Ruiz: It turns out to be a combination of things in the technology that makes the Opteron technology pretty ideal for that. And that is the cool and quiet technology that's in the machine. And from everything we've seen in talking to partners and customers, it is the ideal machine for home purpose, and that [provides] an opportunity for our customers and ourselves to be able to participate in what I think is going to be a very interesting segment of the market.
CRN: How much time and energy do you personally spend on AMD channel strategy and working with the second-tier manufacturers, and how much compensation of the AMD executives is tied to success in that marketplace?
Ruiz: What you call a second tier, channel, system integrators--today they make up a huge portion of our business. In terms relative to our competitor, they make up a bigger portion of our business. So they are a very precious part of our business. We pay a lot of attention to it. We have a team that's totally dedicated [to the channel]. I would say roughly half of our sales and marketing effort is devoted to supporting this segment. So, by definition, I spend a significant amount of time making sure we continue to nurture and support this very important segment. And it's not only important in the U.S., it's incredibly important outside the U.S., too.
CRN: Looking toward the rest of the year into 2005 how is AMD squared away in terms of allocation for system builders, in terms of supply, all the pipeline stuff that in the past has hurt AMD on occasion?
Ruiz: We've learned like all good companies do, and we have become more intimate with our channel. We have become more partnerlike with our channel so we, together with them, go to market with guys that really move product. ... They are thrilled with the changes we've made because they thrive, as you probably know, on velocity. And they are able to move product fast. If you look at our inventory at the end of the first quarter in the channel, it continues to be borderline .... I mean, it's really low and we're happy with the way we are managing that. I think what we have put together--what we have put in place--is a business process to ensure our channel partners are really intimately linked with [us] and we manage that very carefully. There's been a much broader reach of product mix than we've ever had--all the way from value products in the PC space to high-end solutions in the server space.
CRN: Do you foresee Dell is going to be using your stuff any time soon? There's a school of thought that says, 'The longer it takes Dell to get up on AMD, the better off they are.'
Ruiz: I think Dell is a great company, and [when] Opteron gets to the success point I believe it can, that it will be at that part of the curve that it will be very compelling for Dell to start offering systems with it.
CRN: For the guys in the tier two, that means if they start selling systems today based on Opteron they're going to have a good year-minimum head start on Dell because if Dell started tomorrow it would take them a year to get something together.
Ruiz: But don't forget that today's system builders have had a great success in the PC space with our products just by Dell being such a big player in the PC space. The system guys don't have to compete.
CRN: What do you project in terms of growth in mobile for AMD, and do you have any additional branding plans for your mobile and wireless offerings?
Ruiz: First of all, we agree that going forward, the segment in the client side that offers the most growth right now is in mobile and portable computing. What needs to be determined is what exact shape and form that's going to take. For example, we've learned that as we do our own research that in many of the Fortune 500 deployments people are interested in mobile computing where they work. ... So the market is segmented into two big chunks. One is called desktop replacement--almost desktop look-alikes other than the fact you can close the lid and take it to a meeting with you. And the second is for people who are really mobile, like me, for example, who travel a lot. So we're trying to analyze that. And the bet we're making is that--since our goal in life right now is to enable migration to 64-bit computing--as we introduce mobile products based on 64-bit computing they are the best--the best value and the best performance, the best price point going forward. And you know we are putting our energy and effort to ensure our introductions in the mobile space based on our AMD 64 really are world-class. In the second half of this year we're going to introduce some Athlon 64 in thin and light versions, and as we ramp 90 nm we're going to be able to have a broader array of products. But, again, our energy is focused on the 64-bit part of it.
CRN: Is the notion of the product brand starting to fall apart a little bit? When I talk to people, they are buying the system vendor and they are buying the core processor whether it's AMD or Intel and they don't talk as much about whether it's a ProLiant this or a Dell-labeled box. They are more tuned to the processor, the memory and the core components of it than they are the actual product name. So is there a fundamental shift happening there?
Ruiz: I think people in the IT world who focus on enterprise spending are focusing on price/performance and a reliable partner. And the likes of HP, IBM and Sun and, of course, quality system integrators, people are looking really carefully at it. But what they are really looking at is price/performance and the consumption of power. And those are the things we hear more and more from people. And we think we play a good role.
CRN: Do you think those things will hold up as the economy changes, or are people going to say, 'Now that the economy is changing, we'll go the other way?'
Ruiz: I really don't think so. I really believe this is a paradigm shift, as they say. And I don't think we're going to go back to the inefficient IT spend of the past where only 20 [percent to] 30 percent of the computer spend was in the enterprise. I think people are really concerned about efficiency [and] utilization. That's why I think our technology will be key in the future. They are very interested in the cost of the energy. When you have 10,000 servers in the room and the difference between one box and the other is 20 watts per box, you can do the math and that's a huge amount of power, a huge amount of cost. And I really believe this is here to stay.
CRN: So is there a little bit of serendipity benefit coming to you guys because you're bringing on this new processor architecture at the same time people are starting to rearchitect around server blades in the data center and they are starting to drive to Linux? Are you also benefiting not just from price/performance, but from these broad macro trends that are really helping people analyze everything they are doing in one go and they are considering AMD and Intel.
Ruiz: I think some of the trends like the blade server direction, the concern over power consumption, all of that is playing well with our products. If that is serendipity, I'll take it.
CRN: Are you benefiting from your relationship with IBM, Sun and HP and the technology they can provide or the intellectual property they can provide to AMD? How has it benefited you, beyond just extra shipments?
Ruiz: The relationship with Sun is broad and deep, it's not just being a supplier of CPUs to them. That relationship is really going to lead to ... technology ... across a whole breadth of server space, software, etc. We just started. It's brand new. But, definitely, it's a broad and deep relationship. The relationship with IBM is really strong on the technology side, as you know. We have established a joint technology lab where we are looking at technology of the future. And the HP relationship, HP is a customer that's purely focused on what I call the total cost of the enterprise where they see Opteron as more than just an alternative to another supplier but really as a way to achieve price/performance that they couldn't otherwise make.
CRN: Are you in any discussion now with the folks from Apple? Have they been actively evaluating your processor?
Ruiz: I'm not aware of anything going on with Apple.
CRN: The Microsoft relationship--can we expect anything new with Microsoft between now and the beginning of next year?
Ruiz: We have more than ever a very interesting relationship with that particular software partner. In terms of new, how can I answer that question other than to tell you we will be working on strategies and plans to move to 64-bit computing. We'll be talking more about that later.
CRN: Through the downturn, AMD had to shed a number of positions. You had to ratchet things down a little bit. Now that you've entered into significant growth--at least in the numbers--are you positioned for growth? Are you going to have to add head count?
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