's failuers, they're still #1 in discrete. 80% of Capella design wins, that came from Digitimes I believe. That means they got 80% of high-end notebooks. They have all of Apple's high-end notebooks. The best selling of any high-end book.

DX11 will be good, in two years. It's not a big deal right now. In case you guys hadn't noticed, PC gaming is on life support. It's just a bunch of console ports in essence.

And if you actually look at net DP FLOPS per watt, Fermi actually does better than RV870. I actually have a 5870 by the way, it's a good product.
 

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