Adjustment and Extinction? Shuffling the Deck

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AMD has just made a very interesting corporate announcement. Hector Ruiz is giving up the presidency/chief operating officer of AMD to Dirk Meyer. He will continue to be CEO and chairman of the board.

Why? To quote, to give “Hector more bandwidth to focus on leading the company as CEO.”

In other words, Meyer will run the show while Hector runs The Show.

Meyer’s background is that of a CPU architecture guy. So far, he has Alpha, Athlon and Hammer on his resume. That’s not bad.

He’s done a good job solving AMD’s architectural problems (really, more like creating it, before then, AMD just copied Intel designs, then bought the K6 design from NextGen). However, AMD has still been plagued with more than occasional difficulties in getting the design out the door (Palomino, Thoroughbred A, Hammer), and making a few dubious strategic decisions (the last-minute decision to go dual-channel). It’s not clear how much Meyer had to do with such decisions, or whether outside factors (see below) were the real cause of these problems.

We shall see if AMD’s day-to-day operations improve.

Meanwhile, Hector seems to want to become the next Steve Jobs. Give the devil his due, he’s played the role of Chief AMD Fanboy surprisingly well, and has been much more effective at that than his showman predecessor Jerry Sanders. He’s managed to get people to buy AMD processors and pay real money for them, while getting the media to cheerlead right along with him.

Perhaps more telling, when was the last time you heard from founder Jerry Sanders?

So it’s probably best to let Hector spend more time fronting the product, while leaving operations in the hands of someone with a solid track record at the company.

No personnel change, though, can change the root problem AMD has: money, meaning lack of it compared to Intel. This has meant that AMD always has to do things on the cheap, and can’t throw money at a problem the way Intel can.

We’ve talked a lot about AMD mistakes over the years, and their obsessive secrecy, but I would bet that the reason for most of this can be tracked back to this one issue, lack of money.

It’s like the (baseball, for you non-Western Hemisphere types) Oakland Athletics competing against the New York Yankees. The Athletics can’t possibly spend money on players like the Yankees, they just don’t have the fan base revenue. Are the Yankees better than the A’s at putting together a team? No, the A’s have probably been smarter than the Yankees, certainly from a bang-for-the-buck perspective, but because the Yankees have so many bucks, they don’t have to be. When they make mistakes, they just go buy somebody else.

Money doesn’t solve everything, the Yankees haven’t won the World Series for a few years, much as Intel hasn’t been too stellar lately. But it surely makes life a lot easier.

For instance, if AMD ever wanted to play even with Intel, they would need two Fab 36s. This is not an issue at Intel; they just build them. AMD has to fight and scrape and get big government subsidies just to get one, and no doubt a smaller one than they would prefer.

If something isn’t selling well, or a new product line needs to be promoted, Intel just buys more ads and TV time. AMD, well . . . .

Yes, AMD will be using Chartered for more capacity, and they’re suing Intel for more money/less competition, and they’re doing the best with what they got. The root problem, though, remains that they don’t got, and until they do get (or get bought by someone who got), they’re always going to be at a big disadvantage.

What can I say, poverty sucks.

Ed


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