WBMW,
re: Anyway, that's what I got. Any comments?
I agree with your comments.
There were a couple of things, taken together, that seem to give a hint of the Ruiz AMD strategy.
There's way too much technology and not enough innovation.
The window of opportunity for us is that to get to be the kind of company we want to be, we will have to be in the commercial space.
Up until now, people have compared us as a little Intel. The difference is that we're not in Intel's economy, we're part of our customers' economy.
It's not so much a question of whether to reduce R&D as deciding what you are not going to do.
We have an opportunity with Hammer, our 64-bit microprocessor. We also expect to see growth in flash memory and from our alchemy solutions, which are systems-on-a-chip for low-voltage, mostly handheld products.
If you outsource certain things they may not all save money but they can turn into variable rather than fixed costs.
It sounds to me like Ruiz has abandoned Sander's attack Intel, high volume strategy. He must have realized that his revenue levels can't economically justify manufacturing and R&D investments for the low to middle PC space, Intel can engineer and spend him to death. From a competitive standpoint, watching Intel accelerate their process technology roadmap, during a downturn, must have been painful.
My guess is that he is looking at more niche products, with high margins. I think the days of undercutting Intel by 25% on comparable products may be over, after a transition period. If he lowers his fixed costs by out sourcing manufacturing, he can price his products at an acceptable gross margin, and even with the much lower volume AMD can make money. But I think he's aware that he can't compete toe to toe with Intel in volume with a foundry model.
I think it's a good strategy, probably the only strategy. The transition will be key, can they they put out some profitable products before the cash burn turns the creditors into a pack of wolves?
What does it mean for Intel? If I'm right, probably some more pricing power and volume in the PC space, and a little more competition in the server, handheld and flash space.
All IMHO.
John
