Beating Intel at its own game
In the past, Advanced Micro Devices (AMD) has struggled to beat Intel at its own game. Intel (INTC) controls more than 80% of the CPU (central processing unit) market and has not been challenged in this market for the past ten years. Even in the declining PC (personal computer) market, it managed to keep its PC unit profitable by targeting the high-end market.
Now AMD is looking to compete with Intel in the high-end PC market—in both performance and in pricing. For this, AMD has changed its chip architecture to make it competitive with that of Intel whereas Intel has not changed the architecture since 2006 when it launched the Core architecture, said Patrick Moorhead, an analyst at Moor Insights.
For many years, Intel competed fiercely with AMD in the PC market, but now the game has changed. Intel is shifting its focus away from PCs to data center and IoT (Internet of things), and it’s now looking to compete with Nvidia’s (NVDA) GPUs (graphics processing units) in deep learning.
But even if AMD manages to regain some share in the PC market, it may not impact Intel much, though it could significantly boost AMD’s revenue. But if Intel decides to fight back, AMD has a lot to lose.
Is a price war a good strategy for AMD?
AMD was silent about its Ryzen pricing for quite a while and unveiled it just a few days before the launch, giving Intel no room to cut its prices. AMD would launch three chip families: the premium Ryzen 7, the midrange Ryzen 5, and the cheapest Ryzen 3, targeting the high-end gaming and video editing segments, where Intel earns some of its profits.
Intel could respond in three ways: by cutting prices, improving performance by adding cores, and promoting its new Optane technology it developed in collaboration with Micron Technology (MU).
Performance over price
It appears as though, however, Intel may not jump into the price war so soon and risking hurting its own profits. Instead, it will likely compete on performance. It could increase the clock speeds of its own chip offerings, add more cores or bring in its revolutionary Optane storage technology.
Intel is also developing its 10 nm (nanometer) chips, which are scheduled to arrive by the end of 2017. So AMD’s victory over Intel may be short-lived—until the latter strikes back.
But with its Vega GPU, AMD plans to compete with Nvidia in the high-end GPU space as well. Continue to the next part for a closer look at AMD’s Vega GPU.