The Platform

Acquiring ATI amounts to a quick (but expensive) way of filling in the gaps in AMD's current business.  AMD has already proved that it can compete technologically with Intel, and is currently working on fixing the problems with being able to compete in terms of manufacturing ability as well.  By acquiring ATI, AMD will have the talented workforce necessary to produce its own chipsets/motherboards with integrated graphics and engineer some very unique hybrid CPU/GPU platforms using Torrenza.

There are other ways AMD could have gone about attaining the same goal, for example by building its own workforce and IP rather than spending the $5.4 billion dollars necessary to acquire ATI's, but the acquisition approach is arguably quicker and allows AMD to focus on reaping the benefits sooner, not to mention that it leaves AMD better prepared for the future if GPUs do grow closer to the CPU. 

Intel has created the perfect example of how to be a successful microprocessor manufacturer, and its platform focus is one key element of that example.  The ATI acquisition, in many ways, is about following Intel's example and improving wherever AMD can. 

Can't We All Just Get Along?

The one element of this acquisition that you don't read about in press releases, is what it takes to actually make it happen.  It's not always easy to get a bunch of people from varying backgrounds and with various interests to work well together, it's even more difficult to take two well established and fully operational companies and expect to combine the workforces into one.  While direction for the combined company will come from both AMD and ATI senior management, making that translate into a well oiled machine that can not only innovate but execute great products is quite difficult. 

Having each company operate entirely independently makes no sense, since we've already discussed that it's what these two can do together that makes this acquisition so interesting.  AMD and ATI have to work as one company, but getting from where both companies are today to the point where they are one single harmonious entity (or at least as much as Intel) is going to be a very long and difficult process. 

One fundamental hurdle is that neither AMD nor ATI have particularly strong marketing, at least compared to their competitors.  Both Intel and NVIDIA have arguably done a much better job at marketing their products, building brands and gaining mind share.  We are concerned about the marketing direction that the new AMD would take, especially considering that in many ways ATI has the stronger PR/marketing focus.  At least from our dealings with the two companies, ATI gives more importance to its PR/marketing teams than AMD does, which is cause for concern since it is AMD buying ATI and not the other way around.  Only time will tell if AMD will assimilate ATI into its way of thinking, or if both companies will be able to use this acquisition as an opportunity to learn from one another.  We all know what the sensible choice would be, but getting thousands of people to agree on the same thing tends to complicate things. 

The one perspective that is easiest to support right now is Intel's "let's wait and see what happens" view.  Even with all this talk about the potential merger, the benefits, the pitfalls, etc. the reality is that right now all we have is a proposed merger.  It's certainly big news to even have such an acquisition out in the open, but until the final ink is dry many people remain skeptical.  It really wouldn't be too shocking to see the whole merger evaporate and for ATI and AMD to just continue on their present, independent paths -- certainly no more surprising than the initial announcement.

Our Thoughts: The GPU Side


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