For a long time now, AMD has been a thorn in Intel’s side.

Just the other day, I mentioned how Intel has started to strike

back by shipping quad-core processors. It has also started to squeeze

AMD earnings by lowering prices on its CPUs. So if AMD is starting to have a hard time

beating Intel to market with faster processors and can be sent into the red

with a wave of Intel’s hand, how can it compete?

One good strategy is to hit em where they ain’t. Or at least where they ain’t as strong. To

that end, AMD recently decided

to buy ATI to put itself right in the middle of the graphics card market. Intel

markets some graphics chipsets, but usually they’re included on motherboards.

Usually Intel graphics chips aren’t found on separate cards. That’s where ATI

and nVidia currently rule.

ATI has been around for a very, very long time. While other

graphics makers like S3, Diamond, Trident, and others have crashed and burned

along the side the road, ATI has always been a reliable, if not always

top-performing, chip maker.

For AMD’s sake, buying ATI is a pretty cunning move. Beyond

the talk about the union being able to create a ‘computer on a chip’, the

marriage seems pretty natural. AMD has been chasing the graphics market ever

since introducing the 3DNow technology into their K6 CPUs. ATI is a perfect

extension to those efforts. In addition, with the amount of graphics power

needed in Vista in order to get Aero Glass working properly, ATI and nVidia chipsets

are both only going to be more in demand in coming years.

Mergers are always difficult things to pull off however. AMD

will have to tread lightly in order not to mess ATI up in the short term while making sure that it gets the most out of its investment before Intel can react. That’s probably why they’re doing it before Vista ships.

Intel has also come close to putting AMD out of business several times by

cutting prices. So the timing of the merger is crucial to keep Intel’s price

pressure and more rapid innovation from permanently sidelining AMD while putting AMD in the position to really take off once Vista ships.

I’ve always liked AMD CPUs. Every computer I’ve built for

myself at home has used AMD chips. And I’ve always stuck to using ATI video

cards because you can always be assured that the company will be around to get drivers and support later. I’m

looking forward to see how AMD/ATI is going to fare against Intel in the