Intel is by far the most powerful player in the PC and server processor segment and, on paper, AMD is significantly overmatched. However, so was David in the Bible by Goliath and we know how that turned out. In that biblical story David wins through focus, he had one weapon, a slingshot designed to kill large predators, and he used it with effect to overcome a larger allegedly armored foe. In martial arts I saw a huge Norwegian guy simply try and fail to simply push a tiny Judo instructor also showcasing that focus and skill can overcome size in a physical engagement. And the US had its first military loss since becoming a superpower to Vietnam due to a lack of focus, commitment, and some of the worst military practices recorded in modern times.
Being big is both an advantage and disadvantage in that size gives you power but it also makes you a larger target with more to defend. With a company, or a country, the larger and more diverse its projects and/or spread out its geography the more vulnerable to a targeted attack it becomes. AMD demonstrated this at E3 this week.
Let me explain.
Intel’s Lasting Vulnerability
Under Intel’s last CEO the firm dismantled its most powerful engine driving future X86 adaption the Intel Developer Forum which was created by Pat Gelsinger (now CEO of VMware). IDF was one of Intel’s most effective competitive assets and since it predated most other events it was grandfathered on calendars across the world. Eliminating had two strategic impacts, it freed up developers to go to other events and it allowed other events to slip into its spot which will take the event, should Intel now want to reestablish it, from the front to the end of the line. It isn’t reflected in current financials and it was exceedingly expensive also making it far more difficult to reinstate because the cost impact would hit immediately lowering revenue, margin, and valuation while the sales impact could be years out now.
In addition, their last CEO gutted much of their PC and Server efforts and crippled the firm’s marketing. It could be argued he did more for Intel’s competitors than any competing CEO could have ever done. Finally, he allegedly both concealed severe security problems (and that wasn’t all) and attempted to personally profit from them creating a great deal of distrust between Intel, its partners, and particularly people that buy Intel technology.
Now this is all on top of creating a TV program he stared in that failed, a focus on drone swarms that had no apparent material impact on the company, and an investment in automotive sensors in a failed attempt to catch up to NVIDIA in the automotive space (this was like showing up to a tennis match with someone whose expertise wasn’t tennis it was making tennis balls).
This has significantly weakened Intel and while current executive management appear to be working furiously to rebuild staff and capability it has taken Intel from undisputed trusted leader to a firm now chasing its own market and that was very apparent at E3 particularly on the gaming desktop.
AMD’s Move
AMD moved early with a tech day that proceeded Intel’s show and a number of announcements for new products that appeared to beat Intel on CPU’s not only in performance but in price. Most powerful was at the high end where AMD’s part not only outperformed but was announced with a price point that, before Intel’s likely pricing action, was below half of the Intel price. Around $500 savings on a gaming system would be significant.
AMD also argued compellingly on a better together strategy and had both Asus and Acer on stage confirming and validating AMD’s presentation. OEMs rarely pick sides and these two firms not only build systems they build motherboards for other OEMs, so their advocacy was potentially more powerful than that from the majors who both compete and contract with them.
But the strongest advocacy accidentally came from Intel who, in a fit of anger, challenged AMD to a shootout. This validated that AMD was competitive and that, for once, Intel had to take them seriously. But all this was made possible by a combination of AMD focus and an Intel CEO that did more damage to Intel than anyone would have thought possible.
And AMD effectively set Intel up because when Intel’s new i9 ships in the 4th quarter, which should outperform what AMD announced, AMD will begin shipping their latest Threadripper which should again take the performance crown. Set, match, game.
Wrapping Up:
Basically, two companies owned E3 Microsoft and AMD. Of the two Microsoft was the more encompassing with announcements that solidly bridged the console, PC, and Smartphone space. But they are a giant in the industry and their ability to dominate a show like E3 shouldn’t be a surprise particularly given their current executive management and focus. What continues to be surprising is how AMD continues to pound on Intel largely as a result of Intel’s self-wounds so successfully. The firm’s better together strategy and overall performance, not to mention incredible price performance, advantages (even without the security patches throttling performance) are compelling and OEMs are taking notice.
So, this decade we’ve had the worst CEO that Intel has ever had the arguable the best that AMD has ever had in Lisa Su and the result is a real-world David and Goliath fight. I guess you could rightly call the result biblical in scale.
