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It's not so much that AMD "stuck" it to Intel as Intel shot itself in the foot. The only reason AMD was successful was that Intel made a gigantic mistake in NetBurst ("10 GHz or bust!")

When Intel finally rectified that mistake and released Conroe it was game over for AMD. AMD simply can't compete with Intel whether in architecture or fabrication.

What AMD could've done was to concede the PC market to Intel and focus on the emerging mobile device market - the classic disruptive attack. ARM went that route and now has a market cap that's 10X bigger than AMD. Qualcomm adopted a similar strategy with Snapdragon and now has a market cap equals to that of Intel's.

Lesson: never fight a dominant incumbent in its own game. You will get killed. Play a different game. Better yet, invent a new game where you know the rules best.

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That's only part of it.

Intel had an epic once in a generation stumble with a combination of very bad, very high impact choices all at once.

The NetBurst (Pentium-4) architecture was both hugely expensive to develop and manufacture and also extremely underwhelming. But that's only part of it. They also staked out the next generation advancement of the instruction set to a revolutionary and untested architecture (a VLIW variant) with certain compromises, all of which turned out to be a huge and costly mistake. It took almost a decade for the architecture to fully mature and even today it's still not very suitable for everyday computing. They hitched their system wagon to RAMBUS memory, which priced their systems out of the consumer-grade sweet-spot and their long-term contract with RAMBUS screwed them when DDR came around as an equally fast or faster alternative at a much lower cost. And they struggled with making decent chipsets for several years. One of the last pre-RAMBUS/pre-NetBurst chipset was the legendary 440BX which was hugely reliable, flexible, and high performance. After that intel chipsets had a long period of utter mediocrity.

In that window AMD made several strong moves. They produced high performance, low-cost chips using a very solid architecture. They developed an excellent next-generation 64-bit instruction set (x86-64) which had a great deal of heritage with the IA32 (x86) architecture and included mostly just very sensible changes and extensions. And they were able to create hardware which both ran existing 32-bit code extremely well and also ran new 64-bit code at competitive levels of performance. They also managed to put together a "whole system" in terms of cpu, chipset, and RAM which was at a very excellent intersection of affordability and performance.

Unfortunately for AMD, Intel very much learned from their mistakes, adopted DDR ram, vastly improved their chipsets, cut their losses on mistakes like IA64 and the early generation of EM64T systems, adopted the AMD64 / x86-64 architecture, and developed some excellent CPU technology in the form of the Core, Core 2, and Core i{3,5,7} architectures. Meanwhile, AMD ran into a few stumbling blocks and has had a tough time getting over them, let alone getting up to being able to compete head to head with intel again.

IIRC, there were several points during that period where AMD tried to become the default CPU for large computer builders at the time (e.g. Gateway, Dell, etc.) due to far better price/performance ratios, yet frustratingly they stuck it out with Intel. I'm guessing Intel offered some sweet sweet long term deals to keep AMD out of the picture.

The landscape could have looked very differently today had those deals gone through.

I think AMD actually ended up with the superior technology all the way back with the Athlon line (when Intel was still PIII) with a better memory architecture and a few other good odds and ends.

They tried to get back in the game with some bold moves, like buying ATI, but it just hasn't panned out for them.

Three things that have always been in Intel's favor have been their truly massive and always cutting edge fab capability (which no other cpu manufacturer has been able to even come close to), their extremely well-funded R&D teams, and their industry relationships (largely due to those other two factors).

Intel is able to field several different processor lines and architectures simultaneously, and also develop multiple new architectures at the same time. That's not something that most other companies can do. They've also been reasonably good at recovering from mistakes quickly (something that Microsoft has also been fairly good at).

That said, it'll be interesting to see how things pan out with the changes to the computing landscape that are in the works now.

things that have always been in Intel's favor have been their truly massive and always cutting edge fab capability (which no other cpu manufacturer has been able to even come close to)

On a flight a while back I struck up a conversation with a PhD that specialized in chip design. He suggested that if AMD was able to manufacture their chip designs in Intel's fabs, that they would be out Intel chips in terms of performance and power.

The idea was that because AMD uses fabs that are, basically, two generations behind Intel, that their designs have to be more innovative to be able to work within the constraints of the older process.

I'm no electrical engineer, so I took him at his word, but it certain points out that Intel's fabs are a distinct advantage.

I wouldn't go that far. Intel definitely has an advantage in process technology, but it's not as though they rely on it exclusively to stay ahead. For example, currently the AMD and Intel CPUs in the server market are both at the same level of process technology, 32nm, and Intel's CPUs are still overall superior.

Intel's Ivy Bridge processor has been out for almost a year now, and is on the 22nm fab process.

It's 22nm finfet. The finfet is equivalent to a 0.5/1 generation advantage in power or speed.

Ivy Bridge still hasn't been released in the server space. The server market currently has Sandy Bridge chips. The Ivy Bridge chips are due at the end of the year.

Wasn't AMD moving to have (x86) chips made at TMSC?

Maybe if they partner with IBM. Still, even if Global Foundries is two generations behind Intel, that's still one of the most modern fabs and being constantly updated is very expensive.

I've always felt that there fab division should have been forced to be split off from it's design division. It would be better for the industry if architectures had to compete on their merits and all designs had access to the same quality of fabs.

> I'm guessing Intel offered some sweet sweet long term deals to keep AMD out of the picture.

I don't know whether Intel under bid AMD's pricing or not.

What we know Intel did do, though, is that they ran a marketing blitz of Intel Inside ads so that when consumers went to buy a computer and saw "AMD" instead of "Intel" they reacted negatively. Based purely on the marketing, customers would view the computer sporting the "Intel Inside" logo as the premium product.

Methinks they did a wee bit more than that.

http://www.nbcnews.com/id/33882559/ns/business-us_business/t...

Very sweet long-term deals, yeah. Dell managed to meet Wall St's earnings expectations almost entirely through payments from Intel not to ship AMD systems; they even got in trouble because they fiddled the books to hide where the money was really coming from: http://www.pcpro.co.uk/news/359770/intel-sweeteners-made-up-...

AMD did some interesting things. Another I'd point I'd add is taking RISC vs CISC off the table with the x86-outside, RISC-inside K5. This opened up the field for a lot of innovation in the core.

What Intel did best was learn well from both AMD's success and their own stumbles. I'm sure Netburst & Itanium yielded great learnings about branch prediction.

I'm not sure if it was luck, but Intel also benefited from a shift to mobile. iirc, the original Intel Core line was for mobile, but ended up dominating the Intel roadmap. At the same time, AMD was trying to make inroads into the server market, mostly because it was lucrative.

Perhaps that stifled their innovation in some key ways. Anecdotally all the "big iron" architectures are dying off. Certainly if you wound back to 2000 and said ARM is the upstart in the server industry, you'd get laughed at.

Interestingly both Intel and AMD pulled the same trick at about the same time with regard to CISC vs. RISC. The Pentium Pro was also a RISC core that used micro-op translation to present an x86 exterior, and it was introduced about half a year prior to the K5, though it didn't hit the consumer market for a while.

Also, as you point out, Intel has been good at cross-pollinating between different development lines and teams. The Core architecture was a ground up redesign but it was heavily influenced by the work on the Pentium M design done by the Israeli division. And previously there was a lot of influence on the Pentium-III design from the work done with the low-budget Celeron line.

NetBurst wasn't Intel's only big mistake. The other one was being unwilling to disrupt their own 64-bit strategy, which rested on Itanium, with a "low-end" 64-bit design.

I am grateful that AMD forced Intel to rectify both these errors. Too bad AMD wasn't able to ride that wave to long-term success.

> The only reason AMD was successful was that Intel made a gigantic mistake

I don't think that's entirely fair. AMD has put out some darn good chips that should be considered successful on their own merits.

Excuse my pedanticism, but QCOM's market cap has more to do with their intellectual property connected to CDMA, 3G, and LTE standards than anything else.

>>Lesson: never fight a dominant incumbent in its own game. You will get killed. Play a different game. Better yet, invent a new game where you know the rules best.

What about Google[1], Apple[2], Facebook[3], etc? Not disagreeing with you but I'm genuinely curious on what you think about these companies. I probably can think of many more examples but these are the ones that sprang to mind when thinking of companies that "fought the dominant incumbant in its own game".

1) Google - when Google came into existence in late 90's there were no dominant search engines. The orthodoxy at that time was that there was no money in search. Accordingly nobody wanted to be a search engine and everyone tried to be a portal. The dominant player back then - Yahoo - emphasized its use of human editors and partnered with AltaVista and Inktomi for search.

So Google never really defeated a dominant search engine - it merely took advantage of a giant vacuum in the market.

2)Apple - Apple never defeated Microsoft in the PC game. Instead it focused on emerging markets: ipod, iphone, ipad. Eventually these new products (smartphones & tablets) became powerful enough to erode the PC market. Even now Microsoft is still dominant in the PC market. It's just that PC is no longer where the action is at.

3)Facebook - there were no dominant players in social networking when facebook was founded. Myspace was the biggest player, but "big" was a relative term back then. Even at the height of its popularity the vast majority of the population was not Myspace users. Sure if you were 16 year old in 2004 then you were probably on Myspace. but outside of that demo Myspace was far from dominant. Most people were not on any social networks. In short it was a wide open market.

I'm sure there are examples where a challenger took on a dominant incumbent head on and won. But those are the edge cases. You pretty much need all the stars to align perfectly to have a chance. It's not a strategy I'd bet on.

1) Google > Apple in mobile 2) Apple > Nokia in mobile 3) Facebook > Google in ads

What exactly do you mean by google > apple in mobile?

After Apple hit the marked everyone was buying an iPhone. Now most of the people have Android phones.

Not really. While the iPhone has been influential and a huge success for Apple, it didn't really kill any of existing smartphone incumbents. "Everyone" was only buying an iPhone for fairly limited values of "everyone" (e.g. excluding several continents). Instead, Android killed off those incumbents, taking advantage of the opening the iPhone had created.

So it's really Google > Nokia (Symbian), Microsoft (Windows Mobile), Palm and RIM, with Apple off to the side somewhere. And the complex, multi-faceted Apple vs Google battle in mobile isn't an upstart vs an incumbent, it is a battle of two upstarts who have become the incumbents.

1)Apple was never a dominant incumbent in mobile. It focused narrowly on the high end market. For the vast majority of the population, especially in emerging markets like Asia and Africa where Andrioid is now the strongest, iPhone was simply unaffordable. Google didn't fight Apple head on but instead take advantage of its weakness in the mass market and open sourced Android which resulted in a flood of low cost smartphones that quickly capture a large majority of the market, the part of the market where Apple never had much of a presence to begin with.

In short, Google played a different game.

2) Nokia rose to power on simple cellphones. It was never a dominant player in smartphones. In fact smartphone was a wide open market with no dominant players when Apple entered that market. So Apple never needed to fight any incumbent.

3) Google still sells 10X more ads than facebook, so it's rather premature to say facebook has beaten google in ads. And even if that does happen eventually, it'd be because facebook avoided fighting google in search ads (unlike Microsoft tried to with Bing) but instead invented the new market of social ads & newsfeed ads. Once again it's the strategy of avoiding fighting the dominant incumbent in its own game and inventing a new game instead.

1) I remember AltaVista to be clearly dominant in the search engine space. Yahoo was not the dominant player in search, and never has been, they were a curated directory of sites.

I'm not sure whether it was intended or not, regardless, one can take "game" to mean much more than merely "market".

If you play by the same rules, same norms, same fundamentals, etc. as hugely entrenched businesses then you'll often fail. But that's not what google, apple, or facebook did, they changed the game when they came on the field.

Google is an excellent example because the market was saturated with search engines at the time. But at that time search worked very poorly and the dominant strategy of search engines was to become "portal" sites. Google made several "game changing" moves. They created pagerank, which led to better search results. And they used a combination of cutting-edge software techniques (map-reduce, sharded databases) along with cutting-edge datacenter techniques (consumer hardware, massive parallelism, heavy automation). This combination made it possible for google to create a product which was better and superior (more accurate, faster) and cheaper to operate. Which then made it possible for them to monetize their product differently (adwords, etc.) in ways that wouldn't have been possible or profitable for others. The rest is history. Similarly Apple changed the game when it came into competing in the laptop, music player, and phone markets.

Apple played a different game: focus on home usage. They created hardware that looked great, so you wouldn't mind having it in the living room, and they supplied a productivity suite that matters for home use: iLife.

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