AMD: REVERSING THE FUSION LAUNCH

GROUP D7

AISHWARYA USGAONKAR

ALANKRITA MISHRA

ANKIT SEN

JOSHUA DESOUZA

SHOBHINI RAI

SHUBHAM GHOSH

1969: AMD founded1982: Received a second source license for Intel’s x86 microprocessors1992: Released Am 386 & Am 486, low priced version of Intel’s 80386 & 80486

1995: AMD released its first in-house designed processor K51997: Failing to meet expectations with K5, AMD launched K61999: AMD launched Athlon, that offered better performance than Intel’s Pentium

2003: AMD launched, Opteron, a 64-bit processor, compatible with both 32-bit and 64-bit softwares2005: Opteron dual-core was launched by AMD, a more energy efficient processor compared to Intel’s new product. Acquired ATI technologies in 2006.2007: AMD launches a GPU (Radeon HD 3800 Series) under ATI brand

2008: AMD announced that it would no longer manufacture its own chip. (fab-less)2009: The AMD-ATI merger finally showed its worth when AMD launched HD 5000 series of graphic cards.2009: VISION brand launched by AMD,

Late 1960s to Early 1990’s

The 90s ERA

Early 2000s to 2008

The recent years

2003: Opteron, a 64-bit

processor, which was also

compatible with 32-bit

software, was released by AMD.

Opteron was successful in

competing against Intel’s

Itanium and Xeon processors2005: AMD filed a lawsuit against

Intel , accusing it of using its dominant market position to

damage AMD’s relationship with OEMs

2009: AMD was paid $1.25 billion

by Intel as a settlement of the

antitrust lawsuit originally filed in

2005

1987-92: Disagreements between

AMD and Intel. Intel pays over $10

million to AMD. In return AMD

agrees not to clone Intel’s technology

in future

1995: Initially when AMD released K5, it was intended to compete with Intel’s Pentium. But it failed and 2 years later, AMD came up with K6

1997:AMD released Athlon which

offered a better performance than

Intel’s Pentium, taking Intel and

the industry by surprise

ISSUES

At the Company level

• Delay in finalizing the Llano and extension of launch indicating low efficiency of the R&D.• AMD had to choose between the two alternatives, i.e. whether it should launch Brazos now and Llano later or launch both Llano and Brazos

later• Profit had declined and moved into losses in 2007 and 2008. Unsustainable income (legal settlement) resulted in profit during 2009.• Stagnant market share of around 25% - 27% throughout 2008 and 2009.

Marketing Campaign

• “The Future is Fusion” campaign was a short mass marketing campaign. Although targeted towards the end users, budget allocation ($10 million) was low and the campaigning itself was limited (billboards and one page ads).

OEMs and Consumers

• AMD wanted to position its VISION brand as the ultimate gaming and graphic experience provider. However, OEMs were unsure if this was the right move and if this would increase confusion among end users.

• Awareness or knowledge about APUs and its benefits to the customers as well as balancing technical aspects and selling an experience to the consumer.

ALTERNATIVES

Pros:

• Financial Relief for the company• Brazos is ready to manufacture and can be

delivered immediately• It could give a short term increase in market

share in Netbooks and low performance notebooks.

• AMD would be in a better position to tackle competition from Intel, especially with ‘Sandybridge’

Cons:

• Not meeting up to the hype and expectations already created among consumers

Pros:

• AMD wanted to encourage optimizing applications for Fusion APUs. Collaborations with various software firms have a lead time of a year.

• A year would help AMD position the VISION brand in the consumer’s mind through knowledge sharing about the advantages of APU.

• Segmentation of consumers as done by marketing team for VISION brand, would make more sense with the launch of two different microprocessors catering to different segments.

Cons:• AMD would lose out on its market share if Intel

comes up with products with APU technology• Losing out on the revenue for a year just by

waiting• Intel’s Atom processors are already in the

market

Launch Brazos now, Launch Llano later (Alternative-1)

Launch both Brazos and Llano later

(Alternative-2)

SOLUTIONS• Based on the alternative assessment, AMD must approach with Alternative-1, i.e. launch Brazos immediately and wait

for Llano to be launched later.

STRATEGIC

• Brazos was categorised to cater to netbooks, low performance notebooks and desktops. The competitive advantage over the existing Atom processors (limited graphics capability) of Brazos would require them to be launched immediately.

MARKETING

• Product Differentiation (A shift from CPU to APU) would challenge the industry benchmarks on which processors were previously judged. But however, AMD could always bank on the higher graphic capabilities of the newer product.

• Alternative-1 would also bring out the perfect mix of enhanced graphic experience and the sufficient technical aspects and benefit of the APU to the end consumer through OEMs in print ads (Exhibit 10).

• AMD customer funding allocated 90% of the of the funds to OEMs (Exhibit 11). This share can be reduced and allocated to a more effective marketing campaign for “The Future is Fusion” through sponsorships.

FINANCIAL

• Revenue had declined from 2008-09 from 5.8 billion to 5.4 billion. However the net profits had grown from a loss of $3 billion dollars to $0.3 billion dollars profit. This included a legal settlement of $1.25 billion dollars. This is a non-recurring income and AMD would have to launch Brazos in order to maintain/gain profit.

REFERENCES• Reversing the AMD fusion launch, Johnson. R., Harvard Business Review.

• http://i0.wp.com/images.lazygamer.net/2013/08/wpid-amd-vs-intel-2.jpg?resize=730%2C547

• http://www.thinkcomputers.org/articles/ces11_amd/main.jpg

• http://elstatico.divx.com/files/images/amd-vision.png

Thank You