Intel already manufactures its own chipsets, offering PC makers a complete package. Many of Intel's chipsets even feature integrated graphics capabilities, eliminating the need for a separate graphics chip within the PC. By offering a complete platform of its own, AMD hopes its chips will be designed into a greater number of PC brands, increasing its market share. Large computer makers are under heavy pressure to cut costs, says Jon Peddie, an analyst at Jon Peddie Research, an industry consulting firm. One of the ways to do that is for them to reduce the number of different suppliers they purchase from. After the ATI acquisition, AMD will better be able to meet that need, Peddie says. Some investors argue that AMD has managed to do perfectly well without a platform. The company's market share has increased significantly in the past 12 months, and AMD is adding important new customers such as Dell ( DELL), which recently announced would use AMD chips in some of its high-end servers. But Samir Bhavnani, director of research at Current Analysis, says there's one market that AMD has had trouble penetrating: the corporate desktop and laptop market. Many Fortune 500 companies have policies that require them to purchase only Intel-based systems because of the stable reputation that Intel enjoys, partly by providing complete platforms, says Bhavnani. "This helps motivate a company like Dell -- not today, not next year -- but a few years down the line, to all of sudden start considering AMD in its Latitude
laptop lineup. This makes Lenovo consider using AMD in a few years in the ThinkPad," says Bhavnani. Given that AMD has cited increasing its position in the corporate PC market as its next big push, any moves that result in the company's product lineup looking more attractive to that sector make a lot of sense.
AMD still will be missing one vital piece of the platform puzzle when it comes to laptops: a wireless communications chip. And the acquisition does not completely level the playing field with Intel. One key benefit that Intel derives from producing chipsets is the ability to fill up its older generation of manufacturing facilities.
graphics processor unit computations may eventually end up on one piece of silicon," Rahul Sood, president of gaming PC maker VoodooPC, recently wrote on his blog. "In the case of CPU + GPU, the possibilities are endless -- imagine a multicore piece of silicon where one core handles massive CPU computations while another handles graphics, and perhaps another handles the traffic between the multiple cores," Sood wrote. Intel, which already has both multicore and graphics chip capabilities, is already in position to take advantage of the market if it evolves in that direction, says one Wall Street analyst who asked to remain anonymous. Before purchasing ATI, however, AMD wasn't. Although it definitely has multicore technology, it had no in-house graphics capabilities. "It all makes some sort of sense," the analyst says. "But the strategy isn't risk-free. "If the world doesn't evolve that way, they've wasted $5 billion. And even if does evolve that way, it may end up that ATI can't help them," the analyst says, adding that acquisitions often don't work out, and AMD has little history of growing through acquisitions.