Advanced Micro Devices has its eye on the ultra-low-cost notebook market. Dirk Meyer--the company's new CEO--and other executives discussed this and ways to make the company profitable during the company's earnings conference call Thursday.
HP 2133 Mini-Note is a low-cost ultramobile notebook--a market AMD is eying.
(Credit: Hewlett-Packard)Meyer--promoted to CEO on Thursday--made it clear that AMD is serious about the so-called Netbook market, where Intel's Atom processor has been the most successful so far. (Though Intel CEO Paul Otellini made a perplexing comment Tuesday about the Atom processor.)
Netbooks have two hallmarks: they are typically under $400 and are extremely small and light. The Asus Eee PC is the most popular Netbook currently.
In response to a question from an analyst, Meyer implied that while AMD is not interested in the mobile Internet device market (think: iPhone), it is serious about low-cost notebooks.
"We're a much smaller company with not nearly the scale that our competitor has," Meyer said. "We don't intend to try to do absolutely everything they do in the marketplace. (But) slightly smaller form factor notebooks and inexpensive notebooks. That is a market segment that we're interested in."
AMD is already taking concrete steps to get into this market.
"It's actually a segment that we're starting to offer products to our customers in support of now," Meyer said. "We actually haven't talked in public about that, but I expect we'll be talking about that roadmap when we get together in November at our analyst conference."
Meyer and other executives also addressed upcoming 45-nanometer processors, new graphics chips, and the so-called "asset-lite" strategy as ways to bring the company back to profitability.
Chief Financial Officer Bob Rivet said upcoming 45-nanometer processors and the eventual outsourcing of more production to companies like Taiwan Semiconductor Manufacturing Company (TSMC) will be the keys to long-term sustained profitability.
"Our strategy to continue to execute on 45 nanometer improves our cost structure," Rivet said. He added that improving profitability also "does incorporate asset-smart (and) execution by Hector (Ruiz) to bring it to conclusion." Analysts refer to the outsourcing strategy as asset-lite, AMD refers to it also as "asset-smart." Outgoing CEO Hector Ruiz will stay on to execute the asset-lite strategy.
Rivet later added that asset-lite "will be a major reformation of the company."
On upcoming 45-nanometer production, Meyer said: "We're well on track with the 45-nanometer plan. We actually started production late last quarter and on track to begin volume shipment early in Q4." AMD currently uses a 65-nanometer manufacturing process for most of its silicon. Intel, on the other hand, has been shipping 45-nanometer processors since last year and its newest Centrino 2 processors are made on a 45-nanometer process.
New graphics chips will also help, according to Rivet. "The new 4800 series will be the best products in the marketplace. (This) will definitely contribute to gross margin," he said. AMD is struggling to get the all-important financial benchmark of gross margin to above 40 percent. It is now at 37 percent. By comparison, Intel's gross margin was just below 56 percent in the second quarter.
About profitability in general, Rivet said: "Since we're so far away from profitability. The first order of magnitude is operating profit at the operating income level not at the net income level. First get to that level then we'll work to get the net," he said. Rivet said AMD will show an operating profit in the second half.
Intel's newest Core 2 Duo processor has finally found its way into most models in the world's two largest PC makers' notebook lines.
With some exceptions. Hewlett-Packard (HP) will offer the 45-nanometer Penryn processor for the first time in its 8700 performance line in the next two weeks.
HP 8700 performance series will get Penryn chip upgrade in the coming weeks.
(Credit: Hewlett-Packard)Intel's 45nm Core 2 Duo Penryn processor was announced back in January as a significant upgrade from the previous "Merom" 65nm processors. Penryn boasts improved power saving features and generally better (though not phenomenally) performance at the same clock speed due, among other things, to a larger cache memory. On certain multimedia tasks, there is up to a 40 percent improvement in applications using Penryn's new SSE4 instructions.
Dell's newest Penryn-based offerings include Latitude and Precision notebooks, which are business and engineering lines respectively. Dell is already offering Penryn on its consumer line of notebooks, including the Inspiron and XPS lines. Certain high-end XPS models on Dell's Web site, such as the XPS M1730, can be configured with Penryn processors only. One M1730 SKU offers Penryn T9300 (2.5GHz), T9500 (2.6GHz), and X9000 (2.8GHz) chips only.
One of the notable exceptions is the low-end Dell Vostro line which offers only the older line of Core 2 Duo processors and AMD's Turion 64 X2 chip.
While HP was very quick to bring Penryn to its consumer and business lines, there are only limited processor selections in its business line. The HP 6510, 6710, 6720, and 6820 models offer either the Penryn T8100 or T8300, according to HP spokesperson Mike Hockey. But online configuration options are not offered with faster Penryn chips.
The HP 8700 performance line, which includes mobile workstation models, does not offer the Penryn chip yet. This is expected to change in the next week or so when HP, for the first time, includes configurations with the processor, Hockey said.
Dell's XPS M1330 uses the Penryn chip.
(Credit: Dell Computer)Dell is in the process of updating its notebook line with Intel's newest 45-nanometer mobile processors. As reported earlier this week, Dell indicated it would refresh its lineup with Intel "Penryn" processors.
This comes as Dell moves much of its AMD-based lineup to retail stores such as Wal-Mart and Staples.
Dell will offer the Penryn processors in its Inspiron and XPS lines, according to a Dell spokesperson. One of the first U.S. models is already available online. The XPS M1330 can be configured with a Core 2 Duo T9500 (2.6GHz, 6MB cache), 2GB of memory, Intel X3100 graphics, and a 120GB hard drive. The system is priced at $1,674. The same basic configuration with a T8300 chip (2.4GHz, 3MB cache), drops the price to $1,274.
Dell, in the coming weeks, will also offer Inspiron models with the new Intel processor.
Though announced in early January, Penryn-based mobile systems are just now starting to hit the market in volume. For example, Toshiba announced this week a 4.6-pound, 13-inch form-factor model, the U305-S2816, that uses the Penryn T8100 (2.1GHz, 3MB cache). It starts at $1,349.99. And Hewlett-Packard bulked up its consumer notebook lines with Penryn-based models last week.
The simultaneous introduction of new Penryn-based models and the repositioning of some AMD-based notebooks from Dell's online store to retailers such as Wal-Mart and Staples is coincidence and not related, said Anne Camden, a Dell spokesperson. She also said that models in the Inspiron, Vostro, and Latitude notebook lines are available currently with AMD processors.
At retail, at least, AMD has a strong presence. For instance, of the seven Dell systems and package deals listed on Wal-Mart's Web site, only one of them is Intel-based. The rest are AMD. The question is whether a retail-heavy presence--where profit margins are typically thin--bodes well for AMD or not.
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