AMD holding off on tablets, admits iPad cannibalizing notebooks
AMD Chief Executive Dirk Meyer weighed in on the iPad's impact on sales of netbooks and notebooks, surmising that Apple's tablet has cannibalized both. Meanwhile, the company is waiting for the market to develop before committing R&D resources to developing tablet processors.
The Associated Press covered Meyer's response to a question on tablets' impact on netbook sales during an earnings call Thursday. "Clearly, in the last quarter or two, the tablet has represented a disruption in the notebook market," said Meyer. "If you ask five people in the industry, you'll get five different answers as to what degree there's been cannibalization by tablets of either netbooks or notebooks."
"I personally think the answer is both, and given the pretty high price points of the iPad, there's probably some cannibalization even of mainstream notebooks," he continued.
AMD posted a loss of $118 million for the quarter, a slight narrowing of last year's third-quarter loss of $128 million.
According to Meyer, the tablet opportunity is a long term one for the Sunnyvale, Calif., company, which is second only to Intel in shipments of x86 microprocessors. "Even though tablets like Apple's iPad are eating into demand for laptops, AMD will hold off on investing to develop microprocessors for that market until it grows more," Reuters reports Meyer as saying.
"Frankly we're still so small in the notebook market that given all of the opportunities in front of us it doesn't make sense for us to start turning R&D dollar spending towards the tablet market yet," he said.
Meyer is the latest of several high-profile CEOs to warn investors about the so-called "iPad effect." Last month, Best Buy CEO Brian Dunn caused a stir when he hinted that some sales of netbook models at the retailer had dropped off as much as 50 percent since sales of the iPad began. Dunn quickly retracted the comments, jesting that "the demise of these devices are grossly exaggerated." Earlier this week, Intel CEO Paul Otellini conceded that the iPad and other tablets may be chipping away at PC margins.
Third-quarter sales figures published this week by IDC and Gartner corroborated the impact of the iPad on the PC market. According to IDC's calculations, Apple overtook Acer to claim the number three position in the U.S. market. Number one HP saw lackluster growth of 2.7 percent, while second-place Dell saw shipments decline 4.9 percent year over year.
The iPad effect seems to work both ways. "Apple's influence on the PC market continues to grow, particularly in the U.S., as the company's iPad has had some negative impact on the mininotebook market," said Bob O'Donnell, IDC vice president for Clients and Displays. "But, the halo effect of the device also helped propel Mac sales and moved the company into the number three position in the U.S. market."
According to Gartner, sales of low-priced notebooks and mini-notebooks slowed over the quarter after several years of very strong growth. Mikako Kitagawa, principal analyst at Gartner, sees the buzz surrounding Apple's iPad as a contributing factor to the recent slowdown in netbook purchases. "At this stage, hype around media tablets has led consumers and the channels to take a 'wait and see' approach to buying a new device," Kitagawa said.
Unverified reports have suggested that Apple and AMD might have a partnership in the works. In April, unconfirmed rumors surfaced that the two companies' executives were meeting to discuss plans to use AMD microprocessors in some of Apple's forthcoming products.
The Associated Press covered Meyer's response to a question on tablets' impact on netbook sales during an earnings call Thursday. "Clearly, in the last quarter or two, the tablet has represented a disruption in the notebook market," said Meyer. "If you ask five people in the industry, you'll get five different answers as to what degree there's been cannibalization by tablets of either netbooks or notebooks."
"I personally think the answer is both, and given the pretty high price points of the iPad, there's probably some cannibalization even of mainstream notebooks," he continued.
AMD posted a loss of $118 million for the quarter, a slight narrowing of last year's third-quarter loss of $128 million.
According to Meyer, the tablet opportunity is a long term one for the Sunnyvale, Calif., company, which is second only to Intel in shipments of x86 microprocessors. "Even though tablets like Apple's iPad are eating into demand for laptops, AMD will hold off on investing to develop microprocessors for that market until it grows more," Reuters reports Meyer as saying.
"Frankly we're still so small in the notebook market that given all of the opportunities in front of us it doesn't make sense for us to start turning R&D dollar spending towards the tablet market yet," he said.
Meyer is the latest of several high-profile CEOs to warn investors about the so-called "iPad effect." Last month, Best Buy CEO Brian Dunn caused a stir when he hinted that some sales of netbook models at the retailer had dropped off as much as 50 percent since sales of the iPad began. Dunn quickly retracted the comments, jesting that "the demise of these devices are grossly exaggerated." Earlier this week, Intel CEO Paul Otellini conceded that the iPad and other tablets may be chipping away at PC margins.
Third-quarter sales figures published this week by IDC and Gartner corroborated the impact of the iPad on the PC market. According to IDC's calculations, Apple overtook Acer to claim the number three position in the U.S. market. Number one HP saw lackluster growth of 2.7 percent, while second-place Dell saw shipments decline 4.9 percent year over year.
The iPad effect seems to work both ways. "Apple's influence on the PC market continues to grow, particularly in the U.S., as the company's iPad has had some negative impact on the mininotebook market," said Bob O'Donnell, IDC vice president for Clients and Displays. "But, the halo effect of the device also helped propel Mac sales and moved the company into the number three position in the U.S. market."
According to Gartner, sales of low-priced notebooks and mini-notebooks slowed over the quarter after several years of very strong growth. Mikako Kitagawa, principal analyst at Gartner, sees the buzz surrounding Apple's iPad as a contributing factor to the recent slowdown in netbook purchases. "At this stage, hype around media tablets has led consumers and the channels to take a 'wait and see' approach to buying a new device," Kitagawa said.
Unverified reports have suggested that Apple and AMD might have a partnership in the works. In April, unconfirmed rumors surfaced that the two companies' executives were meeting to discuss plans to use AMD microprocessors in some of Apple's forthcoming products.
Comments
...Meanwhile, the company is waiting for the market to develop before committing R&D resources to developing tablet processors.
Hmmm... with the millions of iPads that have been sold in the six months it's been on the market, I'd say that the market has "developed" quite nicely.
Sounds like another company - software or hardware - that decided it was best to shut down their R&D and just sit back and let Apple do all the development for them.
Is it any wonder why previous tablet / slate / whatever sales never took off for the past couple decades??
Perhaps HP may make a dent in that reality with its coming tablet OS. However, by the time any traction occurs for these other players, Apple's iPad will be deeply imbedded in the psyche of the consumer. Game, Set, Match.
Um, what?? The iPad is at a super-low price point, which is one of the reasons it has taken off so quickly.
I think it makes sense for AMD to be hesitant with the tablet market for the time being. The majority of tablets in the near future all use ARM processors to have competitive battery life. I wonder how Fusion will fare against intel's mobile platform.
AMD is taking a bit of a risk, Fusion is their main strategy for laptop and desktop and taking on Intel at Atom, Core, etc. They know they can't compete with anything ARM is suited for over the next several years. AMD better execute on Fusion perfectly, otherwise, big trouble. Can't depend on ATI too long to do the heavy lifting.
I suspect this is not entirely true. I would be very surprised if the R&D department is not frantically exploring Tablet options.
Mr Meyer and the rest of the PC business did not expect the iPad to be such a huge success from the outset. The iPod took 2 years to reach 1 million sales, so to sell the same amount of the more expensive iPad over the first week, will have caught these companies completely off guard.
Their policy initially might have been to wait and see, but after that first weekend, they will have been desperately playing catchup.
They also know that Apple has dropped a paradigm shift into this game.
Apple has taken away the average user from the pc with the ipad because the ipad concentrates what the average person does into a no fuss, powerful, fast and hell of capable system.
Ballmer is sweating bullets and so are his OEMS.
And the ipad gets no viruses. No god**** Norton anti virus ad popping up and pissing off my girlfriend. Nothing. No pop ups!!!! Yeah!!!!
Sorry for all you MS certified techs.
My pose:
*iphone 4 16 gig
*2 ghz Al macbook before becoming the macbook pro
*1 ghz g4 imac 17 inch flat screen(soon to be kicked to the curb for the 21.5 inch imac)
*ipad 16 gig wifi +3G(I told my girlfriend I was going to buy the 64 gig wifi+3G for my birthday back in September but she surprised me. Damn! Beggars can't be choosers)
Windows machine?HHHHHHHHHHHHHHHHHEEEEEEEEEEEEEEEEEEELLLLLL LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL LLLLLLLLLLLLLLL NNNNNNNNNNNNNNNNNNNNOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OO!!!!
Thank you!
come on people. You know and I know that intel and AMD are scared to death of the ipad because it is kicking the tail of a product they dump their effing chips into. The pc
They also know that Apple has dropped a paradigm shift into this game.
Apple has taken away the average user from the pc with the ipad because the ipad concentrates what the average person does into a no fuss, powerful, fast and hell of capable system.
Ballmer is sweating bullets and so are his OEMS.
And the ipad gets no viruses. No god**** Norton anti virus ad popping up and pissing off my girlfriend. Nothing. No pop ups!!!! Yeah!!!!
Sorry for all you MS certified techs.
My pose:
*iphone 4 16 gig
*2 ghz Al macbook before becoming the macbook pro
*1 ghz g4 imac 17 inch flat screen(soon to be kicked to the curb for the 21.5 inch imac)
*ipad 16 gig wifi +3G(I told my girlfriend I was going to buy the 64 gig wifi+3G for my birthday back in September but she surprised me. Damn! Beggars can't be choosers)
Windows machine?HHHHHHHHHHHHHHHHHEEEEEEEEEEEEEEEEEEELLLLLL LLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL LLLLLLLLLLLLLLL NNNNNNNNNNNNNNNNNNNNOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO OO!!!!
Thank you!
You summed it up very well
Waiting for Apple to sell a few million more units.
Waiting for the opportunity to pass it by.
Waiting for Intel to eat its lunch.
Waiting to fail.
Did laptops cannibalize desktop sales? Did the Apple II cannibalize calculators? Did calculators cannibalize ledgers? Good grief, heaven forbid somebody get tablets right.
Amd's position makes perfect sense to me. They aren't going to match the performance/watt of arm any time soon and it's not clear what os would run on their chip anyway. AMD is a cash strapped company -- they need to focus on thongs that actually might work out for them. Probably makes more sense for them to make a processor that could find it's way into macbooks and iMacs.
Exactly. AMD makes chips. They don't make OSes or app stores or negotiate deals with record companies or movie studios or make touch panels. The iPad's success is due to a complex recipe of which the CPU is but a small part.
AMD is much smaller than Intel, they only have so many resources, and their resources are committed to other market segments for the near term. Nothing wrong with that.
Desktop & laptop CPUs will continue to be a very large market. They're not going anywhere due to the rise of tablets. Tablets are like phones; they are another device people are adding to their stable of digital toys.
- Jasen.
This approach is even worst than Microsoft's which is to get blind sided by Apple delivering a perfectly integrated software - hardware product with an easy and large amount of content. AMD will not will a race by sitting in the stands and watching.
Nor should they, but blaming Apple for their problems is not the answer.