I was briefed last week on a fascinating idea: Intel provides the #CPU and much of the package technology and @AMD provides a custom graphics core co-developed with Intel. The result is like AMD’s #APU, but with far higher performance, and the target market would be those who like to travel and game and engineers who would like a thin and light notebook with blazing graphics performance. Those products are coming but I think the more interesting thing is the relationship, not the product. This has the potential of being market shattering, so let me explain. Coopetition The idea of two competitors partnering strategically isn’t new but it rarely works out. Apple and IBM partnered massively in the 1990s to offset @Microsoft, but nothing ever came of their efforts except expenses, largely because neither firm resourced the efforts adequately. On the other hand, @IBM made much of the core storage technology that every competitor they had sold during that same time very successfully. The difference was that what IBM had was cooked; it was willing to put the core technology at arm’s length, and it didn’t promote that its storage products were better because it knew the core technology everyone was using better. In fact, most of the market was unaware just how much of their third-party storage product came from IBM. Coopetition is the name for these relationships and there is generally a hard break between those that work and those that fail badly. Another obvious failure was Microsoft/Sun, largely because the partnership came out of litigation and the executive staff of both firms hated each other. Dell/EMC, on the other hand, worked well until EMC stopped cooperating, but then the two parties reconciled and are one firm now, suggesting these things can have interesting long-term implications once relationships are built between the executives. AMD/Intel This partnership is closer to the one that IBM did with storage and AMD is in the IBM role as the technology provider. It has been establishing a semi-custom effort, which designs parts to order, for some time and used it to dominate the game console business very profitably. What makes this interesting is that before AMD, the game console business was thought to be too low margin to be interesting to most of AMD’s peers. But to truly validate this capability, it desperately needed a proof point with a competitor that could showcase AMD would play well in such a relationship and not become a marketing or optics headache. This partnership with Intel should showcase this nicely, assuming it works out. Given Intel’s culture, I doubt this would work the other way with Intel providing core technology and AMD doing the packaging. But this does open the door to another possibility. AMD/NVIDIA Now the target for this joint AMD/Intel effort appears to be NVIDIA as it is the most at risk for losing business at the high end against this uniquely tuned part. NVIDIA seems much more focused on autonomous driving and AI now, but graphics card sales still are the core of its revenue and high-end mobile is a lucrative market. NVIDIA has three potential paths there, and if it wants to torpedo this thing, it could move to merge with AMD but given the graphics overlap, it would likely run into some regulatory problems and the result would be far short of optimal. The more interesting path would be to work with AMD to create a reverse of the Intel partnership, using AMD’s custom CPU capability wrapped in NVIDIA’s graphics to field an alternative. Were that the case, you’d get massive validation for AMD’s semi-custom business, which could open more markets for it. That would put the company at the heart of both efforts, and the result could be technology blends that drop out of PCs and move to servers and even things like automobiles and advanced drones. Wrapping Up: It’s Chilly in Hell but the Products Could Be Great! Done right, coopetition creates opportunities for all parties that wouldn’t exist otherwise and can reduce competitive inefficiencies. It is rare that competitors have absolute advantages in all areas and often, if they combine their best technologies, they can come up with something uniquely powerful that advances the market more quickly. This is what AMD and Intel are moving to accomplish here. But if this becomes a trend (and AMD really would like it to), the result could be accelerated performance in the ever-widening markets that CPUs and GPUs play in, which extend from autonomous rolling and flying vehicles all the way to autonomous robots, while initially advancing mobile PCs at the high end massively.
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