AMD is losing itself with the Abu Dhabi deal

Yesterday’s business moves by AMD smells of desperation in my opinion.

If you haven’t heard AMD and some incredibly rich people in Adu Dhabi will buy a significant stake in the company and branch off. Basically AMD will be split in two with the Abu Dhabi side being called The Foundry Co.

AMD is on a losing streak of seven unprofitable quarters. This looks on paper to be a good deal. One that will infuse the kind of capital AMD needs to properly compete with Intel, the market leader.

And, I do hope it all works out for the chip maker. But, AMD has lost what made them a power to be dealt with in the market place. I have been covering AMD for more than a decade and AMD built a solid reputation for delivering quality products at a fair price. They did this by realizing that ever day it woke up fighting an 800-pound gorilla called Intel.

AMD understood they were not going to defeat Intel the same way David slew Goliath. AMD’s business was never a one shot deal. They were going to peck away at Intel’s market share. They were going to win some of the small battles and build upon that.

This kind of approach may have lacked speed, but it had heart. AMD’s corporate culture was hyper-focused on pecking away at Intel’s market share.

They were also fortunate to, at one time, sell off everything they made. They also made a blockbuster acquisition of ATI, which gave the chip maker a huge Canadian presence. You can argue that this move put the chip maker in this financial mess.

At the time I applauded the move because it would help AMD diversify and give them a leg up in the graphics space. Plus who knows what can happen down the road with both markets and its technologies. This acquisition, while expensive, helped to cover those bases for AMD.

The Dell alliance was another factor. It forced AMD to be more of a supplier than an innovator. Dell is a demanding company and AMD did not have the plants at the ready for this influx of business, I've been told.

I also believe that the company did not see Intel partnering with Apple at all. A bold move for sure by Apple, this deal really worked out well for Intel. Intel chips were now going to be in some cool stuff. I think all these factors prevented AMD from spending more on R&D. They were already outspent by Intel.

The new plants were necessary given all of these circumstances. The Abu Dhabi folks will help in this regard. But, the question begs to be asked. Will this be the same AMD of the past?

I hope so.

Two quick hit before I go. DataCore Software, a provider of storage virtualization software, has appointed Christian Hagen as its new Vice President of Sales for the Americas & EMEA. Hagen, the former Vice President of Sales and Partner Development EMEA, is now also responsible for all DataCore sales and channel activities in the Americas.

Long time vice president at Audcomp Paul Furtado has left the company.

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