AMD : A Customer-Centric Approach to Innovation
ISEG – ISM MBA Program
September 30, 2010
Professional Management Skills Assessment
Word Count: 2600
This case analyzes the strategy of AMD, a microprocessor manufacturer which is a direct competitor of another microprocessor company, Intel. Between the two companies the competition has never been really balanced because of Intel’s much more Important Size and budget. AMD has found itself in a bad shape several times but has always success in overcoming difficulties resulting from its far smaller market shares and – over the years – has built a strategy to survive and strengthen its position against its giant competitor Intel.
That’s what, so far, the company couldn’t achieve for the desktops and notebooks ranges of microprocessors. Indeed, their price/performance ratio is not as interesting as the performance of their range of servers’ microprocessors.(Ofek & Barley p.11) To not have a value added on those microprocessors, that would differentiate them from Intel’s microprocessors, is definitely a big issue for opening significant inroads into this market.
The product differentiation is one solution. By improving the quality and the number of features of its desktops and notebooks microprocessors, AMD can get a competitive advantage over Intel’s product. Though, since Intel’s R&D funds are much higher (Ofek & Barley p.19), one good way to overtake Intel would be to perpetuate the “virtual Gorilla” Strategy presented by Ofek & Barley p.3. Technology partnership would indeed accelerate the improvement of AMD products and would create synergies with partners that, in the case of AMD, often are potential customers too.
The second solution for AMD is to differentiate its product by conceptualizing new ways of using products based on their assets. The example given on the paper is a perfect illustration of what could have been done to create a new way of using corporate desktop by “reinventing the commercial client” with the “Server based computing.” (Ofek & Barley p. 12). The idea was great; it was about selling to clients a computing system based on the best asset of AMD which was the server’s microprocessors.
Finally the “customer centric approach” set by AMD to improve and develop its products in a way that serves the best end users is a good idea to explore. It first allows the company to create products with features that are supposed to be very close to customers’ expectations. On the other hand this perpetual communication and mutual feedback introduced between AMD and the end users contribute to build a relationship based on trust that might turn to be a long term relationship.
However, even though AMD had the best microprocessor for desktops and notebooks computers, would that be enough? Indeed, to have the best product is one thing, but to convince potential customer and end users that your product is the best is another story. A great part relies in how AMD will market its desktops and notebooks microprocessors.
Here the success of Opteron in the server microprocessor segment can be leveraged by using the notoriety AMD gained through the success of this product. AMD has to use this arguments to progressively gain the credibility it lacks on those segments. Then if AMD success to put itself as a credible alternative to Intel’s microprocessor over desktops and notebooks segments, they would have done half the way. The second half of the way relies on creating a change in OEMs minds, that is, to switch from to position of a “credible alternative supplier” that they can use as a threat in their bargain with Intel to the supplier they want to buy from. And...