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Dear AMD board: be grateful you’re not in tablets

by Scott Bicheno on 8 March 2011, 12:54

Tags: AMD (NYSE:AMD)

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Careful what you wish for

When AMD surprisingly booted out its CEO - Dirk Meyer - at the start of the year, much of the speculation around the reasons for the move focused on the mobile device market, and AMD's absence from it.

All the cool kids were talking about mobile phones and tablets, while AMD couldn't even get a chip into netbooks. The world was going mobile and AMD was getting left behind. Even AMD's direct competitors - Intel and NVIDIA - had low-power offerings: Atom and Tegra, respectively.

AMD was finally delivering on the promise of the ATI acquisition and bringing Fusion chips - which combine the CPU and GPU - to market, and the feeling was that this once in a generation opportunity had to be fully exploited, but the conservative, introverted Meyer just didn't have the tools to deliver.

This may all be true, and it's certainly critical to the future success and growth of AMD that Fusion is a success, but I don't think tablets are where the new CEO should be focusing, no matter what the board think. In fact I'd go so far as to say that the more AMD focuses on tablets for the next couple of years, the worse it will perform.

What made me conclude this was the HEXUS.sharewatch I wrote yesterday for HEXUS.channel. NVIDIA's stock went on a big run at the start of the year as a direct result of the buzz around Honeycomb tablets and their Tegra 2 chips. Then, once it became clear that there were few reasons to choose a Honeycomb tablet over an Apple one, NVIDIA's share price went down the toilet.

Now whether AMD likes it or not, NVIDIA is far better positioned for the tablet market. Tegra 2 is an ARM chip, it's much lower power than even the leanest Fusion chip and NVIDIA has bet the farm on it. Despite that it's still having to scrap for a share of the ten percent of the still tiny tablet market that isn't owned by Apple, against mobile chip giants like Qualcomm, TI, Freescale, etc.

Frankly AMD should be pointing and laughing at NVIDIA right now, not trying to join it. And as for Intel, the less said about its mobile ambitions the better. With its two biggest rivals distracted by mobile, now is the time for AMD to pounce in their traditional battlegrounds, and avoid the car-crash that is tablets if you're not Apple.