AMD will skip Chromebooks until prices, features match better, CTO says

acer chromebook 15 cb5 571 white front up left angle start bar

Acer's new Chromebook 15 will come with an option for a 1920 x 1080 or 1366 x 768 screen.

Credit: Acer

AMD microprocessors are relatively cheap and powerful, and they consume little power. So why aren’t they featured in the latest generation of low-cost computers, Chromebooks?

The answer, according to AMD chief technical officer Mark Papermaster, is that they just aren’t worth it—yet.

“You have to really look at the Chromebook, and what Google’s objective with it is,” Papermaster said, speaking with a small group of reporters on Monday evening during the ISSCC conference. “For us, it's just a business decision, when you need our type of CPU and graphics technology that can make a difference.”

mark papermaster amd AMD

Mark Papermaster, the chief technology officer at AMD

Chromebooks represent just a tiny fraction of the PC market. IDC estimated that 4.6 million Chromebooks were sold in 2014, compared to 304 million PCs for the year—just 1.5 percent of the market, in other words. Still, that’s about double the number sold in 2013, meaning that the category is on a sharp growth curve. Intel has come to dominate Chromebook sales with Celeron and Atom chips, although some models also feature third-party ARM chips inside. 

PC makers began adopting Chromebooks in 2013 as a response to the rise of low-cost PCs. Because Google didn’t charge fees for its use of the Chrome OS, hardware makers could ship a low-cost Chromebook and still make money compared to a similarly priced Windows machine. 

Chromebooks don't need what AMD offers—yet

Chromebooks are generally considered low-cost productivity machines—good for browsing the Web, light office work via Web apps, perhaps some video streaming, but not much more. AMD, which acquired graphics house ATI in 2006, prides itself on its graphics expertise. Its upcoming notebook chip, Carrizo, dedicates four “Excavator” CPU cores against eight Radeon graphics cores. Just 16 percent of the die is dedicated to CPU cores, AMD executives said, giving some idea of the relative weight that AMD attaches to its graphics technology.

amd carrizo presentation AMD

AMD has also struggled mightily to remain profitable in recent years. Rory Read, who ceded the CEO title to Lisa Su last October, architected a strategy of focusing only on higher-margin businesses, such as the embedded space, the server business, and semi-custom parts for all three game consoles. For the better part of a year, AMD has flirted with profitability, helped by the stability of its console business.

That AMD’s long-winded justification for eschewing the Chromebook market, for now. “For us, it’s when do you need our CPU and graphics capability that can make a difference,” Papermaster said.  “Again, you’ll see that there’s these rock-bottom markets... so those don’t have our value proposition.”

“We play in the whole range of [the] market. We’ll play in [the low-cost] value” market, Papermaster added.  “You have to at least get paid for that value when you’re working on graphics. You go below that, and you’re looking at $7 chips.”

Based on his own analysis of Intel's microprocessors, specifically the mobile Celeron, analyst Dean McCarron said he put the Chromebook market at about 4 to 5 percent of all PCs sold.

But McCarron, principal analyst at Mercury Research, also said that AMD's strategy makes sense. "For whatever reason, Chromebooks make a lot of sense for Intel to pursue, but I agree with AMD's perspective that it doesn't make financial sense for AMD to chase the segment if they're not seeing a positive margin," he said in an email. "Perhaps Intel is using Chromebooks as a bulwark against ARM encroachment into the traditional PC client space, and this motivates them to pursue markets AMD would have little interest in."

chrome apps Mark Hachman

Many of Google’s Chrome apps don’t exactly seem like they would require a lot of graphics horsepower.

Part of the blame for a lack of high-end Chromebooks can be put at the feet of Google and Web developers, who haven’t really published or publicized Web apps that require serious client horsepower—especially the Chrome “packaged” apps that it hyped in 2013.  One of the criticisms of the Chromebook Pixel, for example, was that it was overpowered for what it actually delivered. Coincidentally, however, Google published its 1,000th Chrome “experiment” on Tuesday, showing off the power of what coders could do on the Web.

Don’t count out an AMD Chromebook, though

Papermaster also said that if the market continues its pace, AMD may reassess its Chromebook participation.

“If that market grows, if it takes off, they’re going to want to cover more segments,” Papermaster added. “And then it’s going to make sense to offer a range of experiences.”

Meanwhile, AMD continues to address the low-cost PC market, even as it tries to make inroads into the other strategic markets that Su has identified. It’s a tough niche: On the low end, companies like Rockchip have already agreed to develop low-cost versions of Intel’s Atom processors (which are already inexpensive), albeit primarily for tablets. Sam Naffziger, an AMD fellow, also noted that Intel uses what’s known as “contra revenue,” or marketing payments, to help secure system designs.

The bigger picture: If you believe that competition benefits consumers like yourself, then any means of keeping AMD afloat is a good thing. So far, there’s no indication that AMD has been hurt by not being in a Chromebook. But until there’s a demonstrable need for high-powered graphics inside a ChromeOS machine—Chromebook Pixel 2 or not—it looks like AMD is happy to sit on the sidelines. 

This story, "AMD will skip Chromebooks until prices, features match better, CTO says" was originally published by PCWorld.

To comment on this article and other Network World content, visit our Facebook page or our Twitter stream.
Must read: Hidden Cause of Slow Internet and how to fix it
Notice to our Readers
We're now using social media to take your comments and feedback. Learn more about this here.