In watching the Barcelona launch it struck me that the real competitive dynamic between Intel and AMD has very little to do with technology now, but I wonder if either company fully understands this.
Let me walk you through how I came to this conclusion and then talk about what it means.
Barcelona Launch Hoopla
AMD’s launch for their newest flagship part was a large (for them) event with representation by each of the companies supporting the offering. In fact there were so many folks talking, but unfortunately not really saying much, that it was a little hard to pull out the value of what was being said.
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The problems with launch events is that often the vendors focus on quantity and not quality. They want lots of executives to get credit, they don’t want to anger any partners, and the end result is an overlong event that has very little real content. If you look at an Apple launch event you’ll generally see the best of this. I could go down a long list of vendors who repetitively do these things badly, wasting millions of dollars and a lot of sales opportunity in the process.
To be kind, the AMD event wasn’t really in the Apple class but, if you paid attention and dug through the massive amount of rhetoric (and got over the fact that they weren’t going to feed you until it was over) there was some really interesting stuff said.
Industrial Light and Magic
Three talks stood out (well 4, but the 4th was Sun and that was a story in and of itself). The opening talk by one of the most powerful executives for Lucas Films and Industrial Light and Magic was what got me thinking that we just haven’t been looking at the battle between Intel and AMD properly. We’ve bee ignoring the real differences between the firms.
In what was the most impassioned talk I have ever heard from an end-user advocate, the Lucas executive praised AMD – and actually called Intel evil, indicating they had been let down catastrophically by Intel, and implying AMD had saved their company. Seriously, you don’t get this from major customers very often and it was the first time I’d actually been present when this happened.
In short what had happened, according to the speaker, was that early on they had gone to Intel to help create the magic that became Industrial Light and Magic, the company that dominates the digital graphics market for movies. Everything they are didn’t exist back then and they desperately needed help creating the foundation platform to build this powerful company one. After a lot of work with Intel, Intel walked away from the project. AMD stepped in; the implication was that most of the wonderful stuff we’ve seen in movies wouldn’t have existed without them. According to Lucas Films, Intel is basically locked out of this very influential industry as a result (that was a little hard to believe given Intel’s breadth but it sure was passionately delivered).
No real mention of technical prowess, instead it was the power to partner that was the differentiator, allowing AMD to dominate a very important segment and gain what appears to be an incredibly powerful ally.
VMware: Partnering Squared
I’m often struck that there are executives who shouldn’t be on stage and don’t reflect on their companies well by taking the spotlight instead of passing it to someone more capable. The VMware CEO looked like she was waiting for someone to hand her a blindfold before being shot. On the other hand, once you got away from the performance her content was solid and she spoke to a unique relationship with AMD, which was creating better hardware for her market-leading virtual machine offering.
Now, alone, I could have concluded that she would likely say the exact same thing about Intel, and had it not been for one other talk probably would have written hers off to just being nice to AMD.
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Dell: Partnering Cubed (or Quaded)
That was, until the representative from Dell got up, who was arguably one of the best on-message speakers at the event. To drive his point home he had a video from Michael Dell, who personally said that the work they’ve done with AMD and virtualization had created the most powerful virtualization server in the industry with a whopping 40% performance advantage, and that they were significantly increasing their AMD commitment.
Now an OEM saying they have the best hardware is hardly earth shattering but one saying that AMD’s stuff is vastly better than Intel’s even in a localized segment doesn’t happen every day. Dell is credible when it comes to AMD vs. Intel issues, even if you have to take their statements on their own product’s leadership with a grain of salt.
What appeared to give this stem the alleged performance advantage wasn’t Barcelona, but the rest of the work done on tuning the system for this use. Work that likely dovetailed with the work done with Vmware, and it spoke to the power of the relationship, which created something strongly differentiated and different over the power of a generic part.
Remembering the Power of the Relationship
Now I should point out HP spoke a bit about their work with AMD and performance-per-watt but it wasn’t as powerfully delivered as the Dell talk and you kind of had to dig much harder for the benefits. But in all cases the power of AMD was not in any one part, it was in the relationship.
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A string of very powerful companies were agreeing that the true value of AMD was that AMD worked with them to create unique solutions which differentiated, even from other solutions using AMD technology, and the end result is a competitive advantage they couldn’t get by just buying off the shelf.
For a lot of things buying off the shelf is fine, and clearly the dominant vendor (in this case Intel who is executing better than they have in years) will generally have the advantage. But when it comes to building unique and differentiated solutions AMD would appear, based on what was said at the event and actually what I’ve observed over time, to have a sustaining advantage.
Now what if AMD just got off the performance race entirely and simply focused on creating and scaling uniquely differentiated solutions for each of its customer companies? If Intel moved to match and compete in this way the results would move away from a blind race for performance most of us never really use, to more unique offerings with values and benefits that better target our just as unique needs.
I think the word “innovation” could stop being a semi-negative and actually become much more powerful and R&D much more important because it would be more closely tied to real needs.
In the end, I think Barcelona will be more often used because of the quality of the relationship rather than the quality of the part. And, honestly, I think we could all learn something from this. If the quality of the relationship with all of our customers is as strong as it is between AMD and its key customers, they’ll ride with us through thick and thin, and if it isn’t, we are constantly at risk of market shifts and competitive pressures we have less control of.
I can think of a number of vendors, one big software vendor in particular, who could see a great deal of benefit from focusing on learning this AMD lesson. In the end it is easy to run so fast we forget to remember what is truly important. This was a good reminder for me; I hope you find it as useful.