How AMD is Faring 2 Years Into Its Turnaround

Faced with the daunting prospect of competing with Intel and ARM, new AMD CEO Rory Read followed the standard operating procedure for a successful tech company turnaround: Hire dedicated, loyal executives and build a business strategy that makes other firms depend on you. So far, so good--but can AMD keep it up?

By Rob Enderle
Fri, August 23, 2013
Page 3

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The move effectively put Intel on the defensive and allowed AMD to develop a flexible platform that could use ARM and X86 technology interchangeably, based on the performance needed or the code set being run.

With virtualization—a relatively new way to deal with different hardware architectures—AMD could create a hybrid product more flexible than either ARM or Intel could be alone. The first test will be a product code-named Kyoto, a key component of HPs new halo server program code-named Moonshot.

Related: HP Looks to Moonshot for Data Center of the Future
Also: AMD hopes to bridge gap between Xbox, PlayStation and PCs

Finally, AMD chips will be in all three next-generation game consoles, potentially lowering development costs for both the manufacturers of those consoles and the folks who develop on them. Owning this segment can be powerful. Plus, given that Microsoft's game platform is connected solidly to Windows and that Redmond is exploring both ARM-based servers and tablets, this could give AMD a much stronger strategic position with Microsoft.

AMD Turnaround Off to Powerful Start, But Only Time Will Tell

AMD remains overmatched; it lacks the resources Intel can bring to the table. Such a problem is a given, and it's outside any CEO's capability to fix. Finding a way around Intel is a viable strategy, however, and Read appears to be executing well.

We're still early in AMD's turnaround—two years into a five- to seven-year effort—but much of what I've highlighted here is consistent with best practices. Realize that turnarounds are difficult, though, and that neither the soft market nor Intel's undiminished power make this effort any easier.

Overall, if you set aside revenue growth—which, as stated, won't get appreciably better until the end of the turnaround—Read has impressed in his first two years on the job. He has a strong team, a viable strategy and can point to some significant product development progress.

As tech company turnarounds go this, AMD's is one of the better ones. That just shows how difficult they are to pull off.

Rob Enderle is president and principal analyst of the Enderle Group. Previously, he was the Senior Research Fellow for Forrester Research and the Giga Information Group. Prior to that he worked for IBM and held positions in Internal Audit, Competitive Analysis, Marketing, Finance and Security. Currently, Enderle writes on emerging technology, security and Linux for a variety of publications and appears on national news TV shows that include CNBC, FOX, Bloomberg and NPR.

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