AMD console gubbins

[Orangey]

AMD shrinks console APU to 20nm:

http://www.kitguru.net/desktop-pc/c...er-cheaper-xbox-one-is-might-be-in-the-works/

This news suggests that AMD has incorporated measures in to both the Xbox One and PS4 to ensure that the transition to a smaller fabrication technology can happen much faster this generation. This in turn suggests that Sony and Microsoft may be preparing for a much shorter console life cycle this time around.

Total console sales now over 20m:

http://arstechnica.com/gaming/2014/...les-at-least-40-percent-better-than-xbox-one/
http://www.kitguru.net/desktop-pc/c...s-managed-to-shift-13-5-million-ps4-consoles/

Sony has announced that it has managed to sell 13.5 million Playstation 4 consoles to consumers since launch, 3.3 million of those were sold over the third quarter, ending on the 30th of September. This is a step up from Q2, during which, Sony managed to sell 2.7 million consoles.

The original Xbox only sold 24m worldwide and was responsible for a quarter of Nvidia's revenue in 2003FY. Looks like AMD are gonna do pretty well from this. So much for "no margins".

 

[Ayahuasca]

Sounds like a thread for the console section.

 

[Freddie1980]

I would agree from the last set of results its sales to the console manufacturers (including Nintendo) have kept AMD in the black.

On the subject of the story itself the author makes a quite a leap of logic to suggest that a die shrink is evidence to a shorter console life cycle.

 

[D.P.]

AMD shrinks console APU to 20nm:

http://www.kitguru.net/desktop-pc/c...er-cheaper-xbox-one-is-might-be-in-the-works/




Total console sales now over 20m:

http://arstechnica.com/gaming/2014/...les-at-least-40-percent-better-than-xbox-one/
http://www.kitguru.net/desktop-pc/c...s-managed-to-shift-13-5-million-ps4-consoles/




The original Xbox only sold 24m worldwide and was responsible for a quarter of Nvidia's revenue in 2003FY. Looks like AMD are gonna do pretty well from this. So much for "no margins".

Do you have any references to actual margins, both historically and with what AMD currently have?


NVidia and AMD were both in competition and MS + Sony picked which ever cost less. I doubt margins are great at all, that is the entire purpose of games console and why they work to cheap relative to PCs.


EDIT: You need to be careful to separate revenue form profit. The XBox deal gave Nvidia a load of revenue but minimal profit. It is a plain fact that the console deals with AMD is generating significant revenue, but that does n;t equate to profit at all, in fact it might be a loss!

 

[D.P.]

I would agree from the last set of results its sales to the console manufacturers (including Nintendo) have kept AMD in the black.

On the subject of the story itself the author makes a quite a leap of logic to suggest that a die shrink is evidence to a shorter console life cycle.

Form my understanding in previous consoles Sony/MS would pay a set amount for a GPU, fixed over the lifetime of the console. The price was such that the initial GPS would have minimal margin if anything at all, but the GPU provider were allowed to shrink the process when mature and produce a smaller chip with lower cost to them, improving margins to something acceptable.

Obviously there is big pressure on getting the APU shrunk as fast as possible while sales are still high.


This does beg the question, where is this 20nm foundry with capacity? Secondly, if AMD have some limited 20nm capacity available then they will want to ensure their console APUs use all available capacity rather than releasing a 20nm GPU.

 

[Orangey]

TSMC. It shouldn't be that shocking as TSMC have ramped up capacity lately and Apple are looking to move on to greener pastures (14nm @ GF/Samsung).

 

[D.P.]

TSMC. It shouldn't be that shocking as TSMC have ramped up capacity lately and Apple are looking to move on to greener pastures (14nm @ GF/Samsung).

Fair enough.

I still can't find any information to suggest AMD have any reasonable margin on their console APU's, just endless articles that quite convincingly portray the opposite. The revenue figures are pointless within know the profit margin.

 

[mmj_uk]

This in turn suggests that Sony and Microsoft may be preparing for a much shorter console life cycle this time around.

In what way does it suggest a shorter console life cycle?

All it means is that Microsoft/Sony can either sell their consoles cheaper without losing money or make an even greater profit.

 

[melmac]

NVidia and AMD were both in competition and MS + Sony picked which ever cost less. I doubt margins are great at all, that is the entire purpose of games console and why they work to cheap relative to PCs.

They didn't pick AMD because they were the cheapest, why do you keep repeating that BS?

Microsoft and Sony both decided to go with an X86-based SOC instead of ARM based. That ruled both Nvidia and Intel out.

AMD were the only company in the running as they have invested heavily into APUs. They have everything in place for making the X86 SOC that Microsoft and Sony required. And because of this, I think the margins will be pretty good.

 

[layte]

The original Xbox only sold 24m worldwide and was responsible for a quarter of Nvidia's revenue in 2003FY. Looks like AMD are gonna do pretty well from this. So much for "no margins".

The original Xbox contract was a horrible rushed mistake on Microsoft's part. They couldn't dump production of the original Xbox quick enough. One terribly bad deal made well over a decade ago has exactly zero baring on what's happening today.

What have AMD's most recent financial results looked like? oh...

 

[drunkenmaster]

Do you have any references to actual margins, both historically and with what AMD currently have?


NVidia and AMD were both in competition and MS + Sony picked which ever cost less. I doubt margins are great at all, that is the entire purpose of games console and why they work to cheap relative to PCs.


EDIT: You need to be careful to separate revenue form profit. The XBox deal gave Nvidia a load of revenue but minimal profit. It is a plain fact that the console deals with AMD is generating significant revenue, but that does n;t equate to profit at all, in fact it might be a loss!

Firstly they weren't in any competition with Nvidia. Nvidia did not have any kind of competitive CPU solution for gaming(still don't), a SoC/APU at the very least was the only viable option this time around(the previous chips though starting life as discrete gpu/cpu were effectively made into APU's all on one die later on for power/cost reasons).

Nvidia's ARM cpu's were both completely under powered and not even close to a viable high end architecture in terms of gpu/cpu combination(k1 being their first truly modern gpu architecture combined with a CPU launching what, 8-9 months after the consoles launched) and with AMD having had multiple APU's before the consoles came out and several out before the console contracts were even won.

Effectively the only choices were a arm soc or an AMD soc, and ARM hadn't gotten remotely close to the required performance by the time the console designs were to be wrapped up.

As for Revenue, don't discount how that factors in to profit. If you need to make a billion dollars of chips at TSMC or risk penalties, higher costs or slipping down the preferred manufacturers list then decreased revenue can lead to hits costing hundreds of millions. Having increased revenue and successful income, which IS profitable, helps the company out massively. They've since won two further design contracts for custom SoC's, which again after launching two successful ones helps build confidence for other customers. Also because AMD have absolutely swept the board with consoles(remember they are in both Wii's as well) and with AMD going for high performance ARM cores realistically before anyone else has, and with their experience in the APU, gaming and console market.



The current deals DO make AMD a profit, this is well known, how much profit directly is questionable but there are numerous advantages. Games industry is now heavily supporting of AMD with many companies moving from TWIMTBP to Gaming Evolved since it was clear the consoles were all going AMD, multiple games are showing significant AMD optimisation on launch and drivers with good performance from launch. This situation will increase further and further as games come out on the new consoles/pc and start ignoring the last gen more and more.

With AMD really being the only company making higher performance gaming SoC's and with them pushing into making pin compatible/design compatible ARM/x86 new architectures for 2016 and beyond, they will be the only company making high performance(read that as would simply be too high power to fit into a tablet even if cut down on clocks massively) ARM based gaming SoC's. It's likely the next gen of consoles have only one choice. Nvidia haven't and likely can't aim at desktop power arm soc's because they simply don't have the desktop cpu experience/capability, even if they started today they'd be years and years behind. Unless Intel make MASSIVE leaps forward in gpu performance, driver teams, game dev involvement... they really aren't an option either. Leaving a potential new player, can Apple/Samsung/someone else design a higher power architecture to try and win console deals, absolutely..... they have the money, resources and can bring in whoever they need to design it. Will they, almost certainly not.

 

[melmac]

How have AMD's most recent financial results looked like? oh...

AMD's Q3 results have shown a profit for the first time this year. They are forecasting a drop in revenue next quarter and that's why they are letting people go.

All their losses are from desktop PC CPUs.

I also wonder did AMD get any money yet from either Microsoft or Sony?

 

[drunkenmaster]

The original Xbox contract was a horrible rushed mistake on Microsoft's part. They couldn't dump production of the original Xbox quick enough. One terribly bad deal made well over a decade ago has exactly zero baring on what's happening today.

What have AMD's most recent financial results looked like? oh...

AMD's financials have been massively improved since the console chips started shipping.......................... so, I think the answer you're looking for is, their financials have looked very good.

 

[layte]

AMD's financials have been massively improved since the console chips started shipping.......................... so, I think the answer you're looking for is, their financials have looked very good.

OK then. http://anandtech.com/show/8625/amd-q3-fy-2014-quarterly-earnings-analysis I have some magic beans you may be interested in.

Staff layoffs, continuing downward spiral on R&D spend, revenue and income down on the same quarter last year.. Yup everything looks rosy.

 

[D.P.]

I was only asking for evidence that margins were good on the console APUs because everything online states they are terrible.

 

[melmac]

I was only asking for evidence that margins were good on the console APUs because everything online states they are terrible.

Have you any evidence to show that they are terrible? Can you link some sites? I haven't seen any reports either way.

I still think that they might not have received any money yet from the console deals.

 

[drunkenmaster]

OK then. http://anandtech.com/show/8625/amd-q3-fy-2014-quarterly-earnings-analysis I have some magic beans you may be interested in.

Staff layoffs, continuing downward spiral on R&D spend, revenue and income down on the same quarter last year.. Yup everything looks rosy.

The chips were shipping from Q3 13, which is why I stated quite specifically that their financials have improved dramatically since that started to happen. They were making a loss almost every quarter before that happened and have made a profit in 2-3 quarters since the console chips started shipping, so yes, that is an improvement, as is the evidence that the revenue per quarter stands at 600+ mill and a profit of 100million.

Compared to making a loss that is good regardless of what you think.

As for staff losses, AMD cut what 12% of the workforce, the result of that being 2 years in which they turned the company from losses into profits. Work force losses are only a bad thing if you get rid of great staff. One of AMD's key problem was having too many staff full stop and too many of the wrong people in key positions. When you fire a failing guy making £2mil a year, and he's part of the development team, you are both reducing the R&D spending by £2million and improving your R&D department.

Losing staff isn't automatically bad, reducing R&D budget is also not automatically bad and in most cases they are heavily linked being that one of if not the biggest total cost in R&D spending is the wages to the guys actually doing the work.

Considering as I said the lay offs and bringing in the right people since has improved AMD drastically, then your assertion that laying off staff can only be seen badly(by you listing it as a sign I'm wrong to say their financials are improving significantly) is clearly wrong.

Net income by year/quarter for a little further back is

Q3 2012 -157M
Q4 2012 -473M
Q1 13 -146m
Q2 -74m
q3 48mil
q4 89mil
q1 14 -20mil
q2 -36mil
q3 17mil

By any accounts Q3 is an improvement both over Q2 directly and the average Q3 for AMD in the past 5 years has been a loss, not a profit.

This is all with between 40-46mil being paid on debt interest every quarter. So without the debt interest AMD would have been profitable since Q3 last year when the console chips started shipping in every single quarter, while losses would have been significantly reduced by percentage in multiple quarters before, it still would have been a loss in those quarters(some bad losses, but those are mostly one off payment type situations).

AMD's financials are improving significantly over time, streamlining the business is one way they've done this. Despite streamlining they've got a serious plan with pretty much the single most respected chip designer running the table for AMD now. In the past 2-3 years they've gotten stronger consistently both financially, business wise, future wise.

2 years ago AMD got almost all their money from a single slowing market, they've managed to shift half of the companies revenue into a consistent and growing market...... that is a massive and fundamental business shift which is growing(beyond just the consoles) into several other growth sectors.

 

[D.P.]

Have you any evidence to show that they are terrible? Can you link some sites? I haven't seen any reports either way.

I still think that they might not have received any money yet from the console deals.

http://www.extremetech.com/gaming/150892-nvidia-gave-amd-ps4-because-console-margins-are-terrible

http://www.forbes.com/sites/patrick...ns-microsoft-and-sony-chose-amd-for-consoles/


http://www.tech24.biz/nvidia-gave-amd-the-ps4-because-console-margins-are-terrible/


http://www.streetinsider.com/Analys...or+Stumbling+Block+-+FBR+Capital/8515014.html

Wall Street seem to believe the margins are low. But that is really to be expected- Sony and MS in such huge quantities to push the margins close to zero,. They are both selling a consoles at a price point (and a loss), so need the apu as cheap as possible.

 

[Orangey]

initial console APU operating margins of low double digits. FBR and others on the Street have been modeling operating margins in the high 20%s.

"While we do consider this a net negative, after much thought, we are beginning to understand," analyst Christopher Rolland comments. "Over a very long lifecycle (game consoles have historically lasted eight or more years), there are numerous opportunities to reduce manufacturing and operating support costs, thus boosting margins over time. Therefore, while we would have liked to see gross margins in the 40%s and operating margins in the high 20%s from the "get-go," we understand the initial economics."

They're fine given we're less than a year in. OH NOES NO MARGINS DOOOOOM

20nm coming already, then straight shot to 16nm, then 16FF+. bish bash bosh

 

[Orangey]

http://tech.firstpost.com/news-anal...cost-of-sony-playstation-4-at-381-108374.html

So 12% say, of $100. That's an easy bit of maths, $12. $240,000,000 already, by the end of the gen they will be well over $1B richer.