Meyer axed as AMD's chip strategy founders

In some important market segments, Advanced Micro Devices' chip strategy was not promising. But whether this had anything to do with the CEO's ouster, is not clear.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
Brooke Crothers
2 min read

Advanced Micro Devices' chip strategy over the past several years had some flaws that if not fatal, at least cast doubt on how the chipmaker would fare in a quickly changing competitive landscape.

AMD's smartphone-centric Imageon chip technology was sold to Qualcomm.
AMD's smartphone-centric Imageon chip technology was sold to Qualcomm. AMD

Though no one outside of AMD's board may ever fully know why CEO Dirk Meyer was fired today, there were important markets the chipmaker had essentially abdicated. The most salient being tablets and high-end smartphones.

In 2008, AMD appeared well situated to make a foray into smartphones and later tablets (and seemed ahead of Intel and Nvidia in this market segment). But AMD sold that technology, Imageon, to cell phone chip giant Qualcomm in January 2009.

And Meyer made some high-profile comments in October of last year, stating in no uncertain terms that the tablet market was not a priority. "Frankly, we're still so small in the notebook market that it doesn't make sense for us to turn R&D dollar spending toward the tablet market yet. We'll start doing that when the market is big enough," he said during an earnings call.

His point was ostensibly a rational one: the tablet market isn't big enough today to justify AMD's focus. But this thinking could have dire consequences going forward if there's a rush to tablets, hybrid devices (e.g., tablets with slider keyboards), and large, high-end smartphones. In short, AMD's strategy has been too centered on PCs, a mature market where Intel controls the most lucrative segments.

Its biggest rival, Nvidia, on the other hand, has set it sights squarely on tablets and high-end smartphones for the last couple of years and had a strong presence at CES. Motorola's marquee smartphone and tablet products this year, for example, will use Nvidia's ARM processors.

Though AMD's Fusion, aka "Brazos," chips could be used in larger tablets, they're not optimized for that segment like Nvidia's ARM chips are.

Even Intel, which is facing its own challenges in smartphones and tablets, has two Atom chip variants (Oak Trail and Moorestown) that can be used in tablets today.

At CES, AMD did gain some traction in the market segment just above Netbooks--mostly small laptops with 11-inch and 12-inch screens. Sony stated at CES that it was quitting the Intel-Atom-based Netbook market in favor of small laptops based on AMD's Fusion processors, and Hewlett-Packard announced Fusion-based designs.

That market, however, is not very profitable compared to the higher-end segments that Intel dominates.