AMD's Llano - finally, vindication!

Posted by Rob Enderle
AMD launched its landmark and long-awaited Llano processor this week in Bellevue, Washington. In many ways, Llano represents vindication for a strategy than many doubted - but was clearly AMD’s biggest chance to get out from under Intel’s dominance.

One of the problems with competing with a dominant company like Intel or Apple is the tendency to chase them from behind.  

AMD did that for decades and while they - surprisingly - got ahead a couple of times (largely because Intel stumbled), they were never able to capitalize on that success and gain a sustained advantage.

In the end, being a better Intel was always Intel’s fight to win. 

In an effort to alter this dynamic, AMD bought ATI, a very risky and expensive move indeed, in order to move around, rather than through Intel. And this week, their impressive new Llano APU came to market.   

Of course, being different poses distinct risks. We really aren't a race that likes differences, unless we see them as strong benefits. Still, this was the only path available to AMD if they wanted to stay in the x86 business and take the fight to Intel.  

I’m at AMD’s first developer conference and Llano launch event this week and it looks like they got it done.  

Why Not ARM?
This was clearly AMD’s other choice, as they could have licensed ARM and gone after tablets and smartphones instead. Remember, battles are often decided based on initial choices. What weapons you take to the field and what field you engage the enemy on defines those initial decisions.  

In AMD’s case, the decision was whether it wanted to fight a familiar battle on a field both they and Intel knew well: against the latter company's known weaknesses. Alternatively, AMD could have chosen weapons and a field of battle neither company knew well, such as facing competitors like Qualcomm which were vastly more capable than either corporation 

AMD correctly assessed that moving to ARM would switch one competitive disadvantage - one of scale - for another: one of experience.

While Qualcomm was far weaker than Intel, it was hardly alone in what was a hard fought space with even tighter prices and margins than AMD was used to. A market defined by mobile chipsets that AMD (at the time) didn’t have and Intel was attempting to enter largely unsuccessfully. And obviously, Intel boasted (and continues to boast) far more resources than AMD could have ever hoped to have. 

In the end, AMD made the decision to select a field and competitor it knew quite well.
ATI
Intel’s historic weakness has always been graphics, which is the area consuming the most battery life. As you may recall, the corporation tried several times (unsuccessfully) to create a competitive graphics part for the mid-and high-end markets.

While the company maintained a low-end segment that was very successful, success was often attributed to the fact that it was bundled - and not because it was the most competent. 
 
ATI had been getting soundly beaten by Nvidia but still was competitive, allowing AMD to afford the company. Sure, Nvidia may have been the stronger partner, but that strength would have made the purchase price more than AMD could afford.

The result? A high level of executive conflict between the two companies. 

Of course, Nvidia would have entered the relationship as the stronger player, likely creating a conflicted mess. While AMD acquired a damaged company, they could both afford and manage it, as the damage was known and believed to be fixable.    

Ironically, ATI actually had a mobile business in the ARM space but as it had been losing money, the business was sold off to Qualcomm. Instead of being an impediment to success, over the short term, the decision to offload that segment ended up helping fund the effort.  
Time to market became an issue because merging companies and technologies need to create a common part, and this always takes longer than initially expected.  

However, this week it all came together, with the end resulting being an APU that provides more visual performance than comparable Intel silicon at a given level of power - resulting in laptop computers with stronger performance and superior battery life.

Why it is better? Because the graphics side of the APU is more powerful and more intimate with the CPU side. The two parts work closely in tandem, and are therefore more efficient under mixed loads.   
Wrapping Up: Proof is in the Pudding
Of course, few folks will be buying parts, they want systems. If there are no compelling systems, AMD could still lose. 

So far I’ve only seen HP’s AMD line - but these are some of the best laptops HP has ever brought to market.  

Attractive and well-priced, they sport strong performance and many have battery life in the 10+ hour range compared to the 5 hour standard for others in their class. It looks like AMD's strategy worked, so now we’ll see if the market rewards AMD and its partners.

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