Nanotech - The Circuits Blog

Now comes the hard part for Advanced Micro Devices. It has to compete with Intel on the merits of its products.

After settling with Intel and walking away with $1.25 billion, how competitive is AMD's silicon? Some experts weigh in.

Two analysts that follow Intel and AMD said separately that AMD won't be competitive until 2011--at the earliest.

"The only chance for reaching any kind of parity is in 2011. They don't have anything on the roadmap until then," said Ashok Kumar, an analyst at Northeast Securities. In the interim, AMD will get by with about one-fifth of the processor market, according to Kumar. But whether AMD can expand its market share beyond this and be profitable--like Intel--isn't clear. "Intel can leave 20 percent of the unit volume for AMD but (AMD) will have to come up with a business model where it can return to profitability based on this."

AMD may have a chance to expand into more profitable segments if it executes well in 2011, according to another analyst. "AMD believes it's on the cusp of another cycle where they will have strong product offerings compared with Intel. I think this happens in 2011," said Nathan Brookwood, the principal at Insight64. "The products are innovative and have tremendous potential," Brookwood said, referring to the particulars of new chip technologies that AMD disclosed at its analyst day on Wednesday.

But these are big ifs. AMD must close a yawning gap with Intel that's not going to get any smaller because of the legal settlement. "Technically, Intel now has a definitive advantage, which may widen," said Roger Kay, president of market researcher Endpoint Technologies. Kay believes that AMD will have trouble keeping up with the feverish pace, referred to as "cadence," that Intel sets as it moves to each successive generation of chip manufacturing technologies--which, in turn, allows Intel to quickly introduce performance and power efficiency improvements in its processors. "AMD tends to be six months to a year behind Intel," Kay said, citing a statement made by AMD CEO Dirk Meyer at the company's analyst meeting on Wednesday. AMD may begin to close the gap more in the future "but there's no telling whether that will happen," Kay said.

Will AMD's 'Fusion' lead to a resurgence?

(Credit: AMD)

And if it doesn't happen, AMD becomes little more than a foil to keep Intel honest. "This settlement is actually proving the very point that Intel wants to keep AMD alive and able to compete at least in some small subset of the market, otherwise Intel will be faced with regulatory issues that they would rather avoid," said Avi Cohen, managing partner at Avian Securities.

AMD's best technology play to avoid this fate is "Fusion," Kay said, referring to a technology that combines the two key processors inside a PC: the main CPU processor and the graphics processor, or GPU. Fusion, however, isn't slated to come to market until 2011, according to the road map that AMD disclosed on Wednesday.

And what about today? Dan Ackerman, a senior editor at CNET Reviews and someone who regularly reviews AMD- and Intel-based laptops, makes an important point about the challenges AMD faces in the here and now: Intel-based laptops not only dominate the high end of the market but the low end, too. "Intel CPUs are found in almost all of the high-end systems (such as Core i7 laptops), and the low-end systems (Atom-powered Netbooks)," he said.

Ackerman said that AMD will be hard pressed to beat Intel head to head. "AMD has some room in to maneuver in the middle of the market--laptops from $600 to $900--but unless they can offer better performance for the same price, or a significant price discount to consumers, it'll be hard for the company to gain additional market share."

Rich Brown, a senior editor for desktops at CNET Reviews echoes Ackerman's sentiment: AMD competes by offering lower prices than Intel, not better performance. "From a tech standpoint, AMD's...desktop chips haven't been competitive since Intel launched Core 2 Duo. Instead, AMD has had to compete on price," Brown said.

The best action plan for AMD is to keep executing on key technologies and hope this eventually translates to market share gains. "AMD is rapidly developing a reputation for timely execution of marquee products/platforms," said Doug Freeman of Broadpoint AmTech in a research note. "AMD revealed that its newer platforms...are on track for [the first half of 2010]," he said, referring AMD's high-end server chip lines.

Advanced Micro Devices discussed the Hemlock high-end graphics card due next week and third-generation ultra-thin laptop technology, among other topics, at the AMD Financial Analyst Day on Wednesday.

AMD Vice President Rick Bergman holds up the 'Hemlock' graphics card at AMD Financial Analyst Day on Wednesday. The product is due next week.

(Credit: AMD)

"Hemlock will get launched next week," said AMD Senior Vice President Rick Bergman, speaking Wednesday morning at the conference which was streamed live. "It's in production. You'll be able to buy it at e-tailers around the world. You can see there are two GPUs. Five Teraflops out of this baby," he said. (GPU stands for graphics processing unit. A teraflop is a trillion floating point operations per second, a key indicator of graphics performance.)

Hemlock is expected to be appear as an HD 5900 series product--what some reports have called the HD 5970.

Bergman also addressed AMD's third-generation "Nile" ultra-thin laptop platform. "Bring the real PC experience into the ultra-thin. Battery life well north of seven hours," Bergman said. This is due ... Read more

Best Buy is set to launch its lowest-advertised-price laptop to date--an Acer model based on Intel's venerable Celeron chip.

Acer laptop

(Credit: Best Buy)

Thought Netbooks were as low as a laptop's price can go? Another category of ultra-low-cost laptops has quietly emerged. These aren't small or ultra-thin or frugal with power consumption. There's nothing remarkable about these laptops--except price.

Best Buy said it will start selling on Wednesday the $249 Acer laptop--the retailer's lowest-advertised-price laptop ever. The laptop comes with an Intel Celeron processor, 15.4-inch screen, 2GB memory, a 160GB hard drive, and Windows 7 Premium. The model is available while supplies last.

Currently, the lowest-priced laptop listed on Best Buy's Web site is an Acer Aspire with an Advanced Micro Devices Athlon Processor (model: AS5532-553). On Tuesday, it was selling for $329.

Why the proliferation of low-cost laptops? "It's gone from one PC per household to one PC per person," said Justin Barber, a Best Buy spokesman. "And sometimes more than one laptop per person," he said, referring to Netbooks, which are marketed as companion devices to a higher-end PC.

At the core of the low-cost Acer laptop is an Intel Celeron Processor 900--not an Intel Atom chip, which is standard fare for sub-$300 Netbooks. The Celeron is a faster design than Atom: the 900 series packs 1MB cache of cache memory and is rated at 2.20GHz.

By comparison, the Z550 Atom is rated at 2.0GHz and integrates only 512K of cache. The Atom's performance is also hampered by fundamental design constraints: it is built for power efficiency not speed.

Netbooks continue to be the most popular low-cost laptop category, however. Best Buy lists dozens of Netbooks on its Web site from Hewlett-Packard, Asus, Samsung, Gateway, Nokia, Lenovo, and Toshiba, among others. Most are priced around $350.

By not coughing up a low-cost MacBook, as some had expected, Apple has ceded a potentially huge market to PC makers. But is this just all part of Apple's marketing genius?

$999 is as low as Apple will go.

(Credit: Apple)

The announcement Tuesday of the $999 white polycarbonate MacBook was pretty ho-hum as product refreshes go (same price, same color as before) but the implication was important: Apple is surrendering a large, emerging laptop market to Microsoft and its coterie of PC makers.

Not that it's necessarily a bad strategy. Market researcher Gartner said recently that Apple's shipments in the U.S. grew year-over-year by 6.8 percent to total 1.57 million during the third quarter, putting it right behind Hewlett-Packard, Dell, and Acer. Comparatively, overall PC shipments in the U.S. grew by 3.5 percent from a year earlier.

But among those unimpressive overall PC numbers (HP's third-quarter shipments grew only 2.7 percent), was an impressive statistic for Acer: buoyed by Netbooks, Acer's shipments grew by 61.4 percent year-over-year, and it blew past Dell to become the No. 2 PC maker worldwide based on this growth.

Granted, Netbooks are a relatively low-profit segment (i.e., profit on a $400 Netbook is going to be a lot less than that on a $999 laptop). Nevertheless, they're a hot market. Intel CEO Paul Otellini has stated numerous times that Intel was able to create a market that grew faster than either the iPhone or Nintendo Wii. Case in point: Windows 7-based Acer Netbooks are now big on the Home Shopping Network--which claims to have sold more than 5,000 in one segment on Saturday.

And that's not the only market Apple is punting on. A new category of inexpensive, thin laptops has emerged with the roll-out of Windows 7 on Thursday. Like Netbooks, these laptops are light (typically 4 pounds) and don't include an optical drive. But they are relatively powerful and full featured. The 15.6-inch Acer Aspire Timeline, for example, with a 320GB hard disk drive and dual-core Intel processor is fairly well-endowed at only $500.

Apple is not receiving a lot kudos in the mainstream business press ... Read more

Windows 7 has spawned a new breed of inexpensive laptops at retailers like Best Buy and Frys.

At many stores on Thursday, Best Buy refreshed almost its entire stock of laptops: all running Windows 7 and all sporting new model numbers. Frys--a megastore electronics retailer with locations throughout California, Arizona, and Texas--also refreshed many of its laptops with new Windows 7 models.

One of the most inexpensive Windows 7 arrivals is the Gateway model EC1410U. This tiny laptop is distinctly Netbook-like in appearance but uses a more powerful Celeron M ULV 743 processor (1.3GHz, 1MB cache) than the Atom-chip fare found in Netbooks. In addition to the Windows 7 Home Premium Edition 64-bit version, other features include 2GB of memory and a 250GB hard disk drive.

Small Gateway laptop comes in a Netbook-like package but uses a more powerful Celeron processor than the Atom chip found in Netbooks--and it's cheap at $399

(Credit: Best Buy)

Many seductive Windows 7 newcomers are categorized as "ultrathins." These slim designs are typically discernibly bigger than Netbooks (though, as evidenced by the Gateway above, it's now always clear-cut) and pack more processor horsepower. The Toshiba Satellite T-135 (model: T135-S1309), which falls into this category, is priced at $549 at Best Buy and comes with Windows 7 Home Premium Edition 32-bit operating system, a 13.3-inch display, a dual-core power-efficient Pentium processor, 3GB of memory, a 320GB hard disk drive (5400RPM), and built-in Web cam.

The HP dm3 (model: dm3-1035dx), also an ultrathin and also priced at $549, packs 3GB of memory ... Read more

Dell, Acer, Intel, and others together are, in effect, creating a muddle of light laptop categories as part of a not-so-well-orchestrated marketing strategy, according to an analyst. This is expected to become particularly acute when a deluge of new Windows 7 laptops hit the market this week.

Acer 11.6-inch ultrathin looks like a Netbook but it's not.

(Credit: Acer)

Acer offered a graphic example of this recently when it introduced a small, inexpensive Windows 7 notebook--the Aspire Timeline AS1810T--that, from all outward appearances, looks like a Netbook. But it isn't--at least as defined by Intel. It's a new category of laptop called an ultrathin.

"There's a lot of confusion that Intel has created and they haven't really segmented the market that well," according to Bob O'Donnell, an IDC Research vice president.

And it gets more complicated. The inexpensive ultrathin is, in turn, competing now with the expensive luxury laptops, like the Dell Adamo, according to O'Donnell. "Ironically, what's actually happening we think is that the (ultrathin) is actually killing the high-end ultraportable," O'Donnell said.

Here's the problem: any given Windows 7 laptop with an 11.6- or 12-inch screen could be a Netbook, an ultrathin, or a high-end ultraportable, each with distinctly different price-performance characteristics not readily apparent to consumers.

"There's too many overlapping products," according to O'Donnell. Intel tried to prevent this from happening by declaring that any laptop with a screen larger than 10 inches diagonally is not a Netbook. That policy is fine in theory but does not carry over to the real world of head-butting competition among PC makers where even the subtlest production differentiation can mean a leg up on the competition.

Intel says look at performance and price. "Which offers the best performance overall? That's important," said Intel spokesman Bill Calder. "Pricing is a factor too. While some ultrathin laptops including 11.6 and higher are very affordable, none are in the $249 to $399 range that typically defines a Netbook," Calder said.

Some consumers might say it's not a big deal. But ... Read more

Cages at Best Buy are stocked with new models preloaded with Windows 7: behind bars until October 22.

(Credit: Brooke Crothers)

Best Buy is locked and loaded for the Windows 7 launch.

And I don't use the phrase "locked and loaded" figuratively. "Locked" in that all the new Windows 7 machines are locked down behind cages. And "loaded" in that all the cages are full. (See photos.)

I visited a Best Buy Friday night in Southern California where the cages were loaded exclusively with new models preloaded with Windows 7. And I learned a few odd tidbits from a stoked salesperson who had definitely been drinking the Windows-7-is-totally-awesome Kool-Aid. Let me add that the information was conveyed to me at one store in Southern California and may not necessarily apply to all stores nationwide.

The chief executives of Intel and Advanced Micro Devices indicated this week that competition will heat up in the market for sleek, inexpensive laptops running Windows 7.

Both CEOs addressed this new market during conference calls after their companies reported earnings this week. Ultrathin laptops are inexpensive, light laptops--typically between $500 and $800--that are sold in a market segment just above less expensive Netbooks.

Intel CEO Paul Otellini on Tuesday said his company is gearing up to supply more power-efficient chips that contain two processing cores for better performance. "The bulk of the units that have shipped to date were single-core versions of the products," Otellini said. "You'll see a number of laptops show up in retail with the dual-core versions for the holiday season...more ergonomically designed, thinner, lighter," Otellini said.

HP's Pavilion dm3 starts at $549 with an AMD processor and $649 with an Intel processor.

(Credit: Hewlett-Packard)

And AMD's CEO Dirk Meyer chimed in on Thursday. "You'll hear more...next month about the product lineup that we'll be rolling out over the next two years, which will include increasing focus on those small form factor notebooks," Meyer said during AMD's conference call. In the more immediate future, Meyer said AMD will have a "broader assortment of (ultrathin) platforms walking into the Christmas cycle."

To date, this new category of laptops has had a minuscule market-share impact because there was little perceived difference between a Netbook and an ultrathin, according to Bob O'Donnell, IDC research vice president. "A lot of people said this is not actually that much faster, so you're going to see a very rapid transition to all dual-core," he said.

Windows 7 should accelerate sales too. "I think we will see better sales next year," O'Donnell said, as HP, Dell, and others bring out ultrathins with Windows 7.

The category received a boost recently with the rollout of HP's Pavilion dm3, which starts at $549 with an AMD processor and $649 with an Intel processor. The dm3 is expected to be available starting October 22 with the launch of the Microsoft Windows 7 operating system.

Other high-profile ultrathins include the $548 Acer Aspire Timeline (at Wal-Mart) and the $549 Dell Inspiron 13.

Because ultrathins are more expensive than Netbooks, they are more profitable for Intel. "Part of Intel's strategy is to pull people up from a Netbook," said O'Donnell.

AMD, on other hand, is focusing solely on the space "between Netbooks and mainstream notebooks," Meyer said, adding that AMD, in effect, created the ultrathin category with the introduction of the 12-inch HP Pavilion dv2 back in January. "We created that category really in partnership with the HP," Meyer said.

During Intel's earnings conference call on Tuesday, CEO Paul Otellini talked about the growth of notebook PCs versus Netbooks, and Windows 7 adoption in business, among other topics.

Otellini was quick to trumpet the fact that its mainstream notebook business beat Netbook growth. "We saw the sequential unit growth rate of notebook processors and chipsets actually exceed the growth rate of Atom processors and chipsets," he said.

Later in the call, Otellini said: "While Atom and Netbooks are important growth drivers for us, our traditional notebook business remains one of the primary drivers of revenue growth and we expect that to continue in the future."

Otellini, again in the call, expanded on this theme, adding that while Netbooks should see significant growth in 2010 over 2009, the notebook market is flourishing. "We're still bullish (on Netbooks) but what we've seen this quarter though is that the notebook market is alive and well and Netbooks are market-additive for Intel and the industry," he said. "Market-additive" is code for an ancillary product, not a mainstream product.

Intel CEO expects more attractive ultra-thin laptops in the coming months

(Credit: Intel )

He also addressed the new category of ultrathin laptops, which are inexpensive laptops--between $500 and $900--that slot in above Netbooks. "The bulk of the units that have shipped to date were single-core versions of the products. Late last quarter, we introduced the dual-core version of those products. You'll see a number of laptops show up in retail with the dual-core versions for the holiday season...more ergonomically designed, thinner, lighter."

Responding to analyst questions, Otellini also addressed Windows 7 adoption in business. "We see a lot of interest at corporations around Win 7 and the new Nehalem-based (PC models)," he said, referring to Intel's new Nehalem-based Core "i" series of processors. "They're made for each other in terms of the performance and power management and security characteristics."

He continued: "I would expect that the (corporate Windows 7) evaluation process will happen over the rest of this year and we'll start seeing corporate purchases on a refresh basis begin in 2010."

Here's a rundown of other comments:

• Consumer segment strong: "The strength in our business remains primarily consumer driven with broad-based demand across all geographies."--Otellini.
  
• Growth phase: Refuting a question about Intel becoming "smaller" next year: "We're finished with the cutting phase of our efficiency efforts and now in the growth phase of that efficiency efforts."--Chief Financial Officer Stacy Smith.
  
• Inventory hubs: At large PC customers, component inventories levels are at roughly half of the peak level late last year and approximately flat throughout 2009. Intel has a better handle on inventories now using a mechanism called inventory hubs. "We hold the inventory for our large OEM customers, who then pull inventory only if needed...This give us increased visibility into real-time production levels."--Otellini
  
• Nehalem server processors: (dual-processor). "It's not so much an upgrade cycle that's driving the volume right now, it's economics of the data center. People are looking at swapping eight to nine older-generation servers for a single Nehalem server."--Otellini.