Losing its final major workstation OEM customer, AMD seems to have essentially withdrawn from the workstation market for CPUs ... and it doesn't seem to care.
It's still selling GPUs but not CPUs. The strategy might have me scratching my head, but when it comes to marketing its wares to the workstation market, that's precisely where AMD's head is at. Yes, AMD maintains a presence as a supplier to the workstation industry, plying its professional-brand FirePro GPUs, but as far as we can tell the company has thrown in the towel when it comes to selling its CPUs into the same space.
Working hard to increase its foothold in a market dominated by rival Nvidia, AMD's not giving up on the battle for professional graphics hardware dollars. With its recent top-to-bottom Evergreen overhaul of FirePro GPUs, the company knows it's got a competitive line and is looking to capitalize on it. If it can't necessarily overthrow Nvidia, AMD intends to hang onto the 13% it's got, and maybe gain a few points (and some healthy margins) here or there. But the opposite appears to be the case for CPUs, where the company has now completely relinquished its hard-won market share back to Intel. Forget fighting the good fight; the company appears completely apathetic about the fortunes or value of entrenching Opteron (or Phenom or whatever brand CPU) in this vibrant, performance-sensitive corner of the PC market.
Truth be told, AMD hasn't really been engaged in the workstation market for some time, sitting back to watch Opteron's penetration in workstations drop from a peak of 3.6% of the worldwide market in Q2'06 (and a more impressive 9.9% of dual-socket workstations) down to 0.1% in Q3'10. And with the last major holdout HP quietly discontinuing its two Opteron models recently, AMD's share of the CPUs shipping in workstation will for all intents and purposes drop to zero.
Why have AMD's CPUs disappeared from Tier 1 OEMs' workstations? We see two reasons. One, the company needs to pick its battles carefully, and it doesn't see workstations as a priority. And two, today's business unit structure at AMD doesn't appear to lend itself to serving the workstation market effectively. Unlike Intel, AMD lacks the wherewithal to compete full bore in every segment, so it needs to choose its battles judiciously.
Or perhaps AMD senses the workstation business is a tougher nut to crack for its CPUs than its GPUs, since it's fallen so far behind Intel (99+%) to make it a lost cause. But that's a tough argument to make, given that its positions for CPUs and GPUs aren't all that different, as Nvidia with 87% of the market dominates almost to the degree Intel does.
But even if AMD wanted to crack the workstation nut, it no longer appears organizationally equipped to do so. Now apparently lost under servers, workstations look to be the ugly step-child, with servers grabbing all the attention. The two platforms share a similar architecture and system components in dual-socket (2S) configurations, but where 2S platforms represent the bulk of server volume, they represent a relatively small share (around 20%) of workstations, making them less interesting to server management. Similarly, the prospect of building a single-socket mobile or entry desktop — where the majority of the volume is — isn't likely attractive to the client side of the business, since the volumes pale in comparison to PCs.
Now more than other industry observers, we understand the volumes, margins and expenses being incurred in today's workstation business. The volumes of course aren't up to the level of mainstream PC or servers. But at 3.3 million units representing $8.2 billion (system revenue) they're nothing to sneeze at. Furthermore, the margins are far superior to mainstream PCs, and with the commonality that can be leveraged from both of the other two platforms, the engineering costs are quite modest. For the right companies, it's a very attractive market to play in — if you don't believe it, just ask Nvidia or HP.
Ironically, AMD itself sees the value of the workstation market. Otherwise, why would it continue to push FirePro graphics? Predominantly represented by OEMs, the TAM for FirePro is tied almost 1:1 with workstation volume. So if the volume for workstations is too low for AMD CPUs to bother, why is it enough for AMD GPUs to care?
Either AMD doesn't see the CPU opportunity due to organizational blinders, or it's an issue of triage, waiting to take it on after other battlefronts are stabilized. Perhaps it's just waiting for the right Fusion part (Llano, later in 2011) to arrive to then return to market take a bite out of the entry level. But whatever the reason, at least for now, without its previous footholds and (it appears) any champions in the company to pick up the torch, it's not looking like AMD's CPUs will be making a significant comeback in workstations any time soon.