AMD loses to an abacus in Performance/watt

It’s another very quiet announcement from AMD, obviously embarrassed by an underwhelming product launch.

AMD Athlon™ 64 single-core processors 3500+ and 3800+ Energy Efficient (45w)
AMD Athlon™ 64 X2 dual-core processor 6000+ (performs between Intel’s 6600 & 6700)

"Our relentless focus on customer-centric innovation and industry leadership in performance-per-watt enables AMD to offer the market new energy-efficient AMD Athlon 64 processors. We expect that our commercial and consumer customers, as well as end-users, will be pleased with both the low noise and small form factor designs possible using this latest generation of energy-efficient desktop processors," said Bob Brewer, corporate vice president, Desktop Division, AMD.

Customer-centric innovation: As opposed to what centric? I thought the corporate consultant jargons are already passé. These are pre-Enron management double talk that raises alarm bells to analysts. One can understand how hard it is for AMD to talk plainly these days.
Leadership in performance-per-watt: Another open ended claim as the performance-per-watt graph is a long line that goes through multiple segments of the computing world. I can bet you that my abacus can make calculations with less than 1 calorie of energy. The obsessive emphasis of AMD on performance-per-watt simply highlights the already obvious fact that they have no product with “PERFORMANCE”.
Low noise and small form factor designs: This makes it clear that the DTX AMD is trying to promote is just a strategy of segmenting the market to find a niche. A shift of its single core volume running to a niche low energy-higher ASP segment is a good strategy. Unfortunately, Intel has this segment cornered as well.

Dell and Lenovo Illegally Bribed Nonsense

You probably heard it in the news already. Dell is being sued by one of its investors for the undisclosed kickbacks it received from Intel. It says that the total amount was in excess of over a Billion dollars a year wasn't properly accounted. Lenovo on the other hand has declared it received a $22M incentive from Intel for buying 17M processors. That’s just a little over $1 per processor sold and not a hefty amount considering a CPU ASP of $140.

Desperate AMD fanatics quickly jumped on the news incessantly wailing “MONOPOLY!”, “unfair illegal business practices!” "Zionist!" (believe me some do think that).
Intel have always declared that it gives incentives or loyalty payments to its customers based on percentage of amount purchased. AMD's claims which violates the Sherman/Clayton Act are when Intel:
· Forces major customers to accept exclusive deals
· Threatens retaliation
· Forcing of AMD boycott
· Withholds rebates and marketing subsidies as a means of punishing customers who buy more than prescribed quantities of processors from AMD
In case some of you haven’t noticed, the incentives that Intel gives are legal and common business practice and it isn’t what AMD is suing Intel for.

Personally, I think AMD’s case is a bit shaky and mirrors the behavior it once had back in 1992 when they filed a suit for "breach of covenant". The arbiter cited AMD’s behavior as “vindictive” and “opportunistic” given the fact that they were quick to blame Intel when things get worse. You may want to check AMD’s financial history and see how proportional the “monopoly” whining is with company profits.

AMD's marketshare strategy not paying off?

It appears that AMD's has gotten itself into some very big financial trouble. Again, this goes to show how Scientia's rosy outlook for AMD is completely off.

AMD in Trouble: Needs to Raise Cash & Develop Products

AMD needs to come out with new products, he says. And they also need to shore up the balance sheet. “We think management will be forced to come to the capital markets for operating cash before the end of the summer,” he asserts.

Unfortunately AMD is only coming up with a new product with extremely limited volume this year. The performance of K10 is even doubtful to give AMD the high ASP it needs. I think it’s the beginning of the end for AMD. 2007 with be a tough year for them and 2008 is looking like it’s even tougher. 45nm and later Nehalem will definitely prevent AMD to sell anything with a profit. Sooner or later, the creditors will stop lending cash. And that’s when you go to Burger King and flip burgers like Sharikou.

AMD's courts channel - inventory must be horrible!

"AMD is trying to put some spark back into its relationship with the channel in 2007 with price cuts, a more balanced global inventory and new manufacturing technologies."
Which basically means that inventory is at alarming levels and now they need the channel who got screwed last year with wasted and depreciated CPU-less AMD systems.
In the fourth quarter of 2006, AMD ran into trouble with system builders when the supply of dual core Athlons ran out. Executives said that won't happen again.
Either they're lying or they believe that their inventory buildup and status as a low-end CPU supplier is now permanent.
AMD has announced that its Athlon 64 X2 5600+ dual core processor's price has been reduced to $326, down from $505 in the first quarter of 2006. The 5200 series is $232, versus $295 a year ago. And the 4600+ series is now priced at $195, compared to $215 a year earlier. On the lower end, the Athlon 64 X2 3600+ series has been reduced to $102 from $138 a quarter earlier.
Prices for single core AMD 64 processors have also come down a bit, ranging from $78 to $93. Meanwhile, the price tag on the 3400+ Semprons is now $67, down $4 from last quarter.
Which just confirms a growing inventory and overall lack of demand for AMD processors.
And why are they having this problem?
"I think the greater problem they're having is the onslaught from Intel's new products. The Core 2 Duo is a very popular product and Intel is aggressively promoting them".

Link

AMD based PCs provide low margins with delivery risks. On the other hand you have Intel based PCs with entry levels on all segments (low to high margins), guaranteed on time delivery and free advertising money. Why would any businessman would want to deal with AMD?

Intel PWNZ AMD’s Quad Core with a running OctoDeca Core CPU

What the hell is AMD showing off Barcelona in this week’s ISSCC – Integrated Solid State Circuit Conference? If this is management’s way of desperately saving advertising money, then I say, good job. Sure everyone knows they’re not bringing anything to the conference, but what the heck, it sure is nice for AMD to be around the big boys in semiconductor innovation and pretend they’re one of them.
Look! AMD is talking about Barcelona’s power management and how its 40% better in performance/watt (sure, because they haven’t really had one turned on yet). Good for you AMD.
Meanwhile Intel shows off an actual working 80 core – 62 watt – Teraflop CPU. It’s going to be quiet in AMD’s booth. But hey, at least they get free advertising!
Intel Builds the Fastest Chip Ever!

This non-performance related presentation of AMD is quite alarming. I’d keep my eyes open if I was an AMD investor. The emphasis on performance/watt is a bit strange as well. There’s a lot of wiggle room in this benchmark compared to just simple stating “performance”. I’m thinking it’s either that they’re not confident of beating Intel’s offering at the time of launch or they already know that the K10 is DOA. Another possibility is that Opteron orders are so bad at the moment that they don’t want to Osborne it further with Barcelona benchmarks.

AMD Accelerates Technology Roadmap

Not to be outdone by Intel aggressive execution, AMD accelerates their own releases by promising to ship K10 this year. You heard it right! Also planned this year is K8L, but that doesn't stop AMD from skipping K9 all together and proceed with K10.
"K9 is such a dawg so we've transition from K8L to K10." - Hector Ruiz.
Analysts are saying that all that is needed now is for the industry to catchup with the terminology. Luckily K8L and K10 are socket compatible.

AMD's alarming strategy

Watching the trend:

While AMD’s market share rose 4% from the forth quarter its ASP's and revenue share dropped from 29% to 18%. AMD’s ASP is now at $75 compare to Intel’s $130. Of course Intel has a much larger overhead but bear in mind that the other departments pay for themselves like Flash and Chipsets.
Intel isn’t greatly affected by AMD’s market share gains in 2006 because Intel’s shipment to Apple is not included in this numbers.
AMD cannot continue gaining share in the same pace as they are dropping their ASP’s. But in reality AMD doesn’t really have any choice as Intel will continue to ramp Core2 parts and push AMD down even further in the value segment.
A rate of 13 basis points drop per quarter in revenue share and ASP's is something AMD simply cannot continue.
At the end of the day Intel is ending up with the money continuing to produce higher end parts while AMD will be working extra hard just to break even.
It’s an unsustainable strategy that will have long term implications to its future investments.