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Acid test for Byrne-effect as AMD prepares Q4 results

As the Dragon’s Den is always telling us, life is all about revenue. Sure, profit is important, but you can always adjust your cost base to suit a particular business model and, thereby, improve your bottom line. But that only works once you have the revenue. On that basis, you need a rainmaker running sales. Someone who can pull results out of nothing. Rory Read backed John Byrne for this responsibility – was his faith justified? The targets were laid out in the Q3 call. Will they be met?

During the Q3 results presentation, CEO Rory Read, SVP Lisa Su and interim CFO Devinder Kumar were peppered with questions and, almost without fail, they pivoted to (a) how the company needed to be geared around lower costs if it was to do well going forward and (b) that AMD’s future strategy was built around embedded, micro server, APU etc. However, the team was equally stoic that it was no where near ready to reveal details of several apparently large deals – and that more info would be made available well into 2013.

So that leaves us with a ‘traditional PC-focused company’ that has big plans in multiple new areas – but which has to hit targets in the meantime. Not easy. Enter new Chief Sales Officer, John Byrne to pick up that rather hot potatoe.

Tough Graphics Challenges
Roll the clock back 10 years and the UK was snapping up more than 1.2 million graphic cards a year. For 2013, that figure may not pass 500,000. Against that backdrop, we have a very strong line up from nVidia. So what’s the situation right now?
Arguably the most significant promotion in the market for Q4 was AMD’s Never Settle, which saw AAA titles bundled with mid- to high-end graphic cards. It was enough to see nVidia move from telling the market that ‘game bundles don’t work any more’ to ‘Hey, we bundle games too you know’. Unfortunately for AMD, its campaign may well have kicked off too late to affect Q4 significantly. The commitment to ordering (which creates the all important ‘sell-in’ figure) looks to have been swinging nVidia’s way from Q3.
Speaking with the channel, around the time of Roy Taylor’s appointment as Worldwide Channel Chief, we heard that some of the bigger distributors like VIP and Enta, had moved to almost 75% nVidia stock. Given that you can only sell out what you have bought in – that kind of momentum heading toward the end of the year was always going to skew the GPU sales charts to (nVidia) green.
We will be looking for positive impact from Never Settle in the Q1 2013 results.

Hitting Q4 Targets
That said, overall, there seems to be much more optimism at AMD these days – which makes you think that the chip maker has, somehow, managed to beat its Q4 targets. On the Q3 call, the graphics team were the only ones to hit near target, but it seems that the channel figure for Radeon – especially in EMEA – will be shy of the target this time around, which means something else must have kicked in, big time.

Historically, two things are true: (1) The multi-national brands can buy all the product you need to sell and, (2) if you’re working with people like Medion, they can force a turnaround quickly.

Multi-national sales took off when John Byrne was running that area, so now – in his role of CSO – you’d assume he’d put all his past experience and relationships into play in order to secure the win. More so now that John has focused Darren Grasby on the tough role of boosting AMD’s presence in EMEA.

If that logic is correct, then supermarkets across the globe would have ‘specials deals with AMD APUs’ on the shelves.

Has that happened?

KitGuru dispatched a couple of chaps to go see what was brewing. Specifically, we asked them to case Asda – because it’s the UK arm of Walmart, so more likely to be indicative of deals done elsewhere (the big boys love regional/global deals, where they can really leverage their buying strength). Here’s what they found.

Asda shelves and aisles are loaded with systems powered by AMD 5700 APUs. For a complete box, including Windows 8, the price of £349 inc vat seems very competitive. Chassis sports USB3 and a card reader. Useful.

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Closer inspection of the labels on the boxes seem to confirm that these units have been ‘touched’ by the AMD Germany office and KitGuru suspects that the architect on the deal was Darren Grasby. It takes a certain kind of persuasion to convince a company that sells on price (Medion) to upgrade from the lowest/slowest chips to the second most powerful APU in the range. Pushing A10 into the desktop space, and on this scale, is a definite win for AMD.

Companies like Walmart/Asda don't give up floor space and branding easily. They must believe it will sell.

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KitGuru says: Without the new orders online from Embedded etc – and the graphics market being as tough as it was – AMD will need a major push in other areas like APU if it is to hit target for Q4. To see whether the latest moves by John Byrne and Darren Grasby have paid off, tune into the AMD Q4 conference call on 22nd January at 5pm EST. Click here for call details.

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