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Four Reasons Why AMD Is Outperforming Intel

Friday Jun 8th 2018 by Rob Enderle

AMD has an unprecedented opportunity to displace Intel if it can ramp up quickly enough.

At Computex this week, it was pretty clear that, once again, AMD is out-executing Intel. The last couple of years at Intel under CEO Brian Krzanich’s leadership have been like a textbook on what not to do. For instance (not an exhaustive list):

In a #MeToo world, he backed the bullies against the harassed female developer in Gamergate; he publicly castigated and then fired one of the top performing female CMOs in the business, replacing her with a guy (out of Staples, of all places) who was relatively unqualified (and was just fired as well); he laid off thousands while giving himself a $3.4M raise to $14.6M claiming he was underpaid; he gutted his microprocessor organizations, shifting resources to things like driverless cars and drone swarms; he put himself in a TV show on makers, which failed, and then pulled the plug on the maker effort altogether; he killed the Intel Developer conference, shifting more developers to ARM; he notified the Chinese long before he notified the U.S. about a major security problem with Intel parts; and sold every Intel share he could legally sell while still remaining CEO after he knew of the problem but before it was disclosed.

In contrast, AMD just buckled down and got things done this week, launching updates at Computex to much of its processor line. The most interesting is a whopping 32-core Threadripper part that could be huge for film and photo editors, and a 7nm Epic commercial part that flies in the face of Intel’s claim that its 10nm process (which currently doesn’t work) is better. How someone can get away with arguing something that isn’t working is better than something that does is beyond me.

Granted, there have always been complaints about working with Intel, but recently they are over the top and the OEMs are increasingly looking to AMD to fill the gaps. Intel seems unable to execute, unable to focus (at least on PCs), and there is a sense the firm has moved on to things like drone swarms, which will never make it much money.

Brian Krzanich Can’t Lead

There are a ton of rules that most experienced CEOs know, and apparently Krzanich doesn’t. First, to run a company, you must lead by example; if you are going to introduce pain, you should share it. When anticipating major layoffs, rather than trying to justify a massive raise, most experienced CEOs I’ve known drop their salary to $1 knowing that they’ll make their money off the stock anyway and to make it look like they are sharing the pain. People won’t follow a leader who looks like they are only there to enrich themselves and the sale of millions of dollars of stock in what looked like insider trading likely didn’t endear him to the rank and file Intel employee either.

One of the sustaining executive management rules is that you praise in public and criticize in private. Krzanich didn’t seem to get that memo early on as he braced his replacement the first time he met with the analysts. He tore into the guy who was new to the job, and he did it on stage. He followed that by cruelly attacking his own CMO on stage (who had lost her husband and was recovering from cancer) before firing her. While you can build fear by doing this, you don’t build respect, and the people he has attacked, well, many were better managers than he was, and they were well liked.

You take care of your existing customers; you don’t put all your effort into market expansion. Diversification of revenue is an important effort to assure long-term survival, but experienced CEOs know you have to keep focus on the existing revenue streams while expanding into others. This is so you don’t collapse your legacy income stream before you can ramp up the replacement income stream. We saw IBM balance something similar when it switched from being largely hardware driven to a cloud and AI strategy. But what Krzanich did was gut Intel’s PC effort and cripple the server effort, which puts the firm’s short-term survival at risk in exchange for future revenues, which many not emerge.

Finally, Intel has recently begun executing a strategy of bringing in superstars. I’ve seen several firms try this over the years and it rarely works. The reason is that these supposed superstars are often effective because of the unique support structure in the firms that allowed them to perform at those levels, and that support rarely exists at the hiring firm (unless they acquire the entire working group). These folks come in with astronomical packages and then have to work with folks who make far less and haven’t seen a raise or significant bonus in years. Finally, the folks coming in tend to adapt a nearly royal attitude where their co-workers are insignificant while the workers look at them like clueless, expensive idiots (they start by knowing little about the firm but full of well-funded opinions).

Krzanich, in my opinion, has so stacked the deck against himself at this point that I don’t believe he can lead at Intel anymore and that goes to the heart of the firm’s execution problems.

Lisa Su: Focused on Execution

While AMD is vastly smaller than Intel, this has allowed the company to be far more focused. Much of AMD CEO Lisa Su’s term has been relatively scandal free, she is well respected and even liked by AMD’s rank and file, and she was formally trained in IBM’s system to handle the CEO role. I’ve been through much of that training myself and there is really nothing like it in any other firm that I’m aware of. In effect, Su took a company that was struggling and turned it into a comparatively well-oiled machine that she can lead and where the employees can execute.

For instance, Intel announced a 28-core processor at Computex as an AMD killer but missed that AMD launched a 32-core Threadripper part at the same event, leaving Intel solidly in the loser category.

Wrapping Up: Preparing for Litigation

So, the difference I want you to walk away with is that AMD’s CEO is trained to be a CEO and has not made a whole raft of textbook mistakes. Intel’s CEO, on the other hand, seems to have the major mistake or scandal of the quarter and has so weakened Intel that AMD is ramping rather nicely into the market at the moment. This isn’t the first time this has happened. In prior times, Intel has cheated and gotten caught for cheating. I’m expecting the same behavior here, which means we may see a litigation wave. Given how little the OEMs like Intel at the moment, I expect one of them will out Intel, starting this whole litigation war rolling.

AMD has an unprecedented opportunity to displace Intel if it can ramp up quickly enough. Its announcements this week at Computex suggest it is stepping up to the opportunity. The questions remaining are whether it will be enough, what rules Intel will break to try to stop it, and when Intel will get caught this time. Helping Su out is Hector Ruiz’s book on past Intel dirty tricks.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+

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