Analyst Opinion - A lot hinges on Shanghai, AMD's replacement for Barcelona. It is the first major announcement since AMD decided to go fabless and the first real indicator of whether the company is back in the game or will be remain a player behind Intel for the rest of the year in the server and workstation space.
Barcelona was positioned as an Intel killer, but it showed up late and underperformed expectations significantly nearly knocking AMD out of the segment and almost making Intel's entire year. This product doesn't have to blow out Intel, but it needs to showcase that AMD can meet or exceed expectations and restore credibility to the firm’s efforts.
The big driving need in the market is for products that do more with less. Less energy, more performance and competitive cost are the three areas this product must hit hard to be considered a real player and alternative to Intel. It really can't afford a miss. Efficiency is, because it has a multiplier related to the heat the part puts out, arguably one of the most critical and an area where Intel has been making strong advancements.
Virtual Machines are big in the server space and it is hard for any product to truly stand out. However, as difficult as it is, this product must provide a strong counterpoint in this area to other alternatives, if it is to stand out and pull some of the share AMD has lost back into the fold. Virtualization is being used to dramatically reduce the cost associated with broad classifications of servers and cost savings remains the biggest driver for new system purchases. If AMD cannot stand out here they might as well not show up.
From generation to generation, you need at least a 20% increase in measured performance and less than that is rarely interesting. Intel has been ramping the performance of their offerings sharply. To even stay in the game AMD must demonstrate a performance increase that exceeds 20% without eliminating any of the other possible advantages we have discussed so far. Jumping this much is far from easy and it isn't often done, but this time, it is a requirement for AMD.
If there was ever a product that needed to actually show up early, this would be it. AMD missed its timing badly with Barcelona and the company needs to actually beat expectations if it wants to overcome the impressions that Barcelona has set. Vendors make plans based on what they have and unfulfilled buyers often don't come back. AMD must hitor beat its dates or they won't overcome the perceptions that exist in the market with regard to their ability, or inability, to execute.
Overall this is the first announcement since AMD announced its fabless plan. It is critical that it can hit on as many key areas as they can - and ideally hit on all of them to be fully successful. Few companies can step up to this bar, but the market needs competition: So let's hope that AMD, with the Shanghai launch, has brought their "A" Game.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.