AMD chief executive discusses how the chip manufacturer is embracing the cloud


An Advanced Micro Devices Inc. AMD-A10-4600M Series APU computer chip is displayed at the AMD booth at Computex Taipei 2012 in Taipei, Taiwan, on Tuesday, June 5, 2012. Computex Taipei 2012 takes place from June 5 to June 9. Photographer: Ashley Pon/Bloomberg (Ashley Pon/BLOOMBERG)

Since its founding in 1969, chip manufacturer Advanced Micro Devices, has produced the chips powering machines from IBM’s PCs in the 1980’s to Microsoft’s recently released Xbox One.

Today AMD is eager to branch out into cloud services, as business begins to expand beyond desktop computing. In October, Verizon selected AMD’s microprocessor to power some of its Internet-based cloud computing and cloud storage offerings.

In a conversation with The Washington Post, AMD chief executive Rory Read discussed how cloud computing creates opportunities for the company in both consumer and government markets.

When data was stored on local servers, AMD was focused on how to process and display it on one particular device, Read said. “Now with the cloud, you have to be able to set all of that graphics and display [on any device].”

He added that traditional PC chips used to constitute the majority of AMD’s revenue, but that within two years, he expects about 50 percent of revenue to come from high growth segments involving the cloud. AMD reported 2012 revenue of $5.42 billion and $1.46 billion for the quarter ending Sep. 28.

But as more start-ups and established tech companies alike vie for the cloud market, AMD will be competing with companies that are “10, 50, 100, 1000 people, that are going to grow into the next generation of Fortune 500 [companies],” Read said.

Because cloud-based services allow consumers to access them from any device — phones, tablets, laptops and desktop computers — AMD must change how it conceives of new chips, he said.

“For those that embrace the change [from local to cloud computing], that’s where the success will come from.”

Since 2011, Read has been carrying out a plan to “reset and restructure the company” to meet new technology goals, mainly through a 10 percent workforce reduction and terminating contractual commitments. This also included selling and leasing-back its campus in Austin, Tex. in March, freeing up about $164 million in cash. Now, he said, the company must create reusable blocks of intellectual property, which will help it “execute a turn through a launch of new products.”

AMD has also been investing in what it sees as high-growth opportunities for cloud technology. For instance, in July AMD invested in CiiNow, a cloud-based video game company, through its investment arm AMD Ventures. CiiNow and AMD together allow gamers to stream video games onto any device — tablets or desktops or laptops, for instance — with high resolution graphics and speed.

There are opportunities for AMD beyond consumer services too, Read said. A couple weeks ago, AMD was selected for an award of $3.1 million for work with a Department of Energy computing research project, which focuses on data transfer.

Some of the government agencies he has met with often keep their data on separate, local servers so other agencies cannot easily access them, Read said. But as they move data into the cloud, he expects federal employees will want to access that information from any device, any where and at any time, he said.

Mohana Ravindranath covers IT and small business for the Washington Post and its weekly Capital Business publication.
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