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Cheap small notebooks and netbooks, like the HP dm1Z have powered Fusion to massive sales, taking rival Intel Corp. by shock.  (Source: Netbook Live)

AMD's Fusion is a mid-market powerhouse that Intel has no direct answer to in terms of price and performance. Atom is too weak; Sandy Bridge is too expensive.  (Source: Funimation/Toei)
Company sold 5 million chips since the Fusion platform's launch at the start of 2011

As if Intel Corp. (INTC) needed any more bad news after all the grief ARM Holdings plc (ARMH) is giving it, it appears that Advanced Micro Devices, Inc. (AMD) may be closing the gap in notebook and netbook sales.

Late last month, Microsoft's Bill Koefoed, general manager of investor relations, reported "a 40 percent decline in Netbooks" in Q1 2011.  In Q1 2010, netbooks sold about 10 million units, so this indicates that about 6 million netbooks sold in January, February, and April.  If that pace were sustained, through May around 10 million netbooks would have sold.

AMD's Raymond Dumbeck announced this week that AMD sold 5 million "Fusion" chips in the first five months of the year.  AMD's Fusion chips went into a mix of 10-, 11-, and 12-inch notebooks.  Given that the line between a "netbook" and "ultra-portable PC"/"small PC" lies somewhere in 11-12 inch range it seems like a fair guess that A.MD sold about 3 million "netbooks" -- or about a third of the total market (~10 million units)

That's incredible news for AMD which traditionally had little sales success in the mobile sector and virtually no sales in the netbook sector.

The flip side of the AMD victory is that Intel's ultra-mobile Atom processor appears to have bled a great deal of market share in a very short time.  Atom has suffered as AMD reportedly undercut it with Fusion and delivered a superior on-chip GPU compared to Intel's solution.

Intel's only saving grace has been that the rush to Fusion has taken AMD somewhat as surprised.  Mr. Dumbeck comments that the company is currently sold out of its existing stocks.  That shortage slowed sales from approximately 3.9 million in the first quarter to a mere 1.1 million the next two months.

That brief reprieve for Intel may be short-lived, though.  AMD is reportedly working to increase shipment of existing Fusion processors, as well as widening the channel to include new models.

AMD's current Fusion CPUs fall into the Brazos family, which feature the company's new mobile Bobcat core.  They are split between Ontario, which features lower power consumption and lower clock speeds, and Zacate, which features slightly higher power requirements and clock speeds.  Both Brazos flavors are built on a 40 nm process.

The company is preparing to ship a new type of Fusion "advanced processing unit" (APU) codenamed Llano.  Llano packs a beefier K10 core (found in the Phenom II and Athlon II processor lines), but a die shrink to 32 nm should help to mitigate the power bump, slightly.  The processors are expected to come in dual core and quad core varieties and fall between 25 watts and 100 watts in power consumption.

Intel doesn't exactly have a new processor that can compete at the same market point as Llano.  Atom will be much weaker than Llano.  Sandy Bridge will be much more powerful, but will also be more expensive.  The lack of a mid-market CPU offering from Intel should help Llano see strong sales when it begins shipping early next month.

Brazos has clearly exceeded AMD's wildest expectations.  With support from Dell Inc. (DELL), Sony Corp. (TYO:6758), Acer Inc. (TPE:2353), Hewlett-Packard Company (HPQ), and Lenovo Group Ltd. (HKG:0992) AMD's Fusion project is seriously threatening Intel's netbook and notebook processor offerings.

With 28 nm enhanced Bobcat 1-4 core models and 32 nm 2-4 core Bulldozer based models due out next year, AMD clearly hopes to continue to apply the performance pressure on Intel's Atom line and pricing pressure on Intel's Sandy Bridge line.

As with its success in the GPU market, AMD's turn-around owes to the company shifting its focus to the consumer budget and mid-market sectors, versus the traditional enthusiast race that it has waged versus competitors in the GPU and CPU markets.  A company focusing on the majority of consumers, versus a select few?  What a novel thought!  But it sure appears to be working for AMD.

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RE: Nvidia
By SPOOFE on 5/31/2011 1:16:13 AM , Rating: 2
I think we're just going to see a greater and greater divide between "good enough" chips and "powerhouse" chips. We see the early aspects of this trend; I just think "high end" and "low end" are going to wind up with a fairly large gap between them.

RE: Nvidia
By Targon on 5/31/2011 9:02:53 AM , Rating: 2
I disagree here, there will always be people who want something a bit more than the "basic" system, without going up into the very high end. This is why you can buy all these different processors at different speeds, core counts, etc.

Some people will want a six core processor, even now, because they do so many things at once and leave all of their applications open ALL the time. Others will be satisfied with a quad-core processor. EVERYONE will see the advantage of quad-core over dual-core, but not everyone wants to spend a LOT more.

On the AMD front, there will be a fairly small group that won't go with a APU and instead will want a pure CPU with discrete video card, and that is the 10 percent crowd. Now, that is the key to what AMD is doing.

Right now, you have AMD selling CPU and chipsets. If AMD moves the GPU from the chipset to the CPU and adjusts the costs, the CPU+chipset cost may end up being the same, but it also encourages allowing people to upgrade the CPU more often. How many of us have just done a CPU or video card swap without wanting to replace the motherboard? If replacing the CPU also replaced and upgraded the graphics, that could be seen as something more people are willing to do, in the same way that swapping a video card is seen as an acceptable thing today.

There really are four tiers of CPUs out there, the extreme high end, the enthusiast, the mid-range, and then the low end. AMD has pretty much dropped out of the top two tiers on the CPU front due to not having been able to move to a 32nm process soon enough. So, for your mid-range CPU and low end, you have a LOT of room for differences. Dual-core vs. quad, and we will probably see hex-core entering that mid-range in the next year. Do you want a 3.8GHz quad-core, or a 2.8GHz dual-core? We WILL see more of a CPU performance difference between the CPU-only chips/systems and the APU market, and that is where things will get very interesting going forward.

With AMD pushing the APU, the overall performance between AMD and Intel will be a bit more balanced(with AMD having the better graphics and Intel POSSIBLY having the better CPU at the same price). As the complexity of the GPU side goes up, heat and expertise will come into play, and AMD may be able to increase performance a bit faster than Intel. This may hit Intel hard enough to change its approach, and their focus on the CPU may decrease to the point where AMD can stay competitive.

Then again, if Intel is found to be doing more anti-competitive stuff, they may be forced to divide up the company to split off its fab capabilities, which would really help level the playing field. If Intel didn't have the fab development advantage it does, it might not be nearly as far ahead at this point.

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