AMD Business Case

Thèmes abordés

AMD, Microprocessor, Intel

Résumé du document

A.M.D., Advanced Micro Devices, is an American company which has been competing in the microprocessor market since the early 70s.
These years heralded a new era during which computers slowly gained such relevance that soon no company could develop, get organized, gain market shares in an efficient and profitable way without implementing IT tools and processes to support their business.

Indeed the 70s were the years to stage an entry into this world and this is exactly what Jerry Sanders did when he founded AMD in 1969. He was among the other forerunners including the creators of Intel to enter a newly created environment where competition would soon prove to be extremely tough in terms of quality, reliability, price level and innovation expectations. Since then, real competition has arisen between significant global providers of innovative solutions for the computing market.

In a booming market, mainly led by IBM PCs (launched in the early 80s), the time was ripe for AMD to cement its place in the computing solutions market. Indeed, Intel which was the main supplier of microprocessor architecture was asked to license its patents to other suppliers. AMD was among the companies to manufacture processors via cross licensing agreements. IBM's novel and innovative breakthroughs in this domain provoked a scramble for increased R&D spending and spawned a fierce competition among other microprocessor companies in terms of prices and innovation. The battle for securing the top spot in the IT solutions domain became an ongoing affair considering the highly volatile market. The quest to launch new processors and new product ranges within shorter intervals was a key component of the success story.

Extraits

[...] AMD turned to be more commercial client space oriented including desktops and notebooks. AMD could now use clients' inputs to feed its innovation pipeline and by having re-architecting the whole enterprise AMD put itself in a leadership position by imposing an IT structure versus its main competitors which had remained under the product approach. Impacts of Intel on AMD Would AMD maintain its winning position when Intel's had launched it new products? Intel has been shaken by AMD's new strategy based on the customer centric approach. [...]

[...] AMD's business advantage was also perceived by stock exchange as stock price of Intel significantly decreased during the period 2000 to 2006 dropping from more than 70 $ to less than 20 $ while AMD's was priced above Intel at nearly 28 $ in 2000 to reach more than 40 $ at the beginning of the year 2006 showing the confidence investors got into AMD. (exhibit 16) Would the customer centric approach be a source of advantage over Intel? In creating and developing a more structured approach based on the relation with the client, AMD's researchers aimed at putting themselves in the customers' shoes. They planned to to the market”, in becoming closer to them. With this new approach, AMD brought a revolution to the IT market. [...]

[...] They implemented more changes in a certain period of time than ever. Conclusion: As a conclusion, comparing to its significant competitor, AMD couldn't financially activate innovation without partnership. AMD also succeed to gather tools and key actors like HP and IBM in order to put in place new projects. These challenges permitted AMD to reach the first row on the IT tools and processes' market. In order to keep it, AMD should continue to develop its customer focus strategy in showing the competitors how close and responding to client AMD can be in a long term view. [...]

[...] It also shook the long years of habits. This was based on the assumption that enterprises would shift from dedicated PC to a centralized solution called “server-based computer”. The server based costs being lower than the PC based costs, it seemed obvious economic wise that it would be received positively by enterprises. On top, the “power campaign” introduced both ideas of cost reduction and environmental concern by reducing the energy in a context where the entire world is made aware of the climatic changes. [...]

[...] Since then, a real competition has arisen between significant global providers of innovative solutions for computing market. AMD's battle to enter the market and maintain a viable profitable position on the market In an exploding market, mainly led by IBM PC launched in the early 80s, it became a true opportunity for AMD to take a piece of the cake. Indeed, Intel which was the main supplier of microprocessor architecture was asked to license its patents to other suppliers. Then AMD was among the licensed companies to manufacture processors via cross licensing agreements. [...]