Now that we know the merger is definitely happening, it's time to start looking toward the future and what the deal actually means, not just for the two companies involved, but the industry as a whole.
Using our industry insight, we've had a poke around to see where AMD and ATI have perhaps struggled in the past, but may well make headway as a combined force.
It's about platforms, people!
A PC (sorry, a 'solution') doesn't contain simply a CPU, it relies on a large number of other components, discrete, or integrated into core logic. Intel's marketing machine has really pushed the idea of platforms, with Centrino a testament to that. With Centrino, it's about not just the right CPU, but the supporting chipset, power saving measures and network connectivity, providing a more complete solution... a platform.
Although Viiv and vPro aren't as mature as Centrino, all three platforms make it harder for AMD as they don't seem to have an ability to compete with them. This is in part down to chipsets. With AMD not making its own, it doesn't control its own destiny; for some time it has had to rely on third parties, like ATI, Nvidia, SIS, ULI and VIA to develop the core-logic solutions for their CPUs. Meanwhile, Intel can put a whole platform together essentially by itself.
Incorporating ATI's chipsets into a platform strategy, then, would give them something to fight back against Intel with.
Invasion of the living room
Nvidia trump ATI in desktop graphics sales. However, ATI has an advantage in the living room. 85% of high-end digital TVs have an ATI chip involved somewhere, then there's the Nindendo Game Cube and the upcoming Wii, along with the XBox 360. That makes for a massive living room presence, something which AMD could never have got on its own, but can now have overnight.
Mobile market
We mentioned in our initial headline that there would be a lot of focus on the mobile market from AMD and ATI. By the end of this decade there'll be 1 billion mobile phones sold each year... a good pie to have a few fingers in, right?
Bill Gates has said that he forsees a time when XBox 360 games will be playable by users no matter where they are. In light of that, ATI could be supplying graphics chips, based on the XBox 360's 3D technology, into phones come 2010.
The number of phones with such 3D chips could be in the range of around 150 million, putting AMD and ATI in a strong position in the mobile market.
It doesn't end with phones, however; there's the PDA to consider. With AMD's Hector Ruiz making it clear that he's on a mission to "Break Intel's monopoly", it wouldn't surprise us to see AMD and ATI lurch towards PDAs. An acquisition of Marvell would be one way of doing this, giving AMD access to XScale, recently sold off to Marvell by Intel.
Changing the focus
For years the focus of CPUs was on clock speed. Then, AMD made the market focus on work per clock. Eventually, Intel followed suit. Merging with ATI, we could see AMD make a similar focus changing effort once again, thanks to some of the unique abilities of GPUs.
Certain number crunching operations can be performed much faster on a GPU than they can a CPU, and this is at clock speeds that are but a fraction of the clock on a top of the range CPU. Leveraging this kind of technology, AMD could trigger a shift towards great parallelism, GPUs already containing extremely parallelised processing pipelines.
Perhaps general purpose GPU applications will grow in popularity, then? It's certainly something we see AMD investigating.
Taking on Intel in their own back yard
The sweetest part of the merger in the near future, is that ATI's RD600 chipset for Core 2 processors is just about to launch. It looks to be around 10% quicker than i975X and be cheaper too.
The result of this is that even if demand for Intel's desktop solutions increase, with the RD600, AMD will get a slice of revenue growth. The bigger question, though, is with AMD inside Intel's chipset business, does that mean they get a license to use Intel's Intellecual Property? It looks like that's going to be no, amidst news that Intel hasn't renewed ATI's bus license... not all that surprising, though.
Spare a thought for Nvidia
As a result of the merger, the chipset business will rest almost wholly with AMD and Intel. Nvidia will be left to struggle on their own. It could result in Nvidia finding it hard to compete.
It's not just chipsets either. ATI will gain access to AMD's fabrication plants. Capacity willing, it should help them reduce the cost of producing their GPUs. The end result is a tougher GPU market for Nvidia too.
It's coming...
So, recapping what we've discussed in our analysis here, what's coming in the near future? ATI's mid to low end GPU production will move to New York & Dresden. This will cut costs and allow for more competitive graphics products.
While making Nvidia sweat in the GPU market, AMD will work closely with ATI's chipset engineers to produce improved desktop core logic solutions.
In the portable market, AMD is now in a posistion to create and push its own answer to Centrino. A complete platform to take on those produced by Intel.
Finally, AMD will get stuck into the mobile market, intent on getting a big slice with mobile 3D processing technology.
It looks to us like combining forces gives AMD and ATI some serious firepower to use against Intel and Nvidia and help them get a foothold in the relatively young but rapidly growing mobile and digital home markets. Of course, we'll have to wait to see exactly what hand is played, but we guarantee you there'll be some interesting changes taking place.
