Bixler: AMD Widens the ChannelBy Channel Insider Staff | Print
Gary Bixler, North American Channel Chief for AMD, joined Ziff Davis Enterprise Editorial Director Mike Vizard for a recent Changing Channels podcast. Here is a transcript of that interview.
Vizard:One of the things that dominates everybody's mindset at the channel, for better or worse, especially around systems, is pricing. You know, almost everyday you read about the price war that goes on between AMD and Intel, but I don't think anybody ever steps back to say, "What does this mean exactly from a market perspective, and where do you think that the channel needs to wrap their mind around these shifts in prices?" It seemed pretty dramatic.
Bixler:Right. Well, I think from a channel standpoint, one of things that's clearly key to them, you know, they come to expect and they understand the dynamics of the industry and that the price changes will happen. The key for them is having advanced warning that they're happening and be able to plan their business around it. A lot of these guys are, you know, companies that don't carry a lot of inventory, but they carry enough to meet their customers' needs, and if prices change without warning, it hurts them. So they will acknowledge that, you know, price changes are inevitable. Even though you might think that prices change, because they always go down, would be good for them, in some cases that's not the case. They'd prefer to keep the prices, you know, stable, and predictable and in a range that suits their business and allows them to make margin, you know, on the products they sell. So one of the things that we're working on, to do a better job from this point forward, is just providing that stability and predictability in the pricing. With the acknowledgement that, you know, the market the way it is and technology as fast as it moves in this business, we're going to have to change prices. But when we do that, we're going to give plenty of advance notice and do that in a planned manner rather than what the market, what the partners might see as a, you know, haphazard or a random manner. So for instance, we announce our pricings for Q2 on April 9. At that time we announced that that was our price move for Q2, and we have already begun pre-announcing, to our large partners, the pricing for Q3 and the timing for that. And that is the planned pricing for that quarter, and we're not going to do any pricing adjustments in the middle. So really, bottom line, there is, driving stability and predictability back into the pricing mode.
Vizard:It almost feels like AMD and Intel have kind of switched roles in the last few months. Where you used to feel that AMD was always pushing, you know, we have the better performance platform per se, and Intel was always saying it had the better price spectrum. Now it almost feels like, you know, Intel is trying to come out with their latest rev, or generation, saying they own the performance side of that spectrum. So is AMD going to find itself in a better position from a price performance spectrum in the SMB space, or how does that work? What's the relationship?
Bixler:So, a couple things on that point. One is AMD's value proposition on the channel, and actually in all of our business, has almost always historically been that you get more for your money. I mean, that is kind of AMD. That's what this company's been built on, right? So that doesn't change. That's kind of always our positioning for you know, "Dollar for dollar, you pay the same money, you're going to get more with AMD." So if you see our price positioning in the channel today you'll see that that's a very strong value proposition. Now as far as going from a performance lead positioning to a price lead positioning, you know, one of the things that's just a reality of this business when you have only two players — and we both are constrained by the same laws of physics and the same silicon characters — and as long as it takes to design this technology you're not going to always have the performance leadership. And if you listen to Hector [Ruiz] or Dirk [Meyer], you know our leadership, talk about this they will freely admit that this is going to go back and forth in terms of the absolute top of the stack, top of line, you know, bleeding-edge performance. Sometimes they're going to have it. Sometimes we're going to have it. But the meat of the market, where people make their money, is where the positioning has to take place, and that's where our positioning will always be, and we'll always price our products accordingly. We'd love to have, you know, top-to-bottom superiority in performance. We had that for several years there. You know, it's not the case in the market right now. They have some products that, in some places, are clearly above us in absolute performance. But across the meat of the market we are positioned very, very well and that top end, that'll flip as well. And it'll flip back again after that.
AMD widens the Channel.
Vizard:So the key thing from a solution provider's perspective is that meat of the market is where the volume of the business is for them.
Vizard:For the most part it feels like AMD is starting to reach out more to the solution provider who sells directly to the end customer versus just a system builder. What are you guys trying to do in that space, and how do you do that in cooperation, or maybe not in cooperation, with an IBM, or an HP or a SUN that you'd sell as your core technology?
Bixler:I know that you talked a little bit about this as well on a recent edition of this show and it's clearly an interesting situation for AMD. Again, you know, we're an ingredient in that box. So there's a multiple-prong strategy here. One of the things that we have to do is make sure that we are tightly engaged with those OEMs so that whenever they're out selling their stuff they're talking about our stuff. So the benefits, the price performance, the power benefits all those things that matter to those OEMs and to their customers, that they understand. So we're going to make sure that we show up at, for instance, you know, the HP training events, and IBM PartnerWorld and all those places to help them tell that story to their partners, so working through the OEMs. The second key piece is a lot of those boxes get shipped through the big commercial systems distributors, so you've got an Ingram or a Tech Data or those guys, and they're moving a lot of that hardware. So we have to make sure that we're engaged with them because they are, in a lot of cases, the primary partner interface for those partners. It's not the OEMs directly, necessarily. Their relationship is with Tech, or with Ingram or another distributor. So we have to make sure that those guys are also well enabled to tell the story, and in some case even pass through the tools that are needed to tell the story. So that's the second part. And then the third part, for those partners that want a relationship with AMD and in certain market segments where the benefits of our technology are clearly visible to the end user, is, for instance, the high performance computing market. Those guys are highly attuned to Opteron, and things like hyper transport, and direct-connect architecture and things like that. So we're going to have a direct relationship with them because they want a relationship with us. They want to know exactly what's going on in the processor. They want to know the roadmap information, all that stuff. Another example would be the large data center guys and the Wall Street guys. The guys that really, really care about density and price performance per watt where power is king. Those guys clearly want us talking directly to their technology staffs. So we have to have a relationship with their VARs, their suppliers, you know, directly to be able to, in some cases, even walk in the door with them to make that sale. So in other cases, though, we have VARs that would tell us that, "Hey, we've got a relationship with HP and with Tech Data, and that's enough for us. We get what we need from them." So we kind of have to balance that. We're absolutely — we have a program. We have the content. We have the people in the field. For the markets that it makes sense, that want us to engage directly at the VAR level, or even at the end customer level usually in conjunction with the VAR, we're absolutely prepared to do that.
Vizard:So part of that equation is the technology itself is getting a little more complex because it's not just a speed game per se any more. It's capability built into the processor. So you see things like virtualization, for that matter, being built into the processor, or more system management. So, you know, as the processors get more powerful, what kinds of capabilities should the channel be looking at and expect to see in these processors that today they may look for somewhere else, but that are going to find themselves embedded into the core silicon?
Bixler:Well, you know, there are several things there. You mentioned virtualization. That's probably the best example today, and of course virtualization is something that even today in the mainstream markets is not as prevalent as you might expect. And so, you know, we've got some work to do with partners like VMWare, and Zen and some of those guys to really take, you know, something like virtualization and drive it from the enterprise data center, kind of that kind of environment, into more of the mainstream environment. So you'll see more of that. Clearly, the kind of the nirvana that people talk about for that kind of application would be in the fusion space where you look at integrating new and exciting core technology into the die, into the processor to drive graphics, or security applications, or you know, encryption, whatever it may be. And there are some exciting hooks, if you will, in the architectures that we're delivering to allow both on-chip and on-board connections into our micro architectures. Things like the Torrenza Initiative, but if I say much more than the name I'm beyond my scope of understanding, so you'll have to get another guest on the show. But I can tell you that the people that are building those kinds of technologies are really excited about having the ability to build to an open industry standard which is, again, what this company's built on. But to have a standard that they can get their hooks into, from a technology standpoint, to get right into the guts of the architecture and hook something really exciting in the area of security, or something like that through your connector on the board or in some cases even on the die.
AMD widens the Channel.
Vizard:And in a space that the solution provider would give a lot about there'd also be the ability to start embedding more management capabilities directly into the processor.
Bixler:Sure. Absolutely. Yeah, that's another one that would be a great application.
Vizard:Which, from a managed service provider point of view, might be a key enabler.
Vizard:OK. What do you guys think about the whole movement toward, you know, Intel had this platform thing they were banging the drum about last year, and you guys have this new validated play, or whatever that is. You maybe want to describe what that is. What's the value proposition between the platform and validated? You know, what do the system villages need to really take home from that whole conversation?
Bixler:Well, there are two pieces of that that I would probably mention. One is that the solution providers are looking more and more to us, as technology providers, to provide, you know, a total solution that's integrated, that works well together particularly as they address the commercial markets. So they're looking for kind of an AMD stamp of approval, if you will, that says, you know, these pieces go together well, they're stable, they're reliable and they deliver the total value proposition to your end customers in terms of power, performance, features, those kind of things. So we are more and more with programs like AVS, you know, looking to validate those solutions at a level that gives them the assurance that the platform is stable and reliable not just today but for a period of time in the future. So that's a key piece of that. I mean, there are other things that play into the platform level as well. From AMD's standpoint, kind of looking at platformization — as you would expect we took a different approach. The path that we're on, that we will always be on, is an open industry standard path. So when we put things together — AVS is one example, our Better by Design program is another one you'll see applied in the notebook space as well as the desktop space — we certify components that give best-of-breed solutions for things like wireless security, audio, graphics, etc. that are guaranteed to work well together. But it will always be in an open industry standard environment. Same thing for the software. So if you look at some of the solutions that are available from our competitors, they are very proprietary, closed software solutions. If you look to those same solutions, there are good — I would probably argue, better — open industry standard versions of that software that we can attach to and create a better by-design, best-of-breed kind of platform for our partners. And that's the path that you'll always see us stay on at AMD. It's not the proprietary closed solution, but an open industry standard solution.