Advanced Micro Devices, Inc. (AMD) Will Change the PC Industry

AMD’s strategy of disrupting applications like VR and PC gaming could work

When you think PCs, two companies always come to mind: Microsoft Corporation (NASDAQ:MSFT) and Intel Corporation (NASDAQ:INTC). During most of the Wintel partnership between these two companies, however, there has been a second supplier of computer CPUs. Advanced Micro Devices, Inc. (NASDAQ:AMD) has barely made a dent on Intel’s business, but that could change with AMD’s new Zen architecture chips.

Advanced Micro Devices, Inc. (AMD) Will Change the PC Industry

The newest version — the Ryzen 5 — is aimed at mainstream computing and Intel’s Core i5 lineup. AMD recently announced the new CPU will launch on April 11.

Intel Dominates the CPU Market for PCs

There is no question that Intel dominates the world’s PC market. Nearly nine out of 10 CPUs sold for use in computers carry the Intel logo. It’s the exclusive supplier for makers of premium computers, such as those from Apple Inc. (NASDAQ:AAPL), while rival AMD has tended to be shunted to the side as a less expensive option on some budget PCs.

At this year’s Consumer Electronics Show, Intel was showing off its new Kaby Lake processors. The 7th generation of the company’s Core CPUs represent a slight improvement over last year, as part of Intel’s new three-phase “Process, Architecture, Optimization” product development cycle.

In other words, a relatively boring year for Intel upgrades leaves an opening for the competition to make some noise, and AMD is doing just that with its new Zen architecture CPUs.

The Ryzen 7 has already been released, but it is the Ryzen 5 that could really cause problems for Intel.

AMD’s Zen Architecture and Ryzen 5 Built for PC Future

AMD set out to win big with its new Zen architecture. While Intel has been content with delivering single-digit gains in performance per clock cycle, AMD says Zen offers a 52% improvement over its previous generation.

The Zen chips –including the new Ryzen 5 — still lag Intel’s Core CPUs on single-thread performance. That means with software that’s not written specifically to take advantage of more than one or two simultaneous threads for faster processing, Intel still has the raw power edge and will offer superior performance.

However, AMD is looking at high-processor-demand applications and the future of computing. That means software that takes full advantage of multiple cores and multiple threads per core — meaning multiple instructions can be processed simultaneously.

The top of the line Ryzen 5 CPU has six cores and 12 threads, for $249. It goes up against an Intel Core i5 CPU priced at $240 with four cores and four threads.

The Ryzen 5 costs a little bit more and the Intel Core i5 is going to outperform it with older applications. But with the latest generation of high demand software –think PC gaming and virtual reality– the Ryzen 5’s additional cores and threads give it a significant performance advantage. Even the budget version of the Ryzen 5 CPU at $169 offers quad-core, eight thread capabilities, compared to a $174 Intel Core i3 with two cores and four threads.

In the press release announcing the launch of its latest chips, AMD claims the Ryzen 5 outperforms that Intel Core i5 competition by a whopping 69% in Cinebench R15 multi-thread testing.

AMD Could Disrupt the PC CPU Market

There’s been a lot of technical mumbo-jumbo thrown around as part of this conversation. What it boils down to is that Intel has moved to a money-saving, longer product life cycle strategy with its CPUs. That means modest improvements between generations and its current mainstream CPUs remain designed to deliver maximum performance with traditional software.

AMD’s Zen architecture offers a significant improvement over its previous generation CPUs with those traditional tasks –although it still can’t best Intel. But through its entire line-up (not just the most expensive chips), AMD is emphasizing multi-core, multi-thread performance.

That gives AMD a considerable edge over Intel with the latest generation of high-demand applications, like virtual reality. Many industry insiders feel AMD could on the verge of disrupting PC gaming. By focusing on the future, not the past, AMD and chips like the new Ryzen 5 have the first real opportunity in years to steal market share from Intel.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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