Lisa Su’s Channel Awakening: Why Partners Could Be AMD’s ‘Largest Growth Opportunity’

AMD President and CEO Lisa Su calls the channel an ‘incredibly important part’ of the chipmaker’s strategy, setting in motion a plan to double MDF, channel staff and funded positions for top solution provider partners.

When one of the fastest-growing solution providers in the country sought laptops to fill critical customer needs amid the coronavirus pandemic, it opened the company’s eyes to the benefits of AMD.

ImageNet Consulting, No. 3 on CRN’s 2020 Fast Growth 150 list, was facing unprecedented demand for laptops from its health-care, financial and manufacturing customers, which needed the devices for essential workers.

“We were dealing with probably some of the most stressful times in regard to product delivery that I’ve been in for years,” said Juan Fernandez, vice president of managed IT services at the Oklahoma City, Okla.-based company. “I’ve never experienced that before.”

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But the Intel-based systems that ImageNet normally would have recommended were in short supply.

ImageNet’s decision to evaluate and then endorse AMD-based systems from HP Inc. had a wide-ranging positive impact, Fernandez said. He estimated that as of November AMD now accounts for roughly 65 percent of his company’s 2020 system sales compared with 35 percent Intel-based systems, a massive increase given that ImageNet sold very few AMD-based systems last year.

“They gave us the ability to increase profitability; they gave us the ability to increase market share,” said Fernandez. “They gave us the ability to increase our reputation with our customers, which is invaluable. And it gave us the ability to continue doing business in a very tumultuous time. And I couldn’t be more happy about that.”

ImageNet wasn’t getting any special treatment from AMD, nor is it part of any of AMD’s partner programs, but the chipmaker has turned Fernandez, a former AMD skeptic, into a believer—and he welcomes any opportunities to work more closely with the company.

“They’ve done a really good job at stepping up their game,” he said.

Stories like this underline the opportunity for the 51-year-old semiconductor company around enabling a broader channel as it surpasses 20 percent CPU market share against Intel and unleashes new GPUs that stack up competitively against Nvidia.

As solution providers like ImageNet open up to the possibilities of stronger partnerships with AMD, so too is the Santa Clara, Calif.-based company undergoing a channel awakening of its own.

Lisa Su, AMD’s president and CEO of six years, said the channel is an “incredibly important part” of AMD’s business, which is why the company plans to double market development funds, channel staff and funded positions for top solution provider partners next year.

“I think the channel is just a big opportunity for us. It’s really a matter of ensuring that as we scale as a company, we put resources into the channel to support all of the activities there, and I’m very excited about the possibilities,” she said in an interview with CRN last month.

AMD’s Channel Blitz

Ami Kron, director of product management at Insight Enterprises who manages the company’s AMD business, said the chipmaker’s increased focus on the channel is palpable.

“I think that AMD is definitely doubling down, investing further,” he said. “In terms of the types of investments, it spans a couple different things. Obviously, just like other key partners that we have, there [are] a variety of digital marketing efforts and other sales enablement efforts that they’re investing in more heavily than they had in years past.”

That increased support has helped Insight increase AMD-based client sales by a mid-single-digit percentage and AMD-based server sales in the high-double-digit percentages this year, according to Kron.

“You look at the market-share numbers, you look at their growth, and they’ve done some good things,” he said. “Especially with the size of business that we have at Insight, we’ve seen some of that play out in our business.”

Some of Insight’s AMD wins have come because the company is willing to team with Insight’s sales force to answer customers’ questions, particularly around how AMD products compare with the competition, Kron said.

“I think AMD being able to step in and help from a competitive landscape scenario really helped articulate their value and their differentiated approach,” he said. “We’ve definitely had to leverage that at times to get them directly involved in those conversations.”

Su said AMD’s investments in partners like Insight represent an evolution of the chipmaker’s channel strategy, expanding beyond its traditional component channel for retailers and system builders with a new focus on solution providers that resell PCs and servers from OEMs.

“I think we’re growing by leaps and bounds in the channel,” she said. “Now if you look historically, our larger relationships have been in the consumer channel, so sort of in the DIY space, across the world in the desktop as well as graphics cards. And that’s now expanding to the commercial channel, both commercial PCs as well as more commercial server-type opportunities.”

In addition to Insight, the other national solution provider companies that AMD has developed direct relationships with are CDW, SHI International, Connection and Zones, which rank Nos. 5, 11, 24 and 28 on CRN’s 2020 Solution Provider 500 list, respectively.

“I’m very happy with the partnerships with some of our top channel partners, like CDW and SHI and Insight, who are helping to broaden our reach to the next level of customers,” Su said.

But AMD plans to extend its channel reach even further.

Jason Mooneyham, corporate vice president of Americas sales who oversees AMD’s component and commercial systems channels in the region, said two of his priorities next year are to expand direct coverage for national solution providers and establish coverage for regional value-added resellers focused on servers. The company is also expanding coverage for systems integrators in the federal space.

“We will double our head count and double our funding in [2021] relative to the channel, which is massive after it’s gone up basically 5X over the last two years,” said Mooneyham, who worked at Lenovo for nine years prior to joining AMD’s sales organization in 2016.

For head count, this means that AMD will expand investments in the number of technical positions it funds at solution provider partners as well as internal channel staff. On the funding front, AMD is ramping up market development funds and its volume incentive rebate program. The latter was originally for commercial PC sales and has since expanded to servers.

“Now that we have an expanding portfolio with Dell, Hewlett Packard Enterprise and Lenovo on the server side, we can ramp up a lot more of those efforts from a funding standpoint,” he said.

Mooneyham said one of the top requests from solution providers has been technical positions funded by AMD. The company also funds positions for its four authorized commercial system distributors in North America: D&H Distributing, Ingram Micro, Synnex and Tech Data.

“We’re trying to fund those bodies on the floor so that as those deals come up, they’re able to go right in-house to get it without having to chase down somebody in our field organization,” he said.

One major solution provider that AMD is ramping up a partnership with, according to Mooneyham, is World Wide Technology, No. 9 on CRN’s 2020 Solution Provider 500 list, a Maryland Heights, Mo.-based company that has a significant and longstanding strategic partnership with Intel, which includes ongoing investments in its Advanced Technology Center.

“We’ve got an initial call with WWT this week on how we want to set up training,” Mooneyham said, which was set to happen the week of Nov. 9.

A WWT spokesperson declined to comment.

A Channel Conversion Years In The Making

There was a time not so long ago that AMD had a very small footprint in the channel.

One longtime system builder executive said he remembers when AMD’s channel efforts in the data center were essentially nil. After reaching double-digit market share against Intel in the mid-2000s, the chipmaker’s Opteron processors had fallen out of favor as it struggled to keep up with the performance gains of Intel’s Xeon processors.

“If you go back a few years, I mean, there was just nothing,” said Dominic Daninger, vice president of engineering at Nor-Tech, a high-performance computing system builder in Burnsville, Minn. “There was no structure left for their channel programs as far as marketing development funds and that kind of thing. Everybody that worked in that area was gone.”

Even in the PC market, where AMD has maintained a continuous presence, the company’s channel resources were greatly diminished as Intel’s Core processors soaked up sales.

“If you rewind a few years back, when they were struggling, we just didn’t get [channel support from AMD] because they didn’t have the budget,” said a PC system builder executive who asked to not be identified.

Intel, meanwhile, has had a longstanding robust partner program with strong channel leadership such as 15-year veteran Jason Kimrey, general manager of U.S. channel and partner programs, and 21-year veteran Todd Garrigues, director of partner sales programs, keeping the company at the top of the channel pyramid for decades.

“[Intel has] programs and incentives in place to make sure that they continue to grow the business. I think AMD has lacked that [same level of structure],” the PC system builder executive said.

In an interview earlier this year, Kimrey said Intel is more committed to partners than ever before, which is reflected by new investments it has made in its channel organization.

“We’re in a unique spot. We are a leading manufacturer in the data-centric era, and we have the ability to deliver and optimize with our partners industry-leading platform solutions to solve some of the most pressing and important problems facing consumers as well as businesses,” Kimrey said.

But partners said things have changed drastically for AMD since the rollout of its Zen-based processors began in 2017, with the Ryzen brand for PCs and laptops and EPYC for servers.

System builders, which fall under AMD’s component channel, now report having access to engineers, sales representatives and marketing specialists as well as market development funds, early samples and demonstration hardware.

The PC system builder executive said his company has received non-recurring engineering (NRE) funds from the chipmaker to design AMD-based systems, which he said closely mirrors Intel’s NRE program.

“They were very aggressive about making the project a reality with us,” he said.

Randy Copeland, CEO of Velocity Micro, a Richmond, Va.-based PC system builder, said his company’s sales of AMD-based systems have approximately doubled year over year in 2020 while Intel-based systems have only grown roughly 5 percent, contributing to what has been his best year in business in the past decade.

“It’s a dramatic driver. I mean, our AMD business is really exploding,” he said.

But it wasn’t easy for AMD to get to this point. When Su joined AMD in 2012 as a senior vice president and general manager after nearly five years in senior executive roles at Freescale Semiconductor, the company wasn’t in a great place. Its stock price hit a low of $1.81 per share that year, and by the end of the year, the company had made its second major round of layoffs within 12 months due to falling revenue.

“The reason I joined AMD is because I felt like this was a company that could be very important in the industry. I’ve always believed that processors are the center of the universe,” she said. “I’m slightly biased, but I do believe that processors are a very, very important piece of how do you move the industry forward. And AMD is one of the few that has the capability to lead in processors.”

When she was promoted to president and CEO of AMD in 2014, Su said the company made two important decisions based on conversations with employees, customers and industry leaders: The chipmaker wanted to become the leader in high-performance computing, and to get there, it needed to have a “consistent and executable” road map.

“That’s especially important with customers because when they decide to partner with AMD, it’s about a long-term partnership, it’s about investing resources over multiple years,” she said. “And what we needed to do was to make sure that they had the confidence in us, that we would give them leadership products generation after generation after generation.”

The result was Zen, a new x86 CPU architecture AMD would use to make Ryzen processors for desktops, laptops and workstations and to make EPYC processors for servers. But it would take multiple generations of Zen architecture before AMD was able to claim leadership not just in multithreaded performance, with processors offering more cores than Intel’s, but also in single-threaded performance, which had been Intel’s final holdout until the first Zen 3 processors arrived this fall.

“What we would say is we do believe we have leadership in the industry today. We’re very, very excited about that,” Su said. “I think the Ryzen 5000 series are going to be great desktop processors for our desktop fans. That’s going to translate into our EPYC processor line soon. And then you’ll see it also come out in notebooks.”

One server system builder partner, International Computer Concepts, has witnessed how AMD’s performance gains, combined with an aggressive pricing strategy, has improved sales.

Alexey Stolyar, CTO for the Northbrook, Ill.-based company, said because AMD’s second-generation EPYC processors feature up to 64 cores—more than double Intel’s current offerings —the company is able to pack more cores into single servers and sell more systems for customers with set power budgets. AMD-based systems now account for roughly half of his company’s 2020 system sales to date compared with only about 10 percent last year, when Intel-based systems dominated.

“Say you have 100 amps, and each system consumes 1 amp, you can do 100 systems. Well, now if each system consumes half an amp, you can do 200 systems,” he said. “So for customers who have that set boundary, it definitely allows us to do larger installations and grow in those types of ways.”

AMD’s execution has resulted in major growth, with the company reporting in its third quarter that sales had grown 56 percent year over year. At the same time, AMD’s share against Intel in the x86 CPU market reached 22.4 percent, a 6.3-point increase from last year and its highest level since 2007, according to Mercury Research.

But the impact of Su’s leadership is perhaps most evident in the company’s stock price, which as of Nov. 11 was $81.28 per share, representing an increase of more than 2,300 percent since she became CEO.

“I think we feel very good about where we are, and it’s our intention to maintain leadership,” Su said. “Obviously it’s a very competitive world out there, and we know that, but we also have lots of ideas beyond Zen 3 today that are deep in development already.”

The Challenges Ahead

While AMD is on an upward trajectory, the chipmaker has plenty of work cut out for it.

One high-performance computing system builder executive, who asked to not be identified, said AMD will need to contend with the comprehensive and growing partner programs run by rivals Intel and Nvidia. Intel Partner Alliance, a new unified program, launches in 2021 and will bring together tens of thousands of partners of different types, while Nvidia Partner Network crossed 1,500 partners earlier this year.

“What we find is that the Intel program is the gold standard,” he said. “What I mean is that it is very structured in the sense that if you choose to partner with Intel, and depending on your level of partnership, your level of commitment, there is a matching program at Intel you can take advantage of.”

Jerome Sandrini, head of big data and security in North America at Atos, the multinational IT services giant that is No. 25 on CRN’s 2020 Solution Provider 500, said AMD’s channel support is “nowhere near the level of support” his company is getting from Intel, although he knows part of that is a function of AMD’s smaller size.

“We don’t really see the large program discounts, the joint go-to-market and the marketing support that we’ve been working on for many years with Intel,” he said.

But Sandrini thinks AMD can get there with time.

“There is recognition on both sides that we need to do more together,” he said.

Beyond AMD’s expanding direct coverage of top national and regional solution providers, the chipmaker plans to continue to reach a broader channel for component and commercial systems partners through its authorized distributors, although the two areas are kept separate. The company also has the AMD Partner Hub, an online portal for partners of all types that includes AMD Arena, which rewards individuals points for completing online training that can be used to redeem AMD products and systems.

“It’s a work in progress,” said Neil Spicer, corporate vice president of AMD’s global component channel. “We’re working very closely with all of our go-to-market and marketing teams on that evolution. But we’ve really focused on improving the tools that we do have.”

The high-performance computing system builder executive said one of the other areas where AMD needs to improve is on the discrete GPU front, where Nvidia has dominated in the PC and data center markets in recent years. Intel is also entering the segment with products targeting PCs and servers.

“AMD has been able to successfully challenge Intel on the CPU front, but they have yet to be able to challenge Nvidia on the GPU front,” he said.

Su said she sees the chipmaker’s aspirations in the GPU space as similar to what it has achieved with CPUs but acknowledged that it takes time to get there.

“As always, these things are journeys,” she said.

To challenge Nvidia’s dominance in graphics for PCs, the chipmaker recently launched the Radeon RX 6000 Series graphics cards for gaming PCs and a new data center GPU, the Instinct MI100, which the chipmaker said is the “world’s most powerful HPC [high-performance computing] GPU.”

But as for where the company is headed in the next few years, Su pointed to AMD’s major contract wins to provide next-generation EPYC CPUs and Instinct GPUs for two of the U.S. Department of Energy’s first exascale supercomputers: Frontier, which is set to go live in 2021, and El Capitan, set for 2023.

“If you think about what makes these deployments so challenging, you’re trying to get the highest possible performance in what is a very power-constrained and, frankly, space-constrained environment,” Su said. “And so it really does come down to total cost of ownership, which is so important in everyone’s data center, whether you’re a cloud environment or you have a hybrid on-prem environment.”

The one other area of concern for AMD, which has been cited by partners as well as Wall Street analysts, is to what extent the chipmaker can continue to execute as it closes on its massive, $35 billion acquisition of programmable chipmaker Xilinx, which is set to happen in late 2021.

“Lisa Su is as sharp as they come, and her team is as good as they get, but this is a big undertaking,” said one executive who is a longtime AMD partner and asked to not be identified.

But Su doesn’t see Xilinx as a distraction. In fact, she believes the acquisition, which will bring AMD deeper into markets like telecom, will make her company stronger.

“I think we’ve built a very strong execution engine for the past six years. We’re absolutely committed to our road maps and to our customers, and that’s not going to change,” she said.

But more importantly, Xilinx will give AMD more products and technologies to help the channel grow, which Su said is unlike any opportunity she has encountered before.

“I think it’s actually perhaps the largest growth opportunity for us,” she said. “And we hope to earn the trust of all the channel customers.”