AMD Stumbles On Ryzen

| About: Advanced Micro (AMD)
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Summary

CPU Ryzen will be released soon.

AMD will not support Ryzen on Windows 7.

Investor takeaway.

AMD (NYSE:AMD) is due to release a new consumer class CPU called Ryzen. Anticipation in the tech community could not be higher. The AMD enthusiast community has suffered for years under various AMD Bulldozer CPU mutations - which frankly were inferior to Intel CPUs performance-wise. They did offer a lot of bang for the buck, however. All of this sounds nice, but AMD has made a mistake.

Change is in the Wind.

The Bulldozer CPU-era nightmare will be over come early March. In the latest conference call, AMD announced that Ryzen will ship early March, putting behind a very painful few years for the company and harking the return of AMD to the CPU fight in the mid- and high-end against Intel (NASDAQ:INTC) (something the company has lacked for years).

Ryzen will not support Windows 7

However, like any good analyst, we must look at both sides of the equation and see if we can predict any shortcomings of AMD's new processor. AMD has made a mistake with Ryzen and it is involves Microsoft (NASDAQ:MSFT) Windows 7.

Ryzen will reportedly not support Windows 7 (source). Will Windows 7 run Ryzen? Sure, but it will not fully support it. Thus when you have that bug in your software or Windows is acting funky expect zero help.

Per Pcworld.com:

"AMD confirmed that it has tested and validated Ryzen on Windows 7, but that it won't officially support the OS."

Personally, I love Windows 7. Sure, it eats a little extra ram for no good reason, but overall the user interface (UI) makes sense. It does not break from the Windows UI tradition that we have used for decades. Windows 8 / 8.1 / and 10 are abominations (in my opinion) from a UI stance. Yes, I know - I've heard all the arguments about "You will get used to it." I can get used to a lot of things in life if I'm forced to - (prison comes to mind). However rarely do I want to pay for something and "get used to it." It is not just me that refuses to use a questionable OS from a UI perspective: Mr. Market Share has agreed.

Market Share of Windows

If we look around, we can see that the market generally ignored Windows 8 and 8.1 for good reason. They were terrible. A mutation of desktop and tablet mixed together. Yuck! Windows 10 was a little better, but still overall broken and Microsoft had to literally give away the OS for free, trick people into installing it, and sometimes even install it without permission. People are generally holding on to Windows 7 per this marketshare information.

47.2% of the OS market is still on Windows 7. Say it again... 47.2% of the desktop market is using Windows 7. What AMD is doing is forcing consumers to decide upon leaving a loved OS for an OS that obviously some consumers do not want to abandon. Of course, some consumers will not leave Windows 7 and this is lost sales on AMD's part. It is possible AMD will reverse its decision and officially support Windows 7 though. This is going to be a support nightmare for consumers who did not realize AMD was not going to support them. But why is this? Why would AMD not support Windows 7?

An interesting article is located over at Computerworld.com that may explain why. Besides stating the above market share may not totally be accurate (the writer thinks Windows 10 market share is lower) and thus goes on to write:

"The more interesting question is "how is Windows 10 doing compared to Windows 7?" What I see is that Windows 10 "seems" to be catching up.

Why is that happening? I don't think it's because people are eager to move to Windows 10. Everything I've seen indicates that Windows 10 has gained traction not because it's a major improvement over Windows 7 - it's not - but because Microsoft has been pushing Windows 10 on users.

I'm asked all the time why Microsoft is doing this? Easy.

Microsoft wants to move once and for all from an upgrade system, where it must support multiple Windows versions for years, to an automatically updated, cloud-based Windows subscription model.

This will save Microsoft billions in support costs. In theory, it will also make Windows more stable and secure. Well, that's the idea anyway."

What you have here is AMD trying to play nice with Microsoft. By not supporting Windows 7, they make Microsoft happy as, in theory, more consumers will be forced to downgrade upgrade to Windows 10. AMD stays in the good graces of Microsoft and continues to work hand-in-hand with them.

Takeaway

It is disappointing to see AMD abandon Windows 7 though I can understand the reasons why. Supporting multiple OSs has to be a royal pain, but given the market share of Windows 7 (pain or not), AMD needs to support it along with gamers that are itching to upgrade to AMD's newest CPU Ryzen.

However, our view of AMD remains the same - it is a buy per all the upcoming new products: Ryzen, Q2 Naples for the server market, Q2 Vega GPU, and Raven Ridge for the APU market. These will propel revenues northward. Wild cards such as deep-learning in cars and AMD's mystery ARM-based semi-custom chip remain on the sidelines.

Overall AMD is a great long-term play.

Disclosure: I am/we are long AMD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.