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AMD will need a hero if it misses target by 14%

The world is full of what American’s call ‘Monday Morning Quarterbacks’ – the fat chaps who sit in comfortable chairs across the world and explain, to anyone who will listen, what they would have done to ‘make a difference’. The challenge for major corporations is that they need to make their predictions in public and then stand next to them all the way down the line. KitGuru takes a look at AMD’s latest announcement – in light of our earlier article on its key vacant posts – and ponders what kind of hero might be needed.

Let’s declare our interest, up front. KitGuru firmly believes that the market needs a strong AMD. nVidia was driven to produce Kepler, because AMD makes the Radeon 7000 series and Intel has engaged the world in Tick-Tock, in big part because of the success of products like Athlon.

There’s nothing like being challenged by a ‘blood-enemy’ at every stage of your existence, to make you produce your best. At the same time, it’s important that customers in every technology market have a choice.

The question we asked last week, was “Will AMD’s missing vital ingredient, prevent it from cooking on gas?”

The vital ingredient is a world-class Chief Sales Officer and it’s something that AMD has been without for around 6 months. Indeed, if you look back over 5 years, it seems that they have had around one global head of sales each year.

While Managers might work in operational terms, Directors need to consider tactics. Perfect for smaller-scale conflicts.

Move up to a global war and things are won and lost on strategy – where the time scale is 5 years or even more.

Simply put, you can’t get strategic on an annual basis – and that’s what happens if you change key personnel too many times.

Rory Reid seems like a fine choice at CEO and our experience with Dr Lisa Su tells us that she’s an impressive individual to have on board, which leaves the thorny issue of ‘So who actually drives sales?’

KitGuru has great contact with all of the key manufacturers in Taiwan, from Asus to Gigabyte and MSI to Asrock. Ask any of them about AMD and, if they feel comfortable, they will tell you that the company needs to push much harder. There are number of reasons why.

One of AMD’s key challenges is the cost of the mainboards that house the processors and graphics cards. Lower pricing on mainboards is heavily reliant on mainboard sales (good old ‘economies of scale’). AMD needs to sell more mainboards in order to get a better mainboard price – and a lower mainboard price would allow it to sell more. The circle is complete.

And that’s just one area where questions need to be asked.

Should AMD be chasing smaller revenues with higher margin – or aiming to enter the Fortune 500 based on a substantial increase in overall revenues?   That’s another key question.

With developing markets opening up at a tremendous rate of knots, how much time/effort/resource should AMD spend competing in the mature markets?

In terms of results and posted numbers, AMD had (past tense) expressed the possibility that Q2 this year might be up by as much as 3%, but its latest announcement shows that a dip of 11% is much more likely. One shining light expected from next Thursday’s earnings call is that the company has managed to control costs.

Controlling costs is good – but genuine, real world profitability is what AMD will need to deliver over the next 3-5 years in order to get investors on their side. When such a high profile role is available for so long (remember, AMD has been running without a CSO for ~ 6 months), then there are always a lot of options. So what skills are needed and where should AMD look?

  1. Someone who is 100% sales-focused. Let’s be honest, this job is all about setting and hitting targets – so they’re going to need to be very competitive.
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  2. Has spent several years running every aspect of sales (channel, multi-national etc) for a major technology corporation, proving they can close out the big deals with the world’s top 10 customers. They also need to be able to help develop sales in the channel, where you you need to galvanise hundreds of smaller customers in each country and get them all believing that you’re a credible organisation – backed up by the right distribution model
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  3. If the candidate has in-depth relationships with all of the major Far East manufacturers (that actually make AMD’s chips into mainboards, graphics cards and solutions that consumers can buy), then that would be a huge bonus
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  4. Numbers are crucial. You need someone who’s able to stay on top of the numbers on a global scale, but – at the same time – the CSO for a company like AMD also needs to understand the smaller/local challenges being faced by resellers and customers at grass roots level. If they’d managed to build successful businesses of their own over the past, say, 20 years – then that would could also prove very useful
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  5. Will the CSO that AMD choose have the strength to tell the engineering teams when they are heading off in the wrong direction – without actually upsetting them too much?  In other words, can they get hundreds of diverse technical geniuses (in a virtual room) and enthuse/steer/cajole/encourage them to build the hardware necessary to compete with nVidia, Intel etc over the next 5 years?
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  6. Above all, can they deliver results?

Looking at the available candidates, one person seems to have all of the necessary skills and experience in abundance. AMD’s present Senior Vice President and General Manager, John Byrne, has an impressive background and surely must be a front runner with credentials like these:-

  • Sales Director driving IBM manufactured CPUs into Europe in the early nineties
  • Head of Northern European sales for nVidia for 3 years
  • ATI/AMD’s regional graphics sales guru for 7 years
  • Worldwide Channel and SMB Sales Vice President for AMD for more than 2 years
  • Corporate Vice President for the Americas for over a year
  • Is presently Senior Vice President and General Manager, with all of the key relationships into both AMD’s Far East partners and the world’s largest customers
There must be a lot of options for a multi-billion dollar organisation like AMD, but the company will have to work hard to beat its own, internal candidates. Someone who knows the company backwards and has a proven track record of delivering on targets.

KitGuru says: As the market continues to be ultra-competitive, AMD needs to make sure that all of its key positions have been filled – and filled with the best people possible. If there’s a better candidate to run sales, then that person should be found and appointed tomorrow. Missing targets by as much as 14% is not good. AMD needs to get seriously competitive and it needs to do that NOW. It will be good for them, good for competition and – ultimately – good for every person looking forward to ‘something better’ from tomorrow’s technology market. We need to safe-guard choice and that will only happen if AMD gets much more competitive.

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