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Advanced Micro Devices (AMD) is in the process of executing a strategic shift away from the sluggish PC market. As we mentioned in an earlier piece, the company's graphics division is expected to surpass its PC computing segment in terms of revenue in 2014 and the recent news of Apple's (AAPL) Mac Pro featuring AMD graphics solutions puts the company on the right track to match these expectations.

The much awaited Mac Pro from Apple is powered by AMD's FirePro™ D300, D500 and D700. The fact that Apple preferred AMD for the graphics solutions for MacPro is in itself an indication of AMD's highly differentiated graphics capabilities. FirePro will provide around 6GB of VRAM, 2048 processing streams per GPU and 7 teraflops of computing capabilities; twice the performance of previous Mac Pro.

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The AMD FirePro™ D300, D500 and D700 professional GPUs offer exceptional computing power and reliability for creativity and productivity in a wide range of applications. With industry-adopted OpenCL (Open Computing Language) support, Mac Pro users will have the ability to seamlessly edit full-resolution 4K video and simultaneously render effects in the background, and still have enough performance to power up to three high-resolution 4K displays.

The distinguishing feature of this graphics card is the GCN architecture and OpenCL support. The performance, image quality and efficiency improvements are a result of the GCN architecture."We really enjoyed working with AMD to maximize MARI's performance on the new Mac Pro. We've seen some of the best performance out of the box from MARI with the dual FirePro GPUs in the Mac Pro" said Jack Greasley, MARI Product Manager at The Foundry. AMD's increasing competitive strength in graphics will drive the future growth of the company.

The deal with Apple is expected to boost AMD's share in the professional graphics segment. Digitimes estimates that the market share of the company in professional graphics, currently at around 21%, will increase to 30%. This expected increase is because of the favorable demand conditions of Apple Mac Pro. "Demand for the all new Mac Pro is great and it will take time before supply catches up with demand" an Apple spokesman said. The postponement of shipment dates to February is an indication that the demand for Mac Pro is fairly high. Hence, the demand for Mac Pro will supplement AMD's revenue as well.

Estimates

Following are the estimates of the market that can be captured by AMD as a result of this development.

Assumptions

  1. Growth rate of professional graphics is in line with the growth rate of work stations.
  2. The estimated CAGR is an accurate predictor of the future demand over a 3 year horizon.

The model estimates that the company will achieve an additional $183 million in revenues from the Apple deal. The profit margin will also increase as professional graphics margins are higher than those of consumer graphics. The growth of professional graphics is estimated by using the CAGR of work stations, discounted by 25% to reflect the sluggish growth of servers in 2012. Overall, the Apple deal is expected to bring higher margins and revenue growth towards the company.

Conclusion

AMD is proving to be successful in the graphics business. The success is derived from consoles, differentiated server graphics and now the Mac Pro. Furthermore, AMD's computing and graphics solutions will also be featured in the Steam Machine by iBuyPower. The identifiable causes for this success are the GCN architecture and HSA technology. The bottom line is that AMD will continue to grow in the graphics segment thanks to GCN, which resulted in the contract wins with Apple and console developers.

Source: AMD And Apple Are Firing Up The Competition