Is This AMD's Best Move Yet?
Advanced Micro Devices (NYS: AMD) sure seems capable of adapting to the ever-changing PC market dynamics. In a recent strategic move, which many view as an attempt to challenge bigger rival Intel's (NAS: INTC) market dominance, AMD has agreed to purchase microserver seller SeaMicro in a $334 million deal.
At a time when cost-efficiency and space-saving are the real game changers in the world of servers, what does SeaMicro really have that can boost AMD's prospects in the long run? Let's find out.
With an impressive customer list, including Skype and Mozilla (all of which will now go into AMD's kitty), SeaMicro specializes in microservers that consume significantly less power while providing around 12 times more bandwidth than conventional servers. Apart from the obvious fact that less power translates to lower costs, the company's microservers occupy much less space as well. No wonder then that SeaMicro has topped AMD's priority acquisition list. And I still haven't told you the best part yet -- where cloud computing plays a major role.
A walk in the clouds
AMD's biggest future advantage from the deal seems to lie in the realm of cloud computing. Servers that require less space and offer greater bandwidths at lower costs are the ones that will perfectly match the requirements of cloud computing. With cloud data centers slated to be the fastest movers in the server space at least up to 2015 according to the International Data Corp., everyone from search engine behemoths to social networking giants that are banking heavily on cloud computing are aware of their importance. The combination of AMD's very own Opteron technology with that of SeaMicro's should attract existing customers such as Hewlett-Packard and Dell. And this will help ward off competition as well.
The formidable "others"
Market competitor Intel is certainly expanding its portfolio even further as it plans to tie up withMotorola Mobility and Lenovo, among others. While Intel also has to contend with formidable rival ARM Holdings (NAS: ARMH) , as the latter plans to add more muscle to its offerings with the high-capacity ARMv8 processor, AMD has smartly decided to avoid the ARM chip-dominated smartphone segment and concentrate on data centers instead.
Some Foolish last words
The way I see it, the SeaMicro acquisition might be AMD's best move to date, the results of which will be evident toward the end of this year. Apart from being one up on longtime rival Intel, the company has strategically placed itself to grab a larger share of the cloud computing pie. Time to keep an eye on this stock.
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At the time this article was published Fool contributor Subhadeep Ghose does not own shares of any of the companies mentioned in this article.The Motley Fool owns shares of Intel.Motley Fool newsletter serviceshave recommended buying shares of Intel. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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