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Crave Talk: AMD and ATI merge -- rivals quiver in fear

As AMD prepares to acquire graphics card company ATI, we take a look at the implications for its rivals, including Intel and Nvidia

Okay, so it's official: AMD has just earmarked a shed-load of cash to buy graphics card maker ATI. But what does it mean when two of the biggest and best-known acronyms in the IT world join forces?

Firstly, it gives AMD the ability to compete on an even footing with Intel. AMD has been praised for its achievements in keeping up with, and even surpassing, Intel in CPU performance terms, but the CPU is only a small part of today's PC.

Graphics cards and chipsets (the chip or chips on a motherboard that provide functions to support the CPU) also play a major role. The AMD-ATI deal means AMD can now produce complete platforms using its own CPUs, with chipsets and graphics cards from ATI to go toe-to-toe with Intel's bespoke platforms (such as Centrino).

The acquisition also essentially hands AMD the high-end graphics card market on a plate -- an area in which it has never even bothered competing, and an area in which Intel has failed miserably.

Just think of all those laptops that currently use Intel processors and ATI graphics cards, such as the Dell XPS M2010. They'll be a thing of the past. Motherboards that use Intel CPUs and integrated ATI graphics? Not for much longer. AMD laptops and PCs with Nvidia graphics? Forget about it -- they'll be as rare as rocking horses. The people who would have bought such systems could end up being exclusively AMD customers.

The merger will also be great news for AMD's fight to invade the living room. ATI's chips can be found in a massive percentage of high-end digital television and games consoles. Nintendo's forthcoming Wii console, like the GameCube, uses ATI graphics hardware. The Xbox 360 -- 17 million of which should be in homes by this time next year -- also uses ATI hardware.

Although Nvidia will downplay the significance of the merger, it'll secretly be making unscheduled deposits in the trouser bank. ATI could get access to AMD's enormous fabrication plants, enabling it to manufacture standalone graphics cards in larger numbers and at lower costs.

Intel could begin reaching for the toilet paper, too. We've already seen Dell, the world's largest PC manufacturer, begin using AMD parts, and if AMD's newfound ability to create complete platforms consisting of a processor, chipset and graphics card bears fruit we could see serious competition for Intel platforms such as Centrino.

Add to this the fact that AMD/ATI parts could well play a role in a new breed of portable devices such as the Microsoft Zune, a potential 'iPod killer', and you'll see just how powerful AMD is set to become.

Whatever happens, the future's certainly an interesting one. -Rory Reid