A: Athlon is the first product AMD has ever done that is totally independent of Intel's technology. It's not compatible with [Intel]. This was the first time AMD had to build everything itself. The motherboard, chipsets, software are all AMD-based. We launched Athlon in late 1999, and it was the most successful product we had ever built. We can easily see it three to four years from now still being a key product.
At the same time, it's a 32-bit processor. We needed a 64-bit processor. So we took all the learning we did on Athlon, added features and created a 64-bit processor that we call Hammer. If you use Hammer, it's a 64-bit machine that can run all the 32-bit applications that Athlon runs, and you don't have to change anything.
Q: The economics of your industry are brutal. Performance rises even as prices drop. How is AMD going to weather the storm?
A: We're in the most severe recession our industry has ever known. We refer to it internally at AMD as the perfect storm. Demand is not there. Inventories are high throughout the whole supply chain. We also have a global recession that has affected other industries. Then on top of that, we have the threat of terrorism, the threat of war.
So what do you do? We have to put what we view today in the context of where we'll be in the future. We think we will be the leader in 64-bit architecture. So we will focus on Hammer. We intend to be the leader in flash memory. So we'll focus on our partnership with Fujitsu. We believe in connectivity. So we will pursue ways to make connectivity easier.
Connectivity is key. I'm going to make what some people will think is a heretical statement. I think Moore's law [that the cost of computing power falls steadily over time] is irrelevant. I don't think it's applicable anymore. What's applicable is Metcalf's law [which says the utility of a device increases exponentially with the number of other devices connected to it].
If you own a fax machine, but you're the only one who does, it's of very little use. If there are two, then it becomes useful. If you have three, then it's even more useful. We're looking at an incredibly connected world. We at AMD are in the sweet spot of that in providing the flash memory and the microprocessors that enable all that. How do we make sure we get there? We're putting a lot of efforts into managing our balance sheets and not getting distracted.
Q: When do you think the chip industry will start to see a recovery?
A: It's an incredibly challenging time. If you stand at the door of an electronics retailer and watch people come in, you see they have a certain amount of money to spend. They've got a tough decision to make because what's available in stores is huge. It's mind-boggling. You can upgrade your TV, get a new DVD player, a new MP3 player. Choices are huge, and the available dollars are flat because people are concerned about the future.
For a recovery to happen, employment has to go up, people have to feel more confident about the future. We're all hopeful it'll happen next year, but things have to settle down. Corporate governance issues need to go away, and the threat of terrorism has to settle down before people get that sense of optimism that will allow them to feel good about opening up their wallets again.
