Does innovation always have to cost so much in the technology world? Advanced Micro Devices Inc. certainly does not think so and to prove its point, over the past few months the company has been bucking in the trend by reversing rising prices and stagnant innovation. Looking back, AMD has been a key role player in making US$500 desktops, $1200 rack servers and multi-gigahertz mainstream processors. Though the company was known more for reverse engineering Intel products, today after having taken a totally different turn AMD is playing off bigger that ever before. From the looks of it, it appears that the next technology generation will belong to company"s like AMD, that believe technology is for everyone and can be made affordable. On a visit to Dubai with a view to ramp up its Middle East operations and cover more ground, the company"s Executive Vice President Worldwide Sales and Marketing Henri Richard took some time off to talk with CNME. In an exclusive one to one discussion, Richard talks about going an extra mile to ensure AMD stays sure footed in this region as well.
CNME: From a position of follower, AMD is now at a position of being a challenger and even a market leader as we have seen. What strategy did the company pursue to help it go up this road?
Richard: Over technology and business roadmap relied on one key thing- technology innovation. So this led us to focus on some of the big things that the industry was keen for like using innovative technology to protect their investments, better power management and the move towards integrated components. Pursuing a strategy of innovation that seeks to make technology affordable is certainly an advantage we have enjoyed.
CNME: The industry has referred to AMD as the Linux of the semiconductor world. So does AMD want to play the role of conscience keeper for the market?
Richard: It certainly is a flattering comment, but we did not quite think of the role as conscience keeping. Instead, we said to ourselves that the focus would be on building technology focused on the user. So in that sense drawing a parallel between Linux and AMD will not be off the mark. In both cases, the driving force is extreme user focus. In our customer facing approach, we have always tried to make sure the clients trust us totally. The market needs better performance and technology that will not always cost them the earth to get that performance. They don"t need new architectures. AMD believes in fair and open competition and yes, it has been interesting for us to watch competition react.
CNME: You have been a keen flasher of the partnering ecosystem card. Would you like to talk about that?
Richard: AMD"s partnering strategy is position to scale beyond from being "inside" to being on "your side". So we are striving for a balance between innovation, performance and value creation. A partnership model works very well to achieve this because we partner to gain strength and we retain focus ourselves in the areas we do best in. So managing and fostering relationships is very important.
CNME: You company has also decided to standardize its architectures based on the market you are targeting, unlike competition perhaps that constantly innovates in the architecture space. How will this help?
Richard: A standardized environment facilitates both the company and its partners to cull value from the technology being created. But while standardizing, a company must also build technology headroom into the lifecycle. That is the way ROI is tangible and strategic to operations and business. So we follow a standardization program that offers customers easy, uncomplicated offerings to choose from, but we don"t compromise on the technology upgrade path.
CNME: So is the server market the next big destination for AMD? The last of the four big market forces Dell has also said that it plans to consider AMD chips for its servers.
Richard: The server market is absolutely important for AMD and Dell"s plans to consider AMD closely for its servers is very important to us as it represents access into a significant market dominated by Dell.
CNME: And your technology overview?
Richard: AMD believes that 64-bit computing will be pervasive and an integrated technology path will be the way forward. We are in an X86 processor world, so education for us will be important. AMD has a strong strategy in the dual core processor area and we expect strong adoption of this in the market as it promises a multiplication of performance with the same system. Licensing will be of key concern with regard to this as we are recommending a licensing by socket method, as each application will offer different performance levels.
Enabling security at the chip level is also an important focus for us with the EVP security protection that we have built into the Athlon/Opteron and Sempron (with the new technology). This will allow for greater security right at the chip level with the Windows SP2 upgrade.
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The bottom of the pyramid
According to modern economic theory seeking to bridge the digital divide (drawn from University of Michigan Business School Professor CK Prahalad"s paper) there is business to be made by focusing on the bottom of the pyramid, which represents the general mass-market consumer.
The theory recommends that instead of selling high-value goods/products/services to a small group of users, it does make business sense in focusing on a larger market with competitively priced products. But interestingly, besides being a sound strategy for business, this is also emerging to offer an important social benefit model. And AMD wants to be a player in this.
With its PIC initiative, which offers a low cost connectivity device for the mass market, AMD says there is much to offer. " We have launched our 50/15 initiative which, seeks to make 50 percent of the world"s population have access to the Internet by 2015," says Richard.
The device besides having basic functionalities of a PC will be more robust and low cost. AMD"s Geode processor (which it acquired from National Semiconductors) will power the system. As it is X-86 based, the device will not require special cooling and will be a low cost yet effective connectivity device.
The device will be manufactured by AMD partners and will be offered to the market through telcos for a month fee basis in emerging countries like in the Middle East, India, China, Latin America, etc where efforts are on to bridge the digital divide. In the Middle East AMD has initiated discussions with telcos and expects to shortly launch the initiative here as well.
"Our industry is looking at two different tracks. One that wants more performance and the other, which wants more/or same for a less price. I refer to this segment as the "good enough" category. So our focus is on how you take technology, make it and try to accelerate its deployment in the market with a view to tap the bottom of the pyramid," Richard adds.