AMD is on a roll at the moment. Given all the focus on mobile, who would have figured their success result from a ton of effort on desktop PCs?
A recent study has AMD going from just 18 percent to more than a quarter of the market since the rise of their new Ryzen processors.
I think this points to a lesson in strategy that we should work hard to remember: when in competition with a larger vendor, go where they aren’t focused, not where they are focused.
The Race for Mobile
About a decade ago, Apple launched the iPhone and convinced everyone and their brother that the smart money was moving to mobile. Intel, which was slow to the mobile game, tried to pivot away from PCs.
AMD’s board wanted AMD to pivot as well. Their CEO at the time didn’t think that was a good idea given AMD’s strengths. He was let go in favor of a new CEO who was going to take the firm to mobile. So then we had both AMD and Intel trying to be a better Qualcomm than Qualcomm — and that really didn’t end well.
Current AMD CEO Lisa Su, who trained to be a CEO under IBM’s Louis Gerstner, saw the market for what it was. People were still using PCs. Tablets had not taken over the world as predicted. Yet Intel was still acting as if the PC were dead, pulling back resources and effort to focus instead on mobile.
She saw a once-in-a-lifetime opportunity to take Intel’s core market away from them and invested, initially not even in a laptop processor, but in a desktop processor.
I have to believe a lot of folks thought she was crazy, but she was crazy like a fox. She knew that AMD could never go head-to-head with Intel because that firm was massively stronger. However, she could flank them. With their reduced expenditures, there was a chance she could catch them napping and take a large portion of the desktop PC business. She bet that Intel couldn’t easily pivot back to PCs largely because Intel had significantly reduced their own effort. Staffing it back up again would, at best, provide bad optics and, at worst, put Intel’s leadership at risk.
One of the reasons I pointed out Lisa Su’s IBM heritage is because she was there when I was there. One of the lessons we all learned came from IBM’s agreement in the 1980s that the mainframe was dead.
Back then, the market wasn’t rushing to mobile, it was rushing to client/server — even though, for the most part, client/server didn’t actually work at first. Despite a decade of limited support, the mainframe remained a huge profit engine for IBM and today represents one of their most financially successful servers. The lesson was, had IBM stayed the course with the mainframe, they’d have likely been far better off. Regardless of what they did, they now own what was arguably the first appliance computer at scale — the mainframe — because virtually everyone else left that highly profitable segment.
Had a strong challenger gone after the mainframe business with a like product during that decade of low IBM support, I believe they likely could have taken the mainframe market for themselves.
This lesson clearly was not lost on Lisa Su.
In looking at this situation, it is hard not to quote Sun Tzu, the Chinese strategist who seemed to be able to verbalize simple strategic concepts which win wars. For me, one of his most memorable statements was “So in war, the way is to avoid what is strong, and strike at what is weak.”
The idea of really understanding both yourself and your opponent was key to much of Sun Tzu's teaching. For example, he also said, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
Sadly, few seem to have studied his lessons.
However, Lisa Su at AMD has clearly taken Sun Tzu’s teachings to heart. She has effectively done what AMD has rarely been able to accomplish — taking the fight to Intel and putting that far larger company on the defensive. This happened not because AMD rushed like a lemming with Intel to mobile, but because they went where Intel wasn’t: to the PC desktop.
There is a good lesson here, one that is literally thousands of years old.
Photo courtesy of Shutterstock.