AMD at 55: Still Going Strong with a Unique Advantage for the Coming AI Wave

AMD hit 55 this week, and it has been an amazing ride. AMD started out as the redundant supplier to Intel with x86 because IBM, like most companies at the time, didn’t want to be the sole source of a critical technology. It is interesting to note that this decision wasn’t based on AMD’s microprocessor development prowess but on its manufacturing capability, which was interesting given that IBM eventually licensed and manufactured x86 parts. While IBM exited both x86 and manufacturing some time ago, AMD has held on and improved its market share and position over time, even though it remains dependent on Intel’s core technology.

Let’s talk about AMD’s unique place in the market and the foundation for its success this week.

AMD. The Relationship Company

AMD’s long-term advantage against Intel wasn’t technological prowess, which is considerable, but its reputation for listening to, rather than dictating to, clients with regard to product direction and improvements. While Intel remained and is still dominant, AMD’s advancement in the market was tied more closely to its willingness to listen to clients and prioritize their unique requirements. This is why AMD dominates the console market; these unique vendors build highly customized hardware with unique pricing requirements that AMD was able to make. That showcased its equally unique ability to create custom processors for clients.

Even during years when it wasn’t that competitive, OEMs continued to give AMD design wins both because they wanted to maintain an alternative to Intel and because they just liked working with AMD because AMD listened to them.

CEO Lisa Su and CTO Mark Papermaster, both out of IBM, have refined AMD’s relationship model and increased the organizational excellence in the company to rival IBM’s, resulting in far more reliable and trustworthy products over time and even stronger customer relationships.

This excellence in execution is what has landed AMD in the enviable position of having market-leading parts in a number of segments and its recent successful expansion into the adaptive and embedded space for appliances thanks to its recent Xilinx acquisition.

AMD’s Potential AI Advantage

One of the biggest problems plaguing the microprocessor industry is the trend for companies to create their own processors. This trend resulted from the time Intel was led by Brian Krzanich, who tended to treat the processor market and Intel’s clients as unnecessary and effectively set Intel back years. While Intel’s current CEO Pat Gelsinger has corrected this behavior and Intel is functioning well again, this trend to create your own parts includes all of the major cloud vendors and an increasing number of AI companies.

However, these entities lack the knowledge and maturity in processor creation that a company like AMD has in spades. Thus, AMD could step in using its reputation of being good at building custom parts to partner with these companies and enable them to reach a mature solution more quickly than if they did it alone. AMD’s decades of experience both creating parts and partnering with companies like this should provide a significant qualitative time-to-market.

Wrapping Up

AMD has had a storied 55 years with a number of CEOs and currently has the best leadership team that it has ever had. Its sustaining advantage isn’t engineering prowess, which is excellent. It is AMD’s ability to listen to, understand, and create custom offerings that best meet its clients’ needs. This advantage will be critical as we move from graphical user interfaces to AI interfaces because no one yet knows what the client hardware will eventually evolve into, how loads will move between the client and the cloud, or even the nature and full capability of those future AIs.

As a result, AMD’s ability to be flexible, listen, and deliver what its clients want positions AMD to become one of the big powers in the AI market.

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Rob Enderle

President and Principal Analyst at Enderle Group

As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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