The current consensus, however, on Advanced Micro Devices, Inc. (NYSE:AMD)’s side is that even with exceptionally strong console sales, AMD’s future will be a short one if it loses its grip on the PC market to companies like Intel and Nvidia. In this particular instance, I beg to differ. My opinion is Advanced Micro Devices, Inc. (NYSE:AMD) is moving away from a mature market (the PC) and moving towards growth (Next-gen consoles) and ultimately towards winning its own share of the growing tablet market.
The fact of the matter is that the PC as we know it is declining.
In fact, the PC is currently suffering the longest decline in the industry’s history, with an almost 11% decrease in global shipments last quarter alone. Mikako Kitagawa, an analyst from Gartner has stated that “…inexpensive tablets [now] displace the low-end machines used primarily for consumption in mature and developed markets.”
When it is time to replace the average PC, people are no longer buying a replacement – they are purchasing a tablet instead. At the same time, this is destroying the mini notebook market, which filled the gap between awkward tablets and more expensive computers. As touchscreen technology develops and portable keyboards for tablets are released, convenience is becoming king as opposed to raw hardware power. Technology is at the point where you don’t need an expensive PC to run the latest Microsoft Office suite, play a movie or even 3D games.
AMD CEO Rory Read is aware of this as well, referring to the tablet boom as, “…a huge opportunity in front of us.”
Traditionally, ARM has given Advanced Micro Devices, Inc. (NYSE:AMD) a run for its money when comparing market share, with ARM heavily entrenched in the tablet market as shown below.
Source: Q3’11 DisplaySearchTablet Quarterly report
Bullish on AMD
However, Advanced Micro Devices, Inc. (NYSE:AMD) has now demonstrated it can hold its own against its rivals; unanimously beating ARM out of the console market, backed by three corporate giants. AMD is set for a revival and will have an exciting year ahead. Strong performance here will allow AMD to build upon its most potentially lucrative business – micro hosting. This console deal is the first step in a line of business deals that could put Advanced Micro Devices, Inc. (NYSE:AMD) back on the radar.
The article AMD: The Semiconductor Set to Soar originally appeared on Fool.com and is written by Dan Sayers.
Dan Sayers has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft Corporation (NASDAQ:MSFT). Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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