Q&A: AMD's Ruiz Says 'Our Opportunity For Growth Is Phenomenal'

Since joining Advanced Micro Devices Inc. five years ago as president and chief operating officer, Hector Ruiz has overseen an unparalleled wave of advancement by a company that had struggled mightily for 30 years to create a niche for itself in the x86 microprocessor market against industry leader Intel.

Named chief executive three years ago and chairman last year, Ruiz has led AMD in moving beyond its traditional "clone" processor role to become a technology innovator, first by leading the market in the introduction of the first 64-bit implementation of an x86 architecture and, most recently, rolling out the first dual-core x86 processors for the high-volume server market.

As AMD prepares to begin shipping its first dual-core processors for the desktop PC market later this month, Ruiz recently talked to InformationWeek about the challenges ahead.

InformationWeek: AMD has enjoyed unprecedented visibility over the past year. How would you rate the company's execution during that period?

Ruiz: I am thrilled with the way our company has executed over the last couple of years. But I also want to emphasis at the same time that it wasn't easy. This is pretty hard stuff, and we have a lot of bright people in the company that have worked incredibly hard to be able to execute on this. We discount most of the stuff that is written up. We don't eat our own press, frankly.InformationWeek: When you were looking at this 12 to 18 months ago, knowing what you were trying to accomplish with the introduction of 64-bit devices and then dual core, what kind of goals did you have going in?

Ruiz: I always felt that if we could get our technology into the hands of users, that it would make the difference. We felt like if we could get it into the hands of people who actually use the product, whether it was gamers for the Athlon64 FX or enterprise companies for Opteron, they would be the ones who could best evaluate our product. The result was end users really talking about how great the products are, and insisting that [computer manufacturers] build hardware that provides an option with AMD.

InformationWeek: AMD has been able to grab at least some of the spotlight from Intel over the past year. How do you keep that kind of momentum rolling?

Ruiz: In the past, we agonized too much, I think, about what our competitor was doing. We've begun to agonize more about what our customers and end users really want and expect from us. We put a lot effort in first executing on the 64-bit extension of x86, and then going after the most difficult part, which is the server market and the enterprise.

There was a lot of trepidation at the time as to whether that really was the right strategy. I told people internally we were going right at the belly of the beast. We believe we have a road map ahead of us that we can continue to fine tune with inputs from customers and end users.InformationWeek: Despite the growth and profitability in the processor business, AMD recorded a net loss the past two quarters. Is the spin-off or sale of the struggling flash-memory business an answer that will allow AMD to achieve consistent profitability?

Ruiz: Unfortunately, the market changed so much in flash that it appears to indicate to people that we are spinning it off because we are trying to get rid of a problem child. We began this process two years ago, when the flash market was actually pretty strong. We have two very different businesses, and there is an opportunity for both to be successful.

InformationWeek: If you took the flash business out of the equation, you could have had some profits in the last couple of quarters.

Ruiz: Very healthy profit, yes. Our plans are to IPO the flash business as soon as we get through all the regulatory processes. Once that's done, then you've got two businesses with very different models on how they fund and finance growth, and each of them will be able to do that very focused and independently. My belief is that for quite some time we'll maintain a fairly significant minority position in the flash business.

InformationWeek: Intel will likely have a greater capital expenditure budget this year than AMD had in total revenue last year, which is a total capital budget that is about four times what AMD is likely to spend. How does AMD compete when the financial odds are heavily stacked in Intel's favor?Ruiz: When you are in that position there is only one thing to do: Stay close to your customers and end users, understand what they need and want, and then just out innovate the hell out of it. Innovation is at the center at of our ability to succeed. We cannot win by just aping the competition, which we are not going to do. We need to find differentiated ways to address the market.

InformationWeek: AMD and Intel took opposite approaches to their dual-core introduction. Intel introduced dual core on the desktop first, and AMD introduced dual-core processors for the server market first. Is that an indication that you don't expect much out of the dual-core desktop market?

Ruiz: We believe the place that will benefit the most immediately from dual-core technology is in the server and the enterprise. You talk to anyone from users to equipment manufacturers, as well as software developers, and that's the place where you can really exploit the power of dual-core technology. We believe it will happen in the client slower and later.

InformationWeek: What is AMD's greatest opportunities and challenges for the next 18 months?

Ruiz: The thing that I worry about the most is making sure we execute. Internally, we need to pay attention to what we do, and make sure we deliver what we're capable of doing, and not lose sight of what is most important to our customers, I believe things will fall in place and we will grow. As a percentage of the [x86 server-processor market] we are less than 10% of the market, so our opportunity for growth is phenomenal.InformationWeek: How far has as AMD been able to go in changing the historic perception that the company is always an also-ran, cloning company?

Ruiz: I agree that we had a tremendous task at hand to try and change that perception. When we launched Opteron [in April 2003], if I had stood up and said that two years later 55 of the top 100 companies in the world would be using our technology in the enterprise, we would lead the industry in growth in the 64-bit arena, would have the premier product in performance and value, and, by the way, IBM, Sun, HP were going to be the companies supporting us, I think I might have been dialed out.

InformationWeek: How do you characterize your goal of enterprise adoption?

Ruiz: I believe there is no reason why we should not aspire be a third of the market in the next two or three years.

InformationWeek: So, when do you convince Dell to come on board?Ruiz: We are going to continue on our plan to get end users to demand our product. And it's pretty hard with someone as successful as Dell and with the relationship they've had with Intel to respond to anything other than that. So we are working hard with end users and customers so they can see the value and insist at some point in time that Dell provide AMD solutions.