AMD CEO ousted over tablets, but AMD ousted its tablet chip in 2009

AMD logoYesterday's resignation of AMD's CEO, Dirk Meyer, was so completely unexpected that we initially wondered if some Mark Hurd-style scandal wasn't about to erupt. But today's report in the Wall Street Journal suggests that Meyer was pushed out by a board that was dissatisfied with AMD's lack of a convincing story for the growing tablet and mobile market.

The board was apparently satisfied with Meyer's aggressive cost-cutting and the company's return to profitability on his watch, but the lack of a real plan for tablets, netbooks, and smartphones allegedly did him in. Oddly enough, these two issues are actually two sides of the same coin, and there are a few points worth making in this regard.

First, when the financial crisis hit in late 2008, AMD was already on the ropes, and had been for some time. So the company didn't have the option to do anything other than what it did, which was jettison all the parts of its operation that didn't involve making x86 processors for established markets and GPUs. In other words, AMD went back to a very PC-centric lineup that saw it focus on servers, workstations, and desktops, with budget laptops tacked on at the bottom. Servers especially have been one of AMD's core competencies, and the one place where AMD has remained very competitive with Intel over the years.

But any other more speculative, forward-looking efforts were canned so that the company could hunker back down into its core competencies and focus on staying afloat. (More on one of the projects that got axed below.)

As for tablets and smartphones, an Intel-style effort to push x86 down into that space isn't the best option for them. The only way to get x86 down into tablets and smartphones is through process shrinks, and Intel is always going to win there, period. Intel will always be a generation ahead of everyone else, and this will put AMD at a disadvantage in competing with both ARM and Intel for smartphones.

Given the shape of the terrain, the real way for AMD to get where its board wants it to be is to ride the ARM wave. Wouldn't it be great if AMD had something like NVIDIA's Tegra line—an ARM processor core paired with ATI's proprietary GPU technology?

Unfortunately for AMD, it had exactly such a product until 2009. The promising Imageon line combined an ATI GPU and an ARM CPU into a low-power, high-performance SoC, but AMD sold the whole unit to Qualcomm in January 2009 as part of its restructuring in the wake of the crisis. AMD's press release was crystal clear about the sale as a survival move: "With the sale of these handheld technology assets and resources to Qualcomm, we are better able to focus on our core business and leverage our unique position as a leader in both x86 computing and high-end graphics." At the time that this happened, we noted that it was bad news for AMD, and the stock market concurred, whacking the company's stock with a nine percent drop.

So while you can't blame AMD's shareholders for watching all the post-PC action at CES and feeling like the mobile and consumer electronics train is leaving without them, you also can't sell your seed corn to survive and then complain about the lack of planting going on. Meyer did what he had to do to keep the company afloat through an extraordinary time for AMD and the PC industry as a whole, yet that's apparently not enough for AMD's board.

The final thing worth noting about AMD's lack of a tablet strategy is that it's entirely likely that the company could profit from the tablet boom by continuing to focus on winning at servers. Intel CEO Paul Otellini pointed out last week that the mobile device boom is actually fueling growth in Intel's server business. All of those mobiles need a cloud to connect to for storage and compute services, and if AMD can stay competitive in that growing server market, then the company won't need a tablet chip in order to profit from the tablet boom.

Source: Ars Technica

Tags: AMD

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