AMD vs. Intel: A Sun Tzu Lesson in Long-Term Strategy

Rob Enderle

This week, AMD launched its Ryzen processor, one of what is likely to be a line of new desktop and, eventually, laptop parts. Ryzen is an impressive offering, focused mostly initially on home creators and consumers, with corporate offerings like workstations and servers due later. So rather than focus on the part, let’s focus on the strategy and the historic AMD mistake that the firm isn’t making with this launch. When I say historic, I’m going way back to one of the earliest recorded strategists, Sun Tzu, whom I think should be mandatory reading for pretty much everyone, and his views on combat.

We’ve had a history of companies, including AMD, going after large competitors who ignored Sun Tzu’s teachings and I’ve never seen it end well. But Lisa Su, AMD’s IBM-trained CEO, apparently read Sun Tzu’s book and is using it in her latest gambit.

Let me explain.

You Don’t Attack a More Powerful Opponent

The advice comes from this set of phrases:

“If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected.”

Nowhere here do you see the advice, “if an enemy is stronger, attack.” Yet much of the failure we’ve seen by otherwise smart CEOs is the result of not understanding that what works is, “if he is in superior strength, evade him.”

Look, for instance, at how IBM went after Microsoft with OS/2. Microsoft was entrenched and arguably stronger on the field of battle it chose and Microsoft wiped the floor with IBM. Sun and Netscape made equally ill-advised moves and they aren’t even around anymore. And Microsoft challenged Apple on the iPod and got its own butt kicked, as it did when it went after Google on search. Each time, the loss was catastrophic and seemingly unexpected, yet consistent with Sun Tzu’s unspoken advice that you don’t go after a strong component head on and directly at where they are strongest.

With Apple and the iPhone, Steve Jobs went after a host of stronger firms but he didn’t go after their strengths, which were business offerings. He went after their weaknesses using his strength, which was entertainment. And, against vastly stronger opponents who literally refused to see Apple coming, Jobs prevailed. In another case, Google is making inroads with Chromebooks by going where Microsoft was weak, education, and attacking where Microsoft was vulnerable, its profit margin. Recognizing that Apple was unwilling to license its technology, it basically copied Microsoft’s successful strategy against the iPhone and now is more powerful in that space than Apple. (There is a ton of irony here given that Google is basically using Microsoft’s own Apple strategy against Apple, and Microsoft’s own strategy against Netscape against Microsoft).

Lisa Su’s AMD

What AMD had historically been doing was going after markets that Intel was also excited about, and it even tried to chase Intel into the tablet and smartphone market. Fortunately, it pulled out before that foolish move killed the company. But Intel, convinced that the PC is a dying market, has been bleeding resources from that segment, much to the consternation of the PC OEMs, and has been focusing on other things like autonomous cars, drones and the IoT.  This opened the door for AMD, which retained core competence in the desktop space, to revisit that market and effectively attack Intel, where it was no longer prepared. This effectively is back on the same page with Sun Tzu’s advice, and Ryzen has captured a broad cross-section of PC OEMs, who wouldn’t even give AMD the time of day before Ryzen, as a result.

Wrapping Up: Read Sun Tzu

If you haven’t at least read excerpts of Sun Tzu’s The Art of War, you should. Given that the book is thousands of years old, it is impressive that the advice applies to most forms of competition, it is a very easy read, and it makes a ton of sense. Not to mention, it is fun to quote the guy during meetings. Understanding and following Sun Tzu’s advice could make you vastly more successful, far less likely to make obvious tactical or strategic mistakes, and result in a far less embarrassing executive life.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+

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Add Comment      Leave a comment on this blog post
Feb 23, 2017 4:39 AM Lisa Tzu Lisa Tzu  says:
AMD has Intel in checkmate. AMD has a superior product offering in every category: desktop, laptop, cloud, server, graphics, custom, compute, artificial intelligence. AMD has access to sufficient manufacturing capacity to supply the entire marketS. AMD has access to 7nm shrinks while Intel has yet to achieve 10nm shrinks. AMD has both cost and price advantage. Sun Tzu says you must leave your enemy an escape route. What might that be? Intel could license AMD designs and technology for perhaps $10/chip perhaps $20/chip on 300 million chips. Negotiations have stalled. The slaughter begins. Reply
Feb 23, 2017 12:24 PM Darel Rex Finley Darel Rex Finley  says:
Entertainment titles -- particularly Doom, but even before Doom -- were a huge factor in reinforcing the virtuous circle that kept Microsoft OEM PCs dominant throughout the '90s. And Jobs didn't even like games; he considered them too violent. I think the iPhone won just because it was a much better smartphone than anything prior to it. If your product really is dramatically better, you can take on the "strong" incumbents head-on. Jobs thought he had that with the Mac in '84, but he didn't. With the iPhone, he did. Pre-iPhone smartphones were wretchedly bad. Reply
Feb 23, 2017 5:35 PM Thomas Huynh Thomas Huynh  says:
Excellent analysis of Sun Tzu's strategy applied to the modern world, which in this case is AMD. Well done. Reply

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