AMD taps server business for growth
Chipmaker Advanced Micro Devices (AMD) plans to focus more on its server business, a higher-margin business than its chips for desktops and laptops, even though the latter is the company's "bread and butter", one executive shared.
Greg Poole, director of field applications engineering at AMD, told ZDNet Australia's sister site ZDNet Asia in an interview on Tuesday that making chips for desktops and laptops is its fundamental business.
"If you look at the client-computing business, which could be considered as our 'bread and butter', I'd say we have substantially more revenue generated from the client business, including desktops and notebooks," he said.
However, this area is "largely a commodity business now", and it is difficult for the company to hit the margins that it wants to hit, the director added.
This is why the chipmaker will be focusing on its server-based products, as these promise higher returns, Poole stated.
"The server space is extremely important to AMD, and we are investing heavily to be successful ... [with server processors,] you're providing mission-critical applications, and solving the big problems of the world, so you need more robust and reliable solutions. We know where our future needs to grow."
Poole's point was backed up by the company's third-quarter financial results. In the report released on 27 October (PDF), AMD stated that its computing-solutions segment — which includes server processors — reached US$1.3 billion, and was partially driven by "double-digit growth in server-processor revenue, driven by significantly higher ASP [average selling price]".
The Austin-based chipmaker will have to arrest the drop-in server market share in the second quarter of 2011, though. According to IDC's findings, AMD slipped 0.6 per cent to 5.5 per cent in their global server and workstation processors during this period. Its main rival, Intel, on the other hand, rose 0.6 per cent to reach 94.5 per cent, according to the ZDNet Asia report.
Quizzed on how the company plans to increase its market share, Poole declined to comment, saying that he is not equipped to answer, as he's "the engineering guy".
Working towards cooler servers
The executive did point out that enterprises' server requirements are evolving. In the past, the main consideration for server chips was "performance, performance, performance", but this has changed to include the total cost of ownership (TCO) as well, he stated.
In an effort to help IT managers decrease their overall datacentre TCO and justify expenditure, Poole pointed out that AMD's latest Opteron server processor offers 16 cores, and includes more computing capability in a smaller footprint, which, in turn, leads to lower power consumption in one's datacentre.
The chip also has power-saving features, such as thermal design power (TDP) capping that allows IT managers to set the parameters for power consumption and core-power gating, said the director. This, he noted, would also help companies in saving energy consumption and costs.
Via ZDNet Asia