By now you've probably heard all the buzz going on around the rumored AMD buy-out of ATI. CNN Money has a quick-take on the deal, which supposedly clocks in at a neat round number of about $5.5 Billion.
While some may look at this move as a bit over-priced or perhaps even overzealous, I'd offer a perspective to the contrary. Intel has enjoyed the advantage of, for what seems like an eternity, a very healthy "ecosystem", to coin an Intelism. While AMD has repeatedly shown competitive and in many cases superior processor architecture over the past few years, they haven't been able to sufficiently penetrate areas of the market that require a "total solution".
Complete solutions, with a "soup-to-nuts" type of approach, including processors, motherboard chipsets, graphics and sound processing etc, offer extremely compelling value propositions at the mainstream OEM System Builders, ODMs and even the smaller niche' players. This is where a large percentage of market-share can be captured obviously and it's an approach to the market that AMD hasn't been able to match Intel with, since relying on third-party deals with various partners has a downside.
A move by AMD to acquire ATI makes a lot of sense when you consider the equation from this perspective. Consider ATI's strength in chipset market share. Acquiring ATI means picking up the third largest chipset vendor in Intel's ecosystem, behind only Intel and VIA. ATI has also experienced explosive growth in their core logic chipset business. Sure, in the Enthusiast segment it has been all AMD and NVIDIA for a long time now but from a broad-market perspective, ATI's Desktop and Mobile chipset business, in addition to their Graphics and Video Processing products business, look very attractive. It could very well provide AMD the "critical mass" they need to bring more of a total solution to market versus Intel. And the move comes in the nick of time for AMD, as the Core 2 Duo ecosystem begins to take hold...
Though the financials look steep at first glance, it doesn't take a rocket scientist to see the synergy in an AMD/ATI merger or acquisition. It most likely isn't a matter of if, but rather when the deal goes through. We'll hear something soon perhaps.
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