QandA: New AMD Boss Dirk Meyer On Turning Things Around

Advanced Micro Devices' financial struggles are well-documented and new boss Dirk Meyerfaces a crucial stretch of months ahead as he attempts to lead the Sunnyvale, Calif.-based chip maker out of the red. ChannelWeb caught up with Meyer via e-mail to find out how he thinks AMD's partner channels can help make that happen, what "asset smart" means for AMD's core PC and server businesses, and what AMD is doing to help system builders and VARs add total solutions and services to their offerings.

New AMD CEO Dirk Meyer

Dirk, you've got to be an extremely busy guy these days, so thanks for taking the time to talk to us about your strategy going forward as AMD's new CEO, and especially your ideas about AMD's channel relationships. Can you give us an overview of your vision for the company and specifically, the channel's part in that vision?

Thank you. I've never been more excited about the opportunity ahead for AMD and our customers. We have a unique capacity to drive innovation and deliver a better computing experience by integrating computing and graphics processors because we are the only company with both x86 microprocessor and graphics technology expertise. We're executing to a strong roadmap, and our passionate and talented people believe in our business as strongly as I do. But we have to return to profitability, and we're going to do that by focusing on our core businesses, continuing to drive innovation, and consistently executing. The channel is critical to achieving that goal, something recognized by the executive team and the entire company. This is a key reason that Gustavo Arenas, our chief sales officer, is chartered with ensuring our worldwide sales teams are working collaboratively to meet the channel's needs in every region across the globe.

Next: Channel Programs And Dealing With Conflict

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Channel conflict is always going to be an issue at a company like AMD that has to do business with both the biggest OEMs around and with the smallest individual whitebox builders doing a tiny percentage of the big computer makers' volume. So that's just an endless tight rope you have to walk, but companies in your position can either handle such competing partner interests well or poorly. How are you going to balance the interests of different partner channels at AMD? Are there any other companies out there that you feel set a good example for managing channel conflict?

The channel may be complex but our path to meeting all of our OEM customers' and channel partners' needs isn't about conflict-resolution, it's about enabling them to deliver business value through differentiated solutions based on AMD technology. If you look at our business model, we are at the core a channel-centric company. We are also uniquely positioned to meet our customers' and channel partners' needs because we are the only company offering both CPU- and GPU-based solutions, which allows them to differentiate their AMD technology-based offerings. Our microprocessor and graphics platforms provide our channel partners with a one-stop shop, and that gives real value to companies big and small. We know our channel partners and OEM customers look to AMD for products that offer opportunities to increase profits, and we're responding by delivering platforms aimed at profitable segments in the consumer and commercial PC and graphics markets. Take AMD Game! for the mainstream PC gaming market, for example, which is a platform that is important to both OEMs and solution providers. We're also committed to ensuring that our marketing programs and business processes make it easy to work with us, no matter the size of the company. Ensuring success across the board from OEMs to solution providers is going to mean success for AMD.

AMD's been hosting "AMD Build Days" around the country, based around your three new desktop platforms, AMD Live!, AMD Game! and AMD Business Class. The event we went to in San Jose was sold out and local whitebox builders seemed to really enjoy putting together those Phenom and 7-series chipset-based systems. Are there any more such channel-based initiatives from AMD in the works?

I'm glad you were able to attend one of our build events. They are proving to be a successful way for AMD to help system builders learn more about our platform initiatives in what we hope is an entertaining and informative environment. We've scheduled these throughout North America, including one at Everything Channel's upcoming XChange event and#91;Aug. 17-20, Dallas, Tex.and#93;. We want to extend interactive experiences like this into our day-to-day relationships with our customers through programs like our Five-Star Partner Program that provides updated training sessions as well as sales and marketing tools through online portals like AMD Market Builder. We also have an extensive training program with live "metro" training days for our distribution partners across regions, and similar programs that are targeted to our OEM channel partners as well.

Here's a news flash -- hardware margins aren't what they used to be. What's AMD doing to help VARs go beyond just reselling hardware to do the things they need to do to thrive in today's market, like putting together total solutions and attaching services to sales for recurring revenue?

We've put in place a range of programs to address this. First, we enable our channel partners to deliver differentiated solutions to their end customers, increasing their ability to achieve stronger margins. Our CPU- and GPU-based platforms are targeted to profitable market segments. In addition, we're going to continue to execute to mid- and long-term roadmaps to aid in inventory planning because we understand how crucial that is to the channel. And we're responding to the channel's need for associated services with increased training and marketing support, like the support services offered with AMD Business Class.

Next: 'Asset Smart' And The Path To Profitability

We don't know the full details of what "asset smart" means, despite all the speculation by the media and analysts. But it seems safe to say AMD's plans are to get leaner and meaner, whether in manufacturing or other parts of the business. This raises an interesting question for your traditional channel -- at the end of asset smart, what does your core business of PC and server products look like? Is it leaner too? Or do some of the non-core resources you want to trim actually get added to the core business to make it stronger?

Our plans are first and foremost informed by the needs of our customers. We've been clear that we are re-shaping AMD's business model and that means focusing on the core technologies that differentiate AMD, as well as consistently executing to our mid- and long-term roadmaps. I've been working with our leadership team to accelerate this process and we are making progress. And of course I'm continuing to work with and#91;former CEOand#93; Hector and#91;Ruizand#93;, who is helping to drive our asset smart strategy to completion. At the end of the day, these changes are designed to benefit our customers as our main objective is to position AMD as the microprocessor company that you want to do business with. We want to be your supplier of choice.

System builders want simple things. Good product at good prices. The parts they need, when they need them and with reliable support. If they get those things, theoretically they're not going to care if the supplier takes an earnings mulligan every quarter. You, of course, don't have that luxury. On the other hand, having a happy channel and a healthy bottom line aren't exactly mutually exclusive, so to what extent do you think the first thing is going to help AMD achieve the second thing?

This comes back to what you will see from AMD going forward: a focus on our core CPU and GPU businesses, consistent and reliable execution, and providing the channel with platform solutions that enable differentiation and deliver business value. We haven't been consistently successful in delivering that foundation, but I firmly believe we are now on track and the channel is already seeing us deliver the platforms, the training and the tools that they need to be successful. As you point out, the fundamentals are straightforward and AMD is committed to providing system builders with the products and support they need. And that in turn is going to deliver a healthy bottom line for all of us.