AMD CEO Serves Up Change with Focus on Ops and IP
Business Management

AMD CEO Serves Up Change with Focus on Ops and IP

In the foyer of a London hotel, Rory Read steps forward, smiling. Tall and powerfully built, he has a firm handshake and a friendly manner, enquiring about my home town of Newcastle in England which he knows as home to Brown Ale. He’s down to earth, a man with a reputation for operational excellence from his tenures at IBM and Lenovo and, as CEO of AMD, he might well be what his new company needs – a core of stability.

AMD is a legend of the old Silicon Valley, a pioneering chip maker that set up shop when that part of California was better known for orchards than microprocessors. It has been a major part of the client/server era and is beloved of fanboys and geek enthusiasts. However, AMD has always existed in the shadows of its much larger chipmaker rival Intel and Read’s mission is to step out of those shadows and restore the lustre of the company by chasing new market opportunities and executing them strongly.

Almost two years into his reign, Read is seeking to aim at new markets but says the company has no plans to exit the PC sector and disagrees with the notion that the market is becoming a bloodbath.

“Technology and the supply-chain have got to the point that there’s a natural evolution to $250-500 price points. But it’s not a race to the bottom where it’s like $99 or $75.”

So AMD is staying in PCs for the long-term?

“Why not? It’s a good business and it creates IP [that can be reused in other segments] so, yes, we’re there for the long-term.”

However, Read is investing further afield to capitalise on the changing computing landscape where multiple client devices and other systems connect to resources hosted in the cloud.

“[There was a need to] diversify the portfolio [and the plan is to] make 40 to 50 per cent of revenue in high-growth segments such as dense server, embedded and semi-custom designs,” he says. “There’s an evolution, maybe a revolution, [going on] but it’s going to be a big, big deal. There’s an explosion in new opportunities for innovative low-power designs and AMD has a heritage of being innovative [in that area].”

He raises his fists like a boxer in demonstration of his strategy to create “protect” and “attack” businesses where CPU and GPU are defended and dense server, embedded and semi-custom are attack vectors. The Wintel combination of Windows and Intel-compatible processors is weakened, he argues, opening up new chances to the bold.

“There’s no doubt there’s been a breakdown in proprietary control points,” he says. “Cloud changes everything. The era of a vertically controlled OS and instruction sets seems highly unlikely [to continue to dominate] to me.”

In emerging hardware formats there will be opportunities for multiple device makers and their suppliers. For now at least, he sees less opportunity in smartphones where Apple and Samsung are entrenched but in tablets, for example, there might be a more evenly distributed spread across rivals and platforms. He welcomes the opportunity to serve a range of OEMs with sleek designs that sip at power.

“It’s kind of OK to be the second source [for PC processors] but that’s not the culture we want to create. Inflexion points are great, they change the game. The status quo is not our friend.”

Asked for a template for AMD’s revival, Read goes back to the company he served for many years, saying that Lou Gerstner’s turnaround of Big Blue based on diversified products and services, strong operational control and customer focus.

“Execution has not been our forte [in the past]. The company has to be willing to change. IBM had to go through a near-death experience [before it revived].”

Read’s ambition is to build a company with “great bones”, that is, a business based on stout construction, and says he wants “the AMD Way” to be based on employees taking ownership of issues and showing commitment.

Taking a business in a new direction requires cultural transformation and buy-in from the workforce, he recognises. He has conducted “chalk talk after chalk talk” on the need to be open, clear and well organised. He doesn’t disguise the challenge ahead and he hasn’t been helped by a PC market that is declining faster than most forecasted. Early on in his AMD tenure, Read recalls having to de-commit to his largest 10 customers because of shortages of product. Now Read wants to be known for hitting deadlines and executing on promises while growing the intellectual property that is AMD’s core differentiation.

“I don’t need real estate. We need to be very efficient on cost but we need to continue to invest in our IP as the core of the business”

He also took time to meet the man most associated with AMD history, its larger-than-life founder, Jerry Sanders.

“He talked about the history of the company; it’s magical, he’s magical,” Read says of the “swashbuckling” Sanders.

Did he consider bringing Sanders back in some role? Read laughs.

“It’s hard for him to do anything but lead! He’s a pirate!”

Read is no Sanders. He’s not likely to engage in spats with Intel, quote poetry, make boasts or court controversy. But his reputation for operational excellence and the rapid changes taking place in computing may well help him in creating a new AMD.

 

Martin Veitch is Editorial Director at IDG Connect

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