Chicagrafo

Kindle books are more expensive

2011-07-15T16:03:00.003-05:00

I find it very annoying that books for the Kindle are more expensive than the physical ones. I argue that their value is far lower, it is much easier to share a physical book than a Kindle one, and while the digital version has advantages, for long reading, nothing beats a handsome paper typography.

About Operating Systems

2011-02-13T11:08:00.002-06:00

"Those who don't understand UNIX are condemned to reinvent it, poorly." – Henry Spencer

One thing not mentioned in the controversy about ditching Symbian OS is that making an operating system is a very solved problem, just port the whole of Unix and you're done with it. If you want to subtract things from it, you better know what you are doing, 'cos you will get in real trouble.

Android is Linux, which is classic Unix at its core. Mac OS X is a BSD derivative, and BSD is a conformal Unix. Windows 7 is not a Unix, therefore it is a poorly reinvented one. All the Windowzes are the same: perhaps only merely adequate for the current fashion in the world of computing; but woefully inadequate for everything else. I would gamble hard on Microsoft not being able to do better than what they have in the last 15 years.

Nokia shitting on its pants followup

2011-02-13T10:15:00.002-06:00

I think this is the first time I write two articles about the same subject in the spawn of one day, it's that I found the perfect opposing view to better illustrate my opinions:
http://scobleizer.com/2011/02/11/dear-nokia-fans-youre-nuts/
written in defense of the move. My followup:

Scoble says that Windows 7 mobile does not have as many apps as Android, and that's why it apparently flopped. Complete agreement here. I went the Android route when it had about 18,000 apps and the iPhone had like 120,000 or seven times more applications than Android, and merely 15 months later the number of applications is roughly 130,000 versus 300,000, clearly both numbers are dizzying, but Android is growing much faster (look at these very exponentially trending graphs). For Windows mobile to ever be successful, it would have to populate its platform with many thousands of applications, and this requires to inspire legions of developers. I am a developer. Do I want to make Android applications? -- I am dying to, I am thinking about really doing it professionally and all. Do I want to make iPhone apps? yes, those too after Android. What about Windows 7, BlackBerry, or Symbian before the news? -- absolutely not; I am utterly fed up with bad APIs, I do not want to pollute my head with a single one more. (by thew way, there is no need to learn an API to know it's bad).

Scoble then goes on to explain that Nokia's very deep distribution network with it's supplier network is the game changer and Windows Mobile is better than Android. Well, bullshit. Nokia's networks might be better than Samsung, HTC, etc., but no way it is significantly better, and many of these also make Windows Mobile devices... I think that if the promiscuous integration of Nokia hardware with Windows mobile makes it significantly better than the other Windows Mobile, what will happen is that they will progressively withdraw and leave Nokiasoft alone.

Scoble also explains that it did not make sense for Nokia to compete in an Android level playing field because "Nokia can't compete with China's brightest minds", so, he sorts of admits Nokia's hardware to be inferior to what HTC and others can do...

So, there you have it: The virtual merger works for Nokia (which is extremely improbable) and then the Windows platform will be left alone of other hardware manufacturers; or it does not work for Nokia, and it gets killed.

Nokia said going Android was like peeing on your pants, IMO using Microsoft has got to be worse that shitting on your pants

2011-02-12T23:22:00.003-06:00

Nokia descended into irrelevancy and rather than learning from their mistakes, gave up its independence and chose the wrong ally.

First, the title of this article: Yes, Anssi Vanjoki said that Nokia relying on Android for its devices was like peeing on your pants for warmth in the winter, when he was executive vice president of devices and front runner to become the CEO. Then, like a friend of mine said, becoming Microsoft's bitch has got to be worse than shitting on your pants. Elop said about using Android that the "option was carefully examined, but would have left Nokia with little control over its destiny and killed its ability to differentiate from rivals" (quoted from here, got link from here). Am I the only one who thinks this is an evident oxymoron? how's any better turning Microsoft's bitch than being one of the many Android suppliers?, turning Microsoft's bitch let's you differentiate, alright, as the dumb choice.

There are several precedents that illustrate how bad the decision to dump Symbian (a nice platform, by the way) not to go Android but Windows 7 is; I will mention only one for brevity and similarity, Motorola. Apple (or Steven Jobs) screwed them with the Rokr, the precursor of the iPhone, and at one point, they only had bad products in the market, zero credibility, and looked pretty much done, a company soon to become another roadkill of emerging technologies. Fast forward a few years, and now, they have placed four extremely good products in the market: The original Droid (1) (called "Milestone" in other parts of the world), which I acquired in November 2009 and I still use, which I think was the best smartphone for a couple of months (the iPhone had greater processing power, but not so much more to compensate for the disadvantages of AT&T vs. Verizon and Android), then the Droid X came, the Droid 2, and now the Xoom. Using Motorola went in 18 months from being a shame to becoming cool.

Back when the Rokr was launched, I predicted it was going to flop, and that Apple will get in the handtop business with an iPad + Palm Pilot + mobile telephone and that this will be hugely successful because Apple would allow what nobody else dared: a platform open to developers that could take the product to the infinite of its possibilities; and the capability of creating a foundation of high quality. I was sure of the high quality, because Apple had the experiences of consumer electronics from the iPod, including video; the applications for Mac OS X; the porting of Mac OS X to x86 which strongly indicated the capability to port it to ARM, and the nature of Mac OS X itself, classical Unix plus the Apple intellectual property on graphics, media and user interfaces; although I was not certain about the freedom to make applications. I just thought that was the natural thing to do. For exactly the same reasons, the way that they apply to Microsoft, I am certain that they will continue to fail; and Apple allowed some freedom to make apps for the iPhone, for sure, but fell way shorter of what I expected or hoped for. Then, as I have repeatedly said, the opportunity for what became Android was left open, a truly free platform, and Android arose to the point of beginning to displace iOS one year after launched; and "snowballing" on the combined creative energies of multiple hardware manufacturers and thousands upon thousands of developers that leverage the great default application set developed by Google which feedsback on raving user and consumer enthusiasm.

Microsoft used all of its might for Windows 7 mobile, came to market with an otherwise compelling product, but the market rejected it as not up to the standard set by iOS and Android, it just isn't. And this is the platform Nokia chose. It is doomed to fail catastrophically. You only have to see that RIMM/Blackberry is fighting for its survival because the iPhone is entrenching and Android is growing by leaps and bounds.

In previous posts, especially "Exploration" (2) I have explained at length about why there is no substitute for real knowledge in the direction of a company. I submit another example of this, Sanjay Jha, since I mentioned the case of Motorola: he is not a marketroid, he is an engineer. I think a marketroid would choose Windows over Android, the big, established partner; versus the upcomer. We have seen the results of Sanjay Jha; we will see how Elop's Nokia will go to hell pulled by Windows

There is more to say about this theme...

(1) I recently discovered that what came to be the Droid was originally designed and developed as a Windows Mobile phone. Hard to imagine how it could have turned to be the fortunes-reversal product it was if so.

(2) From "Dirk Meyer", third footnote:

I dread showmanship in leaders. Examples: Steven Jobs, before ratifying his genius has thrice-empire-builder (Apple, Pixar, and Apple again) ran Apple, his first empire, into the ground, and had a diet of humble pie for years. Carly Fiorina and her nonsensical acquisition of Compaq; Jeffrey Skilling of Enron, etc. Observe that showmanship is all it takes to convince the meek to take great risks; while real knowledge is what determines their success, showmanship is therefore bound inexorably towards disaster, and the sooner it happens (Steve Jobs), the better.

Entanglement Basic Strategy

2011-01-26T09:20:00.002-06:00

Basic Entanglement Strategy

I discovered a simple to learn puzzle game, gopherwood studio's "Entanglement"
http://entanglement.gopherwoodstudios.com/
while checking on Google's Chromium's "Web Store".

As a 1300+ player, with a record in the best 25 ever, I think I might have something to say about the basic strategy of the game.

First, the scoring is very simple: When you place a tile, you get an arithmetic progression of points per tile crossed (1 + 2 + 3 + ...). Since the total number of points progresses quadratically on the length of the paths, it makes all the sense in the world to prefer to play single-steps if that way you prepare very long paths that you hope to eventually traverse. The principle is this: let's say you have the option to place two tiles to make a path of 20 squares, either make two steps of 10 squares each, or a sequence of length 1 followed by length 19: the first case will give you 5*11*2 = 110 points, the second will give you 1 + 19*10 = 191. So, there you have it, it is most efficient to prepare one long path even while making 1-length extensions to your line. This is the cardinal rule. For the sake of example, consider a 4-tile sequence of total length 20 and individual lengths 1, 1, 1, 17: You would get 1 + 1 + 1 + 17*9 = 156 points; versus a sequence of 5, 5, 5, 5 = 4 * 5 * 3 = 60.

Whenever you have freedom to place any of your two tiles and many rotation options, chose the one that connects the longest two "free" paths [[ I call a path "free" when neither extreme is a wall ]] inbound to the square you are placing. This strategy also minimizes the total number of paths.

In the early stages, try to keep the tiles that when placed at the six corner positions would leave no standing non-free path (a corner position is one of those that have three walls). Since in the corners your options are reduced to the minimum it is worth keeping those tiles around.

Try to connect non-free paths together as soon as possible.

In the later stages, make sure you have an exit path when you get into an isolated hole. Obviously try to keep the option to go over all the hexagons, but if going to an hexagon and back would give you two short paths at the price of not joining two long paths you could traverse later, then it's preferable to forgo that hexagon altogether.

Lastly, this game is stochastic, if you aim for an absolute record, focus on joining the longest free paths and joining non-free paths and assume you will get the hexagon you need; I don't think you can reliably get 2000 points or more playing it safe, playing safe, with my current understanding of the game, I get around 500 points reliably but it is extremely hard to get more than 1000.

Fellow blogger Nathaniel Johnston blogs about the theoretical maximum score:
http://www.nathanieljohnston.com/2011/01/the-maximum-score-in-the-game-entanglement-is-9080/

One non-related recommendation: For Christ's (or Alah's, Buddha's, etc) sake, please use Google's Chromium rather Google's Chrome, the fellow blogger "Manuel Jose" explains: http://www.techdrivein.com/2010/05/why-cant-we-all-use-chromium-instead-of.html

Dirk Meyer, great CEO. I don't know what happened

2011-01-11T22:33:00.003-06:00

Dirk Meyer surely was a major determinant on the survival of AMD this time. I am clueless as to the reasons why, after proven himself over and over, he got booted.

I did not follow closely AMD these years, but I know this:

1) AMD had a license to the x86 instruction set that prevented it from outsourcing more than 50% of its chips, among other things. The divesture of what now is Global Foundries and the outsourcing of production violated many of the terms for the license, nevertheless, Intel timidly enforced it, perhaps due to market conditions, for Intel, it seems optimal to keep AMD in torpor, at the brink of death, but still alive; blocking the whole "Asset Light" would have been fatal.

2) Intel could have kept the legal proceedings about its abusive market practices going on ad infinitum and deny AMD closure and cash

3) The AMD products were utterly unattractive, now, unattractive but perhaps cost efficient, as traditionally.

4) Fusion may be exactly what the emerging market of hand top computers (now known as smartphones) and keyboardless laptops ("tablets") require simultaneously powerful graphics, computing power, low chip count and power efficiency, which are integrated by Fusion probably better than any other option: nVidia's Tegra has the graphics but still requires a processor such as an Intel Atom. Intel, to date, has never been able to do powerful graphics. ARM implementations always require graphics coprocessors. For further advantage, Fusion does x86 and can thus tap the large development knowhow around Windows (*1) and Linux for x86.

5) Global Foundries has been a great success, covering the flank of were the chips are going to come from.

It does not make sense to abruptly change leadership right when long term strategic plans are coalescing into market opportunities.

I strongly dispute the thesis that AMD was flatfooted entering the market for Tablets, while it's true it got rid of Geode, the line of low power processors, for all its might, not even Intel has consolidated in this space; in my opinion the opportunity is now when AMD has a compelling option which could potentially take the world by storm. This has been the official reason for booting Meyer, so, it merits a closer look

Let us recap the timeline of smartphones:
1) In the beginning, there was not enough carrier bandwidth nor processing power to squeeze a sufficiently powerful computer in hand tops.

a) While useful, hand tops such as the Palm Pilot, without wireless and always-on access to the world could not become mainstream
b) There wasn't an ecosystem for applications for what we used to call hand tops back then, PDAs, "Personal Digital Assistants".
c) The mobile carriers had an oligopoly of abuse of people's communication needs; even today they continue to pretend that it makes any sense to charge $0.25 for a few bytes of transfer if they are SMS; $1 for mediocre quality "ringtones"; etc.

2) For reasons not known to me, the guys of Palm did not enter the wireless world, but left the opportunity for RIMM and Blackberry open. Blackberry positioned at the top market of data-hungry customers willing to pay hard for reading their emails wherever they were; they contributed by things like their internal messaging system(*2), which would not ever make sense in a perfect world, but since it provided an alternative to the abuse of carriers, through things like that it built a new market, what we now call "smartphones".

3) For reasons I don't clearly understand, Blackberry did not become mainstream, which left the opportunity for Apple to do things right and take the world by storm. It helped that RIMM burned foolishly opportunity costs en masse by courting Microsoft so that their crap would run in the Blackberries, instead of creating an ecosystem of application developers that not even today they have clearly managed to do, despite the obvious successes of the very different approaches about the same subject from Apple and Google.

4) Apple did everything right, it provided a convergence path to its fanatic user base of iPods, a fashion, hip, cool way to show status to those who already had smartphones; and the most important two things of all, it dared to bitch-slap silly the carriers about their asinine policies and created an ecosystem of application developers

5) Even when Apple did everything right, it left open the opportunity for Google to go full-tilt with free and open alternatives, which they took to heart and did everything right on their own.

Please observe that Apple did not get late into the smartphone area, it gave itself the luxuries of letting Blackberry saturate the market and even sabotaged the Motorola Rokr, an early attempt at an wireless-iPod-iTunes-phone; this, in my opinion, because the conditions were not given yet. This is what leads me to opine it won't matter whether AMD has a zero footprint in today's handtops; it is only right now when you can make truly compelling products in this space, and if it dares to gamble big, like it did with Opteron, AMD64, Hypertransport; which it won, or like Apple that dared to treat the carriers like its bitches, it could take the world by storm. But, as I have said several times before, there is no substitute for real knowledge at the head of a company. I guess that only engineers would have deemed the chances of going the Opteron/AMD64/Hypertransport route worthy of being taken; without the real engineering knowledge of whether the opportunity is there or not, you can not gamble your life. I fear AMD is losing real knowledge, vital to assess whether opportunities for great gambles are there or not. (*3)

Notes:
(*1): AMD, please ditch Windows, really. Do not get tangled and tied into a platform in strong decline, on the contrary, embrace wholeheartedly emerging ones, and while at that, the free/open ones. Riding Windows-based products nobody will ever again reach the world by storm; this is by design: Windows is the establishment and 100% of Microsoft objectives are to preserve the establishment, so it will make sure it will be able to control, curb and nip (castrate) any establishment threat and it is only with that intention that it associates with upcoming initiatives.
(*2): Where I come from, the blackberries continue to be very entrenched at the mainstream. The reason is that people learned to text through their Blackberry PINs, SMS were absurdly expensive, and internet chat networks came much later; full blown email is not yet practical even today.
(*3): I dread showmanship in leaders. Examples: Steven Jobs, before ratifying his genius has thrice-empire-builder (Apple, Pixar, and Apple again) ran Apple, his first empire, into the ground, and had a diet of humble pie for years. Carly Fiorina and her nonsensical acquisition of Compaq; Jeffrey Skilling of Enron, etc. Observe that showmanship is all it takes to convince the meek to take great risks; while real knowledge is what determines their success, showmanship is therefore bound inexorably towards disaster, and the sooner it happens (Steve Jobs), the better.

Crashing Windows or Linux

2011-01-03T20:08:00.002-06:00

When you say "I wrote a program that crashed Windows", people just stare at you blankly and say "Hey, I got those with the system, for free" -- Linus Torvalds

I might add, "but if your program crashes Linux, that's an accomplishment on Cracking/Hacking".

Happy New Decade!

2011-01-01T14:30:00.002-06:00

At least for Christians...

I am amazed how it is a point of contention that this is the first day of this decade, which did not begin one year ago. Our numeration for years is defined so that it began on year 1, not year 0. So, 1 + 2010 = 2011 != 2010

Ubuntu 11.04 Natty Narwhal and Wayland, AMD/ATI, nVidia

2011-01-01T13:37:00.003-06:00

XWindow is very old, it is not a surprise that someone daring like Mark Shuttleworth might decide it's time to move on towards Wayland, I found this bit important, about the progress this project shows: "[it] is sufficient for me to be confident that no other initiative could outrun it".

Natty Narwhal will be the first step away from XWindow, I personally have not began using 11.04 but I soon will, so, I don't know much how far they are going in this step, but everyone, from the developers summit on, reports this is the most daring release of Ubuntu ever.

I wanted to check on nVidia's support for Wayland, since I have been buying only nVidia cards since I last had the disappointment with the ATI HD 2600XT 512MB back in October 2007. It turns out at nVidia they don't have plans to support Wayland. What a turn off! As a heavy user of video cards (I program CUDA and occasionally also 3D game) I am disappointed that we Linux users have to fight so hard with suppliers for them just to enable their stuff on the new projects; I don't quite understand the attitude either: If, let's say, ATI would come and say "we will support Wayland and will help make sure support is there for the time Ubuntu is based on it", I would switch, and begin learning their equivalent of CUDA, participate on their fora, etc., and my influence in my circle of friends will steer business to them. I mean, we are customers they want on their side because we are "leading edgers", "trend setters", you get the point.

Moving to ATI would be a big step for me, for the HD 2600XT, I hated that the Windows drivers were Catalyst-based 'cos Catalyst relies on .net and were incompatible with everything. I kept that sucker around to check the evolution of drivers in Linux, but unfortunately, I never installed it again, I must have it somewhere. In any case, the experience was very bad in Windows; and I got negative feedback about ATI about how BAD their products were based on my experience, it takes something important like supporting Wayland for me to revert.
But there are many reports that ATI (AMD) has really caught up in Free and proprietary drivers for Linux, so, I might buy an ATI card after 3 1/2 years, I am trying to give them the chance.

Check this video about what's coming in Natty:
http://www.youtube.com/watch?v=tf4X2pdAO0A

Ubuntu AMD64

2010-12-28T22:22:00.002-06:00

I have been using Ubuntu almost exclusively, and AMD64 in 3 of the four computers I use.

When I moved to New York, I came only with an Ubuntu laptop, which unfortunately is an Intel Core Duo limited to 32 bits. Anyway, I discovered that people respect better your refusal to use Windows if you really don't have any installation, not even in VMs, otherwise they just think you are being uncooperative.

After a few months of Windows-abstinence and forced to really do 100% of stuff in Linux, I really got liberated.

By then, when I managed to bring my heavy boxes to New York, I purged them of Windows and got on my merry way. By the way, it has actually been merry. Ubuntu Linux not just gives me freedom, but it also incentivizes doing productive use of the computer; and disincentivizes being a passive consumer. If you think about it, for example an iPad: Apple solves most of the configuration issues so that you use your iPad and enjoy content; they charge for their design, so, everybody is happy; but you might use your iPad to watch videos and read books all they long, that's passive; if you would even think of, let's say, learning Haskell, then the device and its configuration so nice to turn you into a couch potato get in the way. Conversely, if you want to make some nice code, in Linux you have all the enticements; in the end I have become a tad more disciplined.

My main gripe about Ubuntu in particular is that the automatic configurations do far too much that you don't have visibility of. And there are many options that you can not get to through the user interface; and this may give you the worse of both worlds if the User Interface somehow disagrees with the actual configurations: The novice can't do what he wants, and the expert who does not need the dumbed down UI is interfered by its options. It happened to me recently: I had set up a non-standard port for VNC, and Ubuntu dropped the "advanced tab" in the "Remote Desktop" option. I forgot this, and then I needed VNC and it would not work no matter what I tried. Until I got to conclude that the user interface had an option somewhere that needed fixing, which forced me to learn about gconf-editor to get to the config options I set before an automatic update that hid them from me.

With regards to the 64 bit issues, both AMD and Intel computers work without a hitch; I only realize I am using 64 bits when I have to install third party binary libraries or applications; that it gets confusing whether you have the 32 bit and 64 bit libraries you need

HOT Apple Rumor

2010-04-28T15:26:00.001-05:00

New rumor after Apple (APPL) confirmed it acquired Intrinsity for an undisclosed ammount (in the 100 to 200 Milion Range), is working on a new iPad. Among the specs:

10.1 Inch Screen @ 1152x720 (HD)
No Changes in the Physical size.
New Processor (A5) based on the ARM Dual-Core Cortex A9
New Battery Technology Boasts Operating time to 12Hours.
WiMAX or LTE module (depending on market).

Codename: Max-iPad.

Fake revolutionaries making the world a worse place. The Colombian FARK, their admirers and the "POWs"

2010-04-03T16:55:00.004-05:00

I get feed-up and disgusted by the people who call themselves or become "revolutionaries", and latter, when TSHTF justify everything saying: "In the past it was the same".

Those who call themselves revolutionaries should be so to IMRPOVE the world and the Status Quo, and to IMPROVE their antics, ethics and to IMPROVE themselves as persons... Not to be like the old system.

Look at the so called "Fuerzas Armadas REVOLUCIONARIAS de Colombia (FARC)" (REVOLUTIONARY Armed Forces of Colombia). Them, as well as many of their sympathizers/ defenders/mystifies call the people they have in their power "Prisoners Of War" (POWs)...

Well then, let's indulge... the third article of the Geneva Convention for the Treatment of POWs (here the full text: http://www1.umn.edu/humanrts/instree/y3gctpw.htm ) :

«In the case of armed conflict not of an international character occurring in the territory of one of the High Contracting Parties, each party to the conflict shall be bound to apply, AS A MINIMUM [emphasis mine], the following provisions:

1. Persons taking no active part in the hostilities, including members of armed forces who have laid down their arms and those placed hors de combat by sickness, wounds, detention, or any other cause, shall in all circumstances be treated humanely, without any adverse distinction founded on race, colour, religion or faith, sex, birth or wealth, or any other similar criteria.To this end the following acts are and shall remain prohibited at any time and in any place whatsoever with respect to the above-mentioned persons:

(a) Violence to life and person, in particular murder of all kinds, mutilation, cruel treatment and torture;

(b) Taking of hostages;

(c) Outrages upon personal dignity, in particular, humiliating and degrading treatment;

(d) The passing of sentences and the carrying out of executions without previous judgment pronounced by a regularly constituted court affording all the judicial guarantees which are recognized as indispensable by CIVILIZED [emphasis mine] peoples. »

¿Who in this open Blog will dare to tell me that the "POWs" that the FARC killed when the army tried to rescue them had a fair trial (d) and had their rights respected (a)?

¿What about the "POWs" in the middle of the jungle, with shackles up their legs, malnourished and with bad medical treatment do they comply with provisions (a) and
(c)?

¿What is going to be the excuse?:
¿That the prisons in Colombia are as bad (but you can bet that the FARC prisoners received calls, letters and visits from their families)?

¿That the "POWs" in the jungle had the same food and doctors that their captors had (not only I doubt it, but I can bet that the captors had no shackles up their ankles, even without the chains)?.

¿That the "gringos" did the same in Gitmo or Abu Gharib?

Well, no, those are not valid excuses or justifications...

Well then... ¿could we say that the FARC are a (some morons would wish) "belligerent" and "revolutionary" party which does not comply the MINIMUM conditions of the Geneva convention on the Treatment of POWs?

Well, if it is like that, they are not REVOLUTIONARIES, They are animals, savages, Yahoos, in the tradition of the stories of J. Swift!

Sorry about the rant, this is a very sensitive issue for me and my family.

Salud!
WYF-89-xxx99

Ali: Visiting the U.S. can be a harrowing experience

2009-10-02T11:19:00.002-05:00

A news agency, reporting on the Olympic bid, included the following:

An uncomfortable moment for Chicago came when an IOC member from Pakistan, Syed Shahid Ali, noted that going through U.S. customs can be harrowing for foreigners.

The remark has been taken down before I could track its origin, but it is, I think, the explanation for Chicago's embarrassment.

I just blogged a few hours ago about this moment (here), I thought Obama clinched the nomination with his words of reassurance. But the fact remained that visiting the U.S., with the hurdles of going through and ever more byzantine and medieval process to get a visa, obnoxious and intrusive security checks at customs, measures such as not carrying liquids that are obviously mere security theater, and in general dealing with the ugliest arrogance which which this (otherwise) great country sometimes treats the rest of the world, turned into such a repulsive experience that the IOC Committee members would rather have the tourists be robbed at Rio de Janeiro.

Overkill -- "America at its best"

2009-10-02T02:54:00.003-05:00

"America at its best": Those where the capital words by President Obama at Copenhagen.

The circumstances where one of the last questions from the members of the selective committee, just after a question about what would be the legacy of the Olympic Games in Chicago, that question was answered, and then Mr. Ali asked something along the lines that it is notorious that sometimes the United States treats harshly some visitors [ I understood that to encompass everything from visa paperwork months before a visit to the intrusive searches by customs and TSA officials, among others ] and that how are the authorities going to cope with an influx of millions of visitors. To that, there was an answer by one of the presenters to reassure Mr. Ali that the organizing committee already has the full cooperation of the agencies of the federal government involved, but Mr. Obama wanted to add something. Obama said that one of the things that he wants to make sure about the legacy of the Olympic Games in Chicago is for the world to see America at its best. He followed with a few remarks on the sense that Chicago looks like the world, that we have people from all over, and that will help them feel welcome; and that they will work to make sure the world gets to know that America at its best is open to the world and will make feel people welcome.

Then, an odd moment of silence ensued, the silence of people thinking right after great words have been said. And a round of applause for the President followed. Then the announcer said that there were no more questions.

I think the President "clinched" the deal right then and there, not just decisively, but overkill. The few minutes I watched made me thought that the people there had proved the proposition that the Olympic Games at Chicago will be more than great, they will be memorable.

At this point (3:15 am Chicago's time) I fail to even imagine how Rio de Janeiro would top that.

The Olympics bid

2009-09-28T10:42:00.002-05:00

I was expecting Obama to make a "surprise" visit to Copenhagen the very last minute to help Chicago get the Olympics, but, although he is actually going the last minute, it won't be a surprise visit.

What is the significance? For one thing, since no other President of the U.S.A. has taken it so personal as to go plead to the IOC to get the Olympics, I would be very surprised if the IOC slights him making the visit a wasted effort.

Ever since I came to live in Chicago in 2003, I have been thinking that this great city has turned into something like "the greatest hidden city". What I mean by that is that most people think they know what Chicago is all about, and since the city has declined in worldwide influence, that the city is less interesting. While the influence decline is true, it has experienced a positive evolution; that's perhaps why I keep seeing that new visitors get a pleasant surprise.

Chicago has had the same chain of lake front parks it has ever had, and you can go to the same historic markers people went 50 or 60 years ago, but the visits are nicer today. It is not just Millenium Park, but other less specific things. A friend of mine came this summer, and I took him on a bicycle tour of the city, that in itself was a great novelty to him. He was absolutely impressed with what we saw and where we went; but I doubt a tour like ours could have been practical only 10 years ago, with much higher crime rates, fewer bike lanes, when the buses didn't have the racks, when you couldn't just go to a rent-a-bike and had to have your own. The very popular Segway tours didn't exist until 2004 or so, I think. While the view from the Sears (Willis) Tower is still the same, although it doesn't look as impressive today because while it was the tallest building in the world, today is merely the fifth; but it didn't have the all-glass balconies it has since this summer. Try stepping on clear glass 400 meters above the street level!. A friend from New York was marveled at how "new" the buildings look. I kept telling him that that was nonsense, because the buildings were even older than those in New York on average, but he insisted that he knows they are older, but they look newer. It helps that Chicago is depopulating very slowly, and the new work technologies require less physical presence, which means that the city is becoming less stressful (that is, the same world-class infrastructure is enjoyed by slightly fewer people). This may explain this new phenomenon in which affluent people who used to live in the suburbs is coming to live in the city proper; that provides for renovated neighborhoods with lots of fun things to do. There are other things as well, that make this a "hidden city". For example, 40+ years ago when African Americans where considered nothing short of second class citizens, they were making Jazz and Blues that still reverberate today, and the places where they did this were not touristic attractions back then. There is a very large collection of small factors that make visiting Chicago a much nicer place to visit today, consistently exceeding expectations.

But this city has always had many worldwide attractions. And for events such as Olympics, it is helpful that Chicago has lots of ethnic communities and not just the usual, many peoples from all over the world will feel at home here, much more than in Rio de Janeiro or Madrid.

I have the feeling that the time is not right for Madrid. If something can be objected of Chicago is that the USA has had many Olympics (LA 84 + 12y to Atlanta 96, + 20y tentatively to Chicago), but then if Madrid would be chosen, Europe would have three Olympics (Greece 2004, London 2012, Madrid 2016), almost consecutively, and Spain two Olympics within 24 years. That, I think, is the most important advantage of Rio de Janeiro, that the Olympics have never gone to South America. But I don't think Rio will get it. To begin with, violence and crime are very serious problems, and it remains to be seen whether Rio would really benefit from all the infrastructure that would be needed for the Olympics. Chicago, on the other hand, regardless of whether it wins the Olympics bid or not, has already begun to execute the urban plans for the areas where infrastructure for the Olympics would be built, getting the Olympics or not, Chicago already knows what to do with those areas. And for sure that after the games we can put to good use any infrastructure that would be built for the Olympics. Regarding existing infrastructure, it is true that Rio de Janeiro's is enough, but Chicago's is superb.

Some people in this city has been short sighted about the Olympics. They are right in that we certainly don't need to incur risks nor expenses to continue to make this city great, but like I said, today's Chicago is much better than what the people think it is, thus, nothing better than this opportunity for the city to be rediscovered. Coming back to my assertion that Chicago is the "greatest hidden city", ever since Obama was elected, I have been saying that he would help the city to be re-discovered. Among other things, he not just claims Chicago to be his home, but he is also the only unapologetic urbanite President in recent history, that is, he is a proud Chicagoan. I am sure the First Lady and the President will be a very effective one-two punch on behalf of the city, as you know, I met Barack Obama before he was famous, and even back then he was "charming", someone you would like to stop to talk to even if he is a total stranger and you are in a hurry, as it happened to me. And we talked precisely about the personality of Chicago, how this is a place like no other. From what our mutual neighbors who also know Mrs. Obama say, she is charming too.

About how Olympic bids are won or lost, I don't know of any back room negotiations and deals, not even whether they happen. But I am sure of something: The IOC is in the show business. They want to make sure that their show is going to get promotion. Now that the visit has been announced, the members of the IOC will have a chance to check for themselves the showmanship (i.e. "charm") of the people who would promote these Olympic Games, like I said, Mrs. and Mr. Obama Chicago are ideal for this. Then, it remains to be seen the level of committment, and by the mere virtue of the president taking a pause of his hectic schedule when his top political priorities are being debated to go plead for the city of Chicago represents a guarantee that he cares. Mayor Daley, has more than proved total commitment.

Disclaimer: I provide an informal service of "Bed and Breakfast" for work mates, I call myself "Chicagrafo" because I discovered my skills for photography here, and I am thinking about providing an informal guided tour service, not just the city as a whole, but featuring historic places such as Hyde Park, the University of Chicago, and the Obama's place, all within short walking distance from the place to stay!

Windows 32 bits, all versions: Max memory is 3GB

2009-09-11T14:16:00.002-05:00

A friend of mine contacted me to ask me what is the maximum amount of memory that a 32 bit windows may handle. Because he knows that it should be 4GB, nevertheless, he has seen very many computers, especially laptops, that come with 3GB.

Regardless of which Windows of 32 bits you are using, whether XP, Vista, or Windows7, the limit is around 3GB. The reason is that the BIOS of the computer will reserve addressing for memory mapped I/O for the video card, PCI devices, etc. The reserved addresses depend on your devices, but it should be clear that a 512MB video card will take at the very least 512MB of addressing. When the operating system starts, it must respect the reserved addresses and if it is a 32 bit Windows, then it will be able to only address 4GB minus whatever the BIOS took. A 1GB video card will leave less than 3GB of addressing space to refer to RAM, typically, 2.8 GB.

Unbelievably, Microsoft keeps doing Operating Systems susceptible to these kind of problems. 20 years ago, it was the problem of Low, High, Extended and Expanded memory, exactly because of the addressing space that the BIOS reserved: The 80x86 in real mode have only 1MB of addressing space, of which the BIOS needs about 384K to map devices, so, the RAM memory addressable with the "real" mode is 640K. When the AT computers and their successors began to come with 1MB or more, one had to do very complicated DOS settings so that the DOS would map a memory window in the BIOS region to the memory above the 640K, and do the swapping. Alternatively, you could have a DOS extender that would run the application in "protected mode", using the full addressing capabilities of the processor, but that had to reset to "real" mode every time it had to use DOS. The problem is that DOS was absolutely tied to the "real" mode of addressing, a major design fault of Microsoft.

Nowadays, we have grown our memory usage 4096 times (12 bits in 20 years, or a year to year rate of 51% growth) and experience the same problem...

What should Microsoft do?
1) Port all of its device drivers to 64 bits. One of the contributors to Windows XP popularity is that, without XP being architecturally any superior to Windows 2000, it came with a very large catalog of device drivers and this greatly simplified the major hassle of hunting for the device driver and dealing with the installation complications. But today there are gazillion devices for which M$ made device drivers for, that don't have an updated version for x64.
2) It should create a virtualized sandbox to connect peripherals, especially USB peripherals, in which the user installs the old 32 bit drivers for the device and internally the operating system runs them in a virtual machine environment.
3) Put pressure on AMD and Intel to extend the AMD64 instruction set with a driver compatibility mode compatible with the driver model of old 32 bits. (Remember, AMD64 is binary compatible at the application level, but the device drivers and kernel modules need to be "long mode")

What should the customer do?
1) Cease and desist at using 32 bit Windows as host operating system
2) Try Linux 64 bit and virtualized 32 bit Windows
3) Put pressure for device manufacturers to provide x64 drivers

Do Corporations have the right of free speech?

2009-09-09T00:17:00.002-05:00

Of course they don't.

As a matter of fact, they don't have any rights. It is their owners who have rights, so, I guess that as a proxy for the rights of the owners of corporations, many legal systems in the world confer to corporations privileges that are very similar to rights, and define the figure of a "legal person".

In the United States, it happened an amazing process that I have seen called as "Corporate Personhood", through which associations of people and money to make profits (corporations) progressively acquired rights given landmark Supreme Court decisions, especially after the Civil War and the reconstruction amendments that tried to extend the constitutional protections to the recently freed slaves.

The fact remains, naturally, that a corporation is not a free citizen, so, treating it as a citizen will cause problems.

Today the Supreme Court will decide whether the free speech constitutional guarantees apply to Corporations and other associations. I am particularly concerned about the possibility of the court finding that free speech protections apply to corporations even in the case of speech intended to influence elections and public policy.

It is not difficult to imagine that corporations, although inanimate entities, may have "opinions" and "political opinions". Remember what corporations are: associations bound by law to make as much profit as they can; therefore, they have interests to promote. The corporations also have the means to promote their interest; sometimes, they can even make their case appealing to the public; sometimes they can not, because their case is detrimental of the public, but they can just keep quiet about that. For example, a high-technology corporation may need highly-skilled labor from other countries, and has the means to promote all the benefits of such immigration while never even mentioning the negatives, that is, corporations may present their cases to the public to decide, that is, they may have opinions.

There are a gazillion things wrong with allowing corporations to promote political positions.

It is very bad already that money matters a great deal in modern politics of the United States. I should remind people that this country already tried the idea that wealth was an indicative of the capacity to self govern and decide public policy issues, many states had qualifications to vote that included ownership of properties or poll taxes that effectively excluded poor or non wealthy people from voting. But it was proven an evil so bad, that the 24th amendment to the United States Constitution was submitted to the States and ratified in 1964, and still, the problem persisted at the State level until the Supreme Court decided that poll taxes where in violation of the equal protection clause of the Fourteenth Amendment (that is, the whole 24th amendment was always a moot point, because all poll taxes, for Federal or State elections, at least according to the 6-3 vote of the U.S. Supreme Court in "Harper v. Virginia Board of Elections" were unconstitutional). As can be seen, the system has moved backward, wealth provides more and more influence at public elections; only that now it is not legally sanctioned but it happens in practice.

But, if corporations are granted freedom of political speech to influence elections, I am concerned not just about the evils of eroding the principle of "one person, one vote", with "one person, his dollar votes", but that the dollar votes themselves do not represent all the dollars evenly. I mean, someone who has made some fortune is arguably someone competent, and it is not very crazy to think that there really isn't a problem to grant more influence to those who have more dollars. But, as I will show, the dollar votes do not count equally every dollar. So, there is the risk that a few individuals may use their above average wealth to become even wealthier and thus even more politically influential. By the way, I haven't seen the following argument being mentioned, so, there is a chance that it is original of mine.

It is a consequence of the fact that every corporation over represents the interests of its controlling majority. Meaning that if I control 50+% of a corporation, and an adversary controls less, I can bias the activities of the corporation to consistently privilege my interests over the non-controlling owners. Since corporations are allowed by law to own other corporations, then, I can control, let's say, 51% of a small company "A" that itself owns 51% of a larger one, "B", which itself owns 51% of an even larger one "C", and then a "D". Ad infinitum. So, while I just own 6.25% of "D", I effectively control it, I have magnified the influence of my money by 16. With enough consolidation, I can exert massive influence on an economy. By the way, this scenario is not implausible. There have been periods of great "consolidation" among the corporations, and there have been people like J. P. Morgan who had an enormous economic influence, not just in the United States, but in the whole world, while never having a really big fortune (I just read in Wikipedia that his worth at the time of his death was equivalent in modern figures to $1.4 billion, which is rather puny compared to his worldwide influence). So, the process through which consolidation multiplies the power of some people is a very real phenomenon. Thus, I am worried about people not just leveraging their economic power, but also their political influence in the same measure.

Any Libertarian must be very concerned about the possibility of giving such mechanisms to the few owners of controlling interests of the mega corporations.

But these two are not all the evils from this very bad idea of granting freedom to influence elections to corporations. Others have explained them, so, I will just mention some in here:

What about the political freedom of employees? If a corporation exercises its "right" to influence elections, then, some employees must carry out that activity; but what if the political opinions of the employee are the opposite of what his work duties must further?

Corporations are bound by law to maximize profits, but the profits of corporations are not the only goal of a society, there may be others, such as protecting life (as in environmental protection, healthcare, etc). So, if a corporation may further its profiteering interests, by law it must do so. Let's say a municipal transportation company. Let's imagine that the municipality is discussing a transportation subsidy, and some voters want to go to a demonstration against. So, is the company authorized to deny service to the protesters, because it is bound by law to maximize profits and thus to minimize the threats of the subsidy not being passed?

From time to time the Supreme Court concludes awful mistakes and sets dreadful precedents that take decades to correct, there is reason for concern

And the Oracle conquered the Sun

2009-04-22T19:06:00.004-05:00

One of the most commented news in the Java world these last days has been the Oracle acquisition of Sun, practically from under the nose of IBM. For some (me included) this came out of nowhere, but it was not a surprise.

We knew that Sun had to be bought eventually by some other giant. There were only four names that could be interested in acquiring Sun, in order of "importance": IBM, Oracle, Microsoft and Google. From these, Microsoft would never pass an anti-trust evaluation of the deal, and Google really doesn't need anything from Sun (owning Java and MySQL could be nice, but not needed).

This leaves only two major players: IBM and Oracle. Given the failed negotiation with IBM it was just a matter of time for Oracle to make the move. I just never expected it to be so soon.

Obviously people are asking "what now?", and the web is filled with speculations and analysis. So here is my take.

From my point of view, Oracle just made one of its best acquisitions of all time.

First of all, they have Solaris and ZFS (and the corresponding teams). Solaris is the OS where the Oracle RDBMS runs better, and ZFS is THE best filesystem to date. We can expect Oracle to take advantage of having the three development teams (RDBMS, Solaris and ZFS) working at the same place to make the RDBMS take full advantage of the Solaris/ZFS stack.

Combine a Solaris/ZFS-optimized RDBMS, the low-power/low-heat Blade servers and Sun storage offering, and you get a killer box for all database needs. All under the Oracle brand. This, by itself, is worth the $9.5 a share that Oracle paid, and positions it on par with IBM.

As a side note, the Solaris/Oracle on Sun servers is a quite common configuration, so Oracle is also expanding the offering to its existing customer base (meaning more money flowing in the Oracle direction).

Then, we have Java. A language, a platform, that is a monster by itself. No other platform beats its ubiquity (yes, not even Windows, if you count the smart phones).

Java is at the center of Oracle's middle-ware strategy. The possibility of IBM controlling Java may have been the trigger for Oracle to pick up the ball and buy Sun less than a month after the IBM-Sun deal was broken.

But, what Oracle did exactly bought regarding Java? The brand, surely. But does it really matter? Not much. Google is already distributing Java that is not Java in Android and Google Apps.

What else? A permanent seat on the JCP? That is also a nice thing to have, as it has veto power over the features of Java The Language. But Oracle itself has proposed that the JCP should be an "open independent vendor-neutral Standards Organization where all members participate on a level playing field", that "veto power" may disappear.

And the code is "free" as in both "beer" and "speech": all you need to do is go to the OpenJDK project, take the code, fork it, and you have your very own Java as long as it complies with the Java Language Specification and passes the TCK (the Java Technology Compatibility Kit).... wait...

Here comes the issue, why Oracle didn't want IBM to get complete control of Java: Sun controls the IP of Java, and only grants it to a third party implementation if it passes the TCK, which is freely available to everyone but will poison the license of any code that is tested under it to make it non-OSS friendly. Yes, this means that the resulting code cannot be released under Apache, GPL, LGPL, BSD or any other other OSI approved license. Also, a TCK code can only run on non-secluded PCs, ruling out servers, cellphones and PCs in booths and kiosks.

Do you want to make an implementation of Java, claim that it is Java compatible and distribute it? Pay Sun for the commercial use of the TCK. IBM and Oracle did this.

The latest Sun stunt on Java was to announce the release of the JDK 1.7 without a JSR (Java Specification Request), which means releasing a version of Java without a language specification or TCK, the two components necessary for an independent implementation, this effectively blocked all non-Sun Java implementations from upgrading to JDK 1.7. Who where the two most affected companies by this stunt? IBM and Oracle, the only two serious alternative JVM implementors.

So, what Oracle actually buys from Sun is the Java IP. They can now upgrade JRockit to the next Java version without needing a language spec or a TCK, and claim it is a Java compatible implementation, because now that they own the IP they can call a "Java compatible implementation" anything they feel like it.

This puts them in a very unique position: Either they stay true to what they wanted to do on December 2007, creating an external standard body for Java and giving the TCK for free and without ANY licensing burden, OR they can continue the Sun strategy and release the JDK 1.7 without a TCK, which could hurt IBM's middle-ware business.

As a final note, the lack of IP on a "Java" implementation, even if it does not claim to be Java (like Project Harmony) may not seem very important to us mortals. But it is critical to corporate lawyers. For a more detailed analysis of the Java IP, how it is acquired by third parties and how it may be a risk, please read these posts:

No Java SE 7 - The Oracle perspective

A question of IP

Welcome to Soronthar -- Our third contributor

2009-04-21T17:43:00.002-05:00

I was having a conversation with one of my friends who is an excellent technology commentator about the Sun Microsystems acquisition by Oracle, and since he is extraordinarily knowledgeable about Java, I encouraged him to publish his very interesting insights about the triple interplay between Oracle, Sun and IBM around Java that perhaps drove the news we are commenting today. We should expect his article to appear soon.

His name is Soronthar, and he will become the third author contributing for this blog. Quite an impressive lineup.

AMD's report: "Flesh wound!"

2009-04-21T17:21:00.002-05:00

The title refers to Monthy Python's "Holy Grail", of course. I mean that AMD is pretty much in a terminal process, and the story giving the rounds is that AMD beat the expectations by losing "just" 66 cents per share, or 1/5 of the share value lost in a quarter...

Now, I must sort of apologize. I called repeatedly the multi-year delay in providing details for the "Asset light/smart" strategy mere bullshit; because we all knew the terms of the license prevented AMD from not manufacturing the vast majority of their chips. It turns out that it can be argued that secrecy was necessary in preparation to actually break the license. This is sort of an example of the terminal desperation AMD is in.

It may get away with it, though. It is not clear to me whether Intel prefers a dead AMD or an AMD in torpor.

Again, investing in AMD is crazy, it doesn't matter how, because AMD is the football everyone is kicking around according to their non-public interests.

Farewell to Sun Microsystems

2009-04-21T16:33:00.002-05:00

Some quick blogging about Sun and Oracle:

The first time I blogged here about Sun it was to criticize their lack of coherence: They had this market prong of Java which commoditizes the computing platform, and at the same time had the "boutique" Sparc hardware, along other things that I called a "multiple personality complex" trying to be open and proprietary at the same time. Nevertheless, Sun came a long way during these 3 1/2 years. They at Sun kept capitalizing on opportunities thanks to a practical approach: They deepened their AMD Opteron offerings, early in the cycle of Intel's Core architecture they began to also offer Intel without de-emphasizing their Sparc offerings. They kept opening their businesses, launched --finally!-- an Open Source version of Solaris, allowed Java to become ever more free, continued providing support to OpenOffice, gave the reins to "Mr. Open Source CEO" Jonathan Schwartz, acquired MySQL and VirtualBox. I was very optimistic about the end result of all of this, and wrote a blog about it which I recommend to the dear reader; in summary, all of this openness and reliance on Open Source enlarge a market for the products of Sun, and allows the participants in that market to move faster than the industry. This success was assured by the history of IBM's embracing of Linux and Sun's very Java; and although Sun was very late to that game, it still wasn't too late.

A little before the acquisition of MySQL I had already taken a small bullish position on Sun. My intention was to accumulate over a period of three years, with a lot of patience at the beginning acknowledging that the traditional businesses of Sun were in shambles, without any clear prospect of re-vitalizing them, but I wanted to get early due to my conviction about the results of the evolution that was (is) undergoing. The plan of selling covered calls wasn't losing although the price was declining, until the crash. This crash zapped my conviction on Sun because with a bad economy the prospects of a struggling boutique shop had to include bankruptcy, so, I didn't accumulate, but neither sold.

Then came the news of the IBM acquisition, that made little sense to me. At this point, I got tempted to sell, to perhaps buy back after the bubble bursted, until I heard that the Sun board had rejected the IBM offer. I reasoned that the board probably knew what they were doing, perhaps there could be a better option for Sun down the road, and decided to wait. Then, I got to know that IBM also thought it over, and as a financial journalist said, they were not willing to undergo the "financial proctological exam" of the regulatory agencies to approve the merger. By the time of the Oracle announcement, I thought I had screwed it again, losing my best chance to get rid of what I had of Sun; but that wasn't the mistake I made, I should have observed that the market itself had merged Oracle and Sun (almost all of my customers who run Oracle run it on top of Sun, anyway, the correlation is undeniable), and I should have remembered the Dvorak argument about Oracle killing MySQL using Sun as a proxy. Further examination about Sun's leadership at initiatives such as the computing grid are an strategical theater of operations that Oracle has been slow to position itself at. With Amazon.com's EC^2 (Elastic Computing Cloud) and all of those other cloud initiatives taking hold, Oracle needed something powerful to help them succeed at their belated entry in that space.

This acquisition makes a lot of sense to me. The financial journalists have already discussed the obvious reasons why Oracle has a relatively easy task of making this acquisition work; just the advantages to supply truly integrated platforms to customers is enough to justify this acquisition, but at deeper strategic reasons the acquisition makes even more sense.

The really interesting question, that I dare not forecast about, is what is going to happen with MySQL, Java, OpenOffice, and VirtualBox; depending on how you look at it, MySQL and VirtualBox either cannibalize pre-existing Oracle businesses, or represent entries into markets that Oracle is not strong at today, so, it's difficult to forecast in what direction would Oracle ultimately move. About Java, I don't see whether Oracle will treat it with indifference (dis-investment) or would try to steer it towards helping some strategic initiatives. About OpenOffice, I am curios to know if Oracle really wants to intensify the war against Microsoft's sacred cash cows. Open ZFS, Solaris and Solaris are clearly valuable assets that would continue to help Oracle given their orientation towards high end performance, the segment at which Oracle wants to remain as strong as ever. All of this lack of clarity prevents me from transferring my shares to Oracle, but furthermore, I think Oracle suffers from a condition that makes me abstain from taking bullish positions: Oracle does not operate in a market at which the common people will eventually become customers, but only a high-end that it is not clear to me that it will even continue to exist. This is like nVidia: Good company and all, they began doing 3D accelerators for a high end segment of the market that was bound to become mainstream in due time; and it became mainstream, and nVidia became a major player in the industry. But today, its market segment is shrinking to the very few people who require absurdly high computing capabilities, therefore it is very risky to get into bull-side.

Finally, this acquisition provided me with something to hunt for in the stock market: technology companies that are struggling and the market has merged its products to those of much stronger companies, mergers may be happening.

A decade of only AMD for new processors is over

2009-03-14T11:32:00.012-05:00

It has been a while since I posted an article, so, let me begin with some bits of news:

1) I am particularly busy on my day job, doing high performance mulithreaded software
2) I am evaluating Windows 7, of which I have bits and pieces for an article
3) I have studied nVidia's CUDA, of which I would be posting some articles too
4) After more than a decade in which all my new processors have been AMD, I switched to Intel, I bought a Nehalem, a Core i7 920.

This last item put me to think and deserves a nostalgia trip, here it is:

The last time I felt motivated to buy a new processor from Intel was a Celeron 300A, because, if you remember, this was Celeron in price but Pentium II in performance. Intel made the mistake of launching the original Celerons as processors that underperformed even the existing Pentium MMX of the day, but still requiring a much more expensive motherboard, so, they only made sense for people who wanted to eventually buy a Pentium II and were willing to put up for a while with a system slower than the old generation, although this wasn't a good plan because at the time to replace the processor, how would you get money from your spare Celeron?

The reason why the original Celerons were so bad, was that they didn't have any L2 cache. They were overperformed by Pentium MMX because they were, for all practical purposes, Pentium II inside and the Pentium motherboards had about 512 KB of cache (external to the processor), whereas the Pentium II (and Celeron) motherboards assumed the L2 cache was going to be in the processor and, because of the diminishing returns of a third cache level, did not have any cache at all. You may check these claims starting with the wikipedia entry:
http://en.wikipedia.org/wiki/Celeron

Then, Intel sort of over-killed the problem with the first line of Celeron processors with cache, because they were super performing, over-clocker kings at devalued Celeron prices.

Since there was a no-cache Celeron of 300 MHz (Covington architecture), and a Celeron with cache (Mendocino) of 300 MHz, its model was called Celeron 300A, with the "A" to differentiate among them.

It turns out that a Celeron 300A (66 MHz external bus) in some benchmarks (without overclocking!) was faster to the Pentium II 300 MHz (100 MHz external bus) because the Pentium II, although it had a 512KB L2 cache, it ran at half the speed of the processor, while the 128 KB L2 cache of the Celeron 300A was running full speed. The reason for this was that the L2 cache of Pentium IIs was off-chip, while the "Mendocino" Celeron cache was on-chip (by the way, this makes it the first massively produced processor with an on-chip L2 cache). It seems that the Mendocino architecture was a precursor for Intel's fully-on-die L2 cache Coppermine architecture (the Pentium III with 256 KB of L2 cache). If if you remember Coppermine trounced Katamai Pentium III that had double the L2 cache size precisely because their cache ran at full speed, so, the Celeron 300A versus Pentium II was about the same thing: L2 cache running at twice the speed, but 1/4 of the size.

I was saying that I feel it was a precursor to the Coppermine, because they all overclocked like crazy. And it was very easy to overclock them, you just forced the motherboard to use 100 MHz of bus frequency and the processor went from the specified 300 MHz to 450 MHz.

I gave that processor to a friend of mine, that I understand is still running it today, at 450 MHz.

Before that, I was very happy with my Pentium MMX 166 MHz, great processor; and at the time I didn't like none of the cheapos AMD K5, K6 and K6-II

I gave up about Celeron 300A because I bought an Athlon 550 MHz and got blown away by its performance and also its performance/price, which then was improved further by the impressive performance/price ratio of their "Duron" siblings; while Intel came out with the ragingly fast eunuch of the Pentium 4 that were routinely overperformed by properly configured Athlon. Although sometimes a Pentium 4 may have been faster, still, the price difference didn't justify it.

So, it was Athlon/Duron for everyhing, I bought a used laptop (with Intel processor, but this doesn't count because it wasn't a new processor), then I bought a mobile Sempron laptop because it was the best peformance/price ratio, then, when I wanted a new laptop, I took the hard decision of buying a Turion 64 over a Pentium M only because I wanted to move to 64 bits as soon as possible, as I have said before, the AMD64 (or Intel's EM64T) should help compilers to make the same programs run about 5% faster (things like the doubling of the architectural register file (from 8 registers to 16) should overcompensate the extra memory inefficiency).

Over the years, the performance and performance/price of AMD processors went ever higher and higher while Intel's were lower and lower, with the exception of the Pentium M series.

As we all know, Intel came back with the Core µ-architecture (Core 2 Duo) and demonstrated that plain ole P6 had a lot of life, but still, it wasn't convincing for me to switch. But further down the road it came Nehalem, and it was more than enough for me to switch, probably for a very long while.

The Core i7 920 priced at less than $300 is actually very cheap for what it is, but it forces you to pay premium prices on the motherboard (currently there is only one chipset for it, the X58 from Intel) and it forces you to buy DDR3 memory before their final price-wise commoditization, and these really hurt the performance/price ratio you can get from a Nehalem; but what really pushed me over is that although this is just a quadcore, it really feels like an octo-core. Nehalems have the feature of "Hyperthreading", that is, run two instruction streams per core. As far as I have seen, hyperthreading REALLY works on Nehalem.

If you remember, when Intel introduced Hyperthreading, it didn't work, people hated it, and Intel abandoned it for the subsequent µ-architectures until Nehalem. I will explain in a new article why it didn't work and why it now works, but there are still a few things I need to explain about Nehalem:

Intuitively, to feed all the data needed by 8 threads executing at full blast will require quite a lot of bandwidth and slow latencies, that's why I have been so skeptical even about Intel's current double-duals that only need to feed 4 threads. Also, I perceived the whole thing of FSB as a dead end and I wasn't going to grace Intel's technical mistakes with my money by acquiring a FSB-based motherboard. Just to illustrate the point, following the article at
http://www.techspot.com/article/131-intel-corei7-memory-performance/
you can see that a nominally 1333 MHz FSB (that runs at 333 MHz "quad pumping" (capable of 4 transfers per cycle) DDR2 memory) with a 64 bit (8 bytes) width, can only give 8 * 1333 E6 Bytes/sec, or 10.656 GB/sec, while DDR2-800 memory, in dual channel gives 2*8*800 E6 bytes per second, 12.8 GB/sec. Meaning that even the 1333 MHz FSB can't fully use a dual channel DDR2-800 configuration!. I am not really sure that I am right about this, but it seems to me that official pages such as
http://www.intel.com/Products/Desktop/Chipsets/G31/G31-overview.htm
that claim bandwidths over 10.656 GB/sec are a lie, at least I am not able to explain how a 64-bit wide FSB at 1333 MHz (nominal) may do it. Even recent benchmarking pages such as
http://www.tomshardware.com/charts/desktop-cpu-charts-q3-2008/Sandra-2008-Memory-Bandwidth,806.html
with measurements using the SANDRA memory bandwith show how FSB-based systems can't go above 7.5 GB/sec even being quadcore extremes using DDR3 and 1600 MHz FSB. Interestingly enough, you may see how all the AMD models have higher measured bandwith than any FSB based system.

As
http://www.tweaktown.com/articles/1665/2/intel_core_i7_memory_analysis_can_dual_channel_cut_it/index.html
tells us, AMD's integrated memory controller began with the socket 754 processors, featuring 3.2 GB/sec, which was a real number you could get in practice, that then was superseded by socket 939 processors with support for dual channel DDR-400 (6.4 GB/sec), which then were superseded by socket AM2 with support for up to 12.8 GB/sec.

As you know, my Core i7 920 is 2.66 GHz, capable of driving DDR3 memory at 1066 MHz of nominal speed, but in triple channel configuration, giving it 8*3*1066 MB/sec, 25.584 GB/sec of bandwidth... without the FSB contention nor FSB latencies problem of double duals, sure lyenough to feed all 8 threads. Also, as this domestic screen capture shows:

The cache hierarchy is right: 32KB+32KB L1, 256KB L2 and 8MB shared L3, this would give a progression per thread of 32, 128, 1024, of which the greatest step is the third level where the data is shared. The L1 and L2 sizes look small, to tell you the truth, but if you really have 8 threads running, chances are that you have some running the same algorithm in a data-partitioned scheme, of which they will be sharing data, which improves the effect of the L3 cache.

Since Intel now comes with 3D acceleration in its processors (by the way, sooner than AMD's Fusion), and especially important for me, 8-core systems, I think I won't have any interest on AMD processors for a while. Not even curiosities like the triple cores, that disappointed me because they consume as much power than an X4, or may have errors like the L3 TLB bug...

It is 1998 all over again. Will next year be 1999 all over again?

2009-02-23T14:46:00.003-06:00

In 1998 AMD was living on the fringes, satisfying itself with the lower end of the market.

They produced a better alternative to older Intel Processors. You could buy a nice AM5x86 and give your 486 computer a performance similar to that of a Pentium 75 (I did, for 6 Machines), or, you could design your system around a K6-2 (bought and recomended a few, from Compaq), but no way of catching the performance of a (non-Celeron) P-II.

A system integartor would certainly be doing a good move building a low end system with AMD parts. No need to redesign your Socket 3 or Socket 7 Mobo, just a few BIOS tweaks (whole different story with Super 7). That course of action appealed to upgraders, gamers, and even some Tier-1 manufacturers (most noteworthy, Compaq) for their lower end consumer lines, but for High-End Workstation/Servers, Intel was the only game in town.

All that changed in 1999 onwards, when AMD gave Intel three hard punches to the ego (but not their wallets) in the X-86 space, with the K-7/Atholn & K8/Opteron:

1° To develop Cooper Interconnects.
1° To beat the 1Ghz Barrier.
1° To develop X86-64 (AMD-64).

Fast forward to 2009. AMD just released the Phenom II Processor. And today, I read a very interesting review . The fine folks at ArsTechnica took a PhenomII X4 940, overclocked it to 4.2Ghz (using a phase change cooler), and ran a comparison between a stock Phenom II X 940, the overclocked one, an Intel Core i7 965, a Core i7 920 and a Core 2 Quad QX9650, all Intel chips running at stock clock speeds...

And here we are, back to 1998 all over again, the PhenomII part is good, and competitive witht the older generation Intel parts (Penryn derivatives), and at a better price points, but you would be hard pressed to justify doing new deployments of High End Workstation or Servers based on it when you compare to the latter Intel offerings (Core i7 derivatives)...

Please read the full review, but, I guess this quote from the conclusions will summarize it:

«Deneb's comparative performance against the Core i7-965 and Core i7-920, however, is rather troubling. Even at 4.2GHz and with an IMC running at 2.53GHz (1120MHz memory clock), Deneb doesn't always outperform Intel's lower-end, 2.67GHz solution, much less the top-end i7-965. It's true that the i7-965 is a $1,000 part today, but a Deneb clocked at the rates we tested (if such a thing existed for the commercial market) would run at least $1K as well.

Our data indicates that AMD has a long-term problem it's not going to be able to solve with clockspeed. The company's next 45nm refresh will have to include architectural improvements that result in significantly higher performance clock-for-clock—bolting more L3 cache on the core isn't going to be the magic answer. Socket AM3 arrives soon with support for DDR3-1300, but that's no silver bullet, either—desktop applications tend to be latency-sensitive, not bandwidth-limited.»

Now, I really HOPE that AMD survives the downturn. The world really needs an AMD, but I do not see how next year, or the year after that, can be a 1999 for AMD. The lower end of the market will have to do...

Full Disclosure: Small tweaks to the article.

Inactivity

2008-12-15T17:41:00.002-06:00

Hello out there.

I am not blogging because I am not moving my money, and that because when things depend on government actions, I am not particularly better informed than the rest of the market. It is the same reason why I chose to get out of AMD even though I was very bearish, AMD's fortunes depend on financiers, what do I know about their negotiations and interests?

So, I just got rid of long term puts, because they were depreciating, to keep only short and long positions, since the long positions outweighed a lot my long share positions, I have been hurt by this downturn, but only money that I can leave alone indefinitely.

Perhaps I will write non-trading blogs

Evil Intel now buys the FBI

2008-09-15T21:12:00.002-05:00

Just to land a poor employee in hot water.

http://arstechnica.com/news.ars/post/20080915-fbi-ex-intel-worker-tried-to-take-trade-secrets-to-amd.html

Read all the gory details of evil Intel Sk Ph.D Boy Genius' blog.

¿¡What do you mean he posted nothing on it!?

¡Intel is evil! ¡He must not waste this chance to post!

Bad Omen for AMD

2008-06-21T11:40:00.002-05:00

Tomorrow, June 22, 2008, the Formula one will have its last Grand Prix at Magny Cours.

They have run there from 1991. The circuit gives very little traction, which forces the participants to lean towards soft-compound tires.

The only french pilot to win there was Alain Prost in 1993.

I hope AMD's Magny Cours chip fares better.

I Worship in the Temple of Christensen

2008-05-28T23:12:00.006-05:00

"I Worship in the Temple of Christensen!"

Back when I was doing my MBA, my International Marketing professor (HarlemBoy, the nickname he choose for himself) used to say as a catchphrase: «I Worship in the Temple of Walmart». In that same term I was taking General Management classes (you may call those Advanced Strategy),and I loved that phrase so much, that I adapted it for myself, and began saying there: “I Worship in the Temple of Christensen”.

You see, that refers to Mr. Clayton M. Christensen, DBA (Doctor in Business Administration, a REAL PhD) and best-selling author. I actually read one of his books “The Innovator’s Solution” before I entered the MBA. That advanced knowledge, and my firm belief in Christensen got me an A+ in General Management class (the Holding Fast Case, in case you are curious). I wholeheartedly recommend reading his books and articles, you can become a convert too.

Every time Christensen talks, I listen. So, I was very surprised when Christensen talked about the « The New Economics of Semiconductor Manufacturing ». I read the article, and something got me thinking:

« Competition is shifting toward a new playing field. Now what matters is making a large variety of products, each product in small volumes and each perhaps for only a short time. Examples of these growing markets include cellphones and MP3 players, which are subject to trends in fashion. Then there are the thousands of chips that are increasingly finding their way into our homes, offices, automobiles—and into every nook and cranny of our lives.

You often hear executives in the semiconductor industry sighing for the next great vehicle for industry growth, like the PC in the 1990s and the minicomputer before that. Well, perhaps the next killer application won't be one thing but rather scores or hundreds of things, none of which require the raw performance that only the biggest, most technically advanced fabs can provide. Perhaps what the next wave of killer apps requires is a new business model, made possible by such things as TPS.

Throughout history, business models that reduced the minimum effective size of factories have transformed entire industries. Steelmaking was transformed by the minimill's ability to efficiently produce small batches of steel, business computing by a succession of ever-smaller machines starting from mainframes for payrolls and ultimately leading to the personal computer, and photographic film processing by fully automated one-hour film-processing machines, which were then replaced by digital photography. Because these transformations offered customers entirely new ways of doing things—rather than simply making the existing model work a bit better—we call them disruptions. The agents of disruption are invariably business models (although these models often come with a new technology wrapped inside).»

That got me thinking. Then I read this blogpost from Mr. Rahul Sood « AMD Breakup ». Here Mr. Sood argues that AMD should split the Fab Business from the µProc+Chipset+Video business. At first I thought “This is Madness! Madness, I tell you!” But then, I heard Christensen’s voice… I mean, I really heard his voice in this podcast: «Spectrum Podcast: Q&A With Harvard Business School's Clayton Christensen »

And here, The Light was made. Basically, One of Christensen’s points is that the semiconductor industry is going through a commoditization/decomoditization phase, things that before were differentiators become commodities, and what was a commodity before, becomes a differentiator (too confusing, read his book, he is a DBA, I am just an MBA).

Of particular interest to us is that, for the bulk of the market (about two nodes behind the state of the art) the capacity to design chips is becoming a commodity, because libraries of modular components are readily available, but now the capacity to produce small batches of wafers with very fast turnaround times is the differentiating factor, because the process in very interlocked, one may say proprietary. His advice to investors:

«Go around and buy a bunch of these fabs […] then as you get the [TPS] system going you can price your products 15~20% over the market price, because you are fast».

Also, remember that at 32nm, with 450mm wafers, there is a huuuuuuuge number of chips that can be manufactured per wafer. Christensen admits that there is a segment of the market (like state of the art X-86 µProcessors) that will need to stay in the forefront of Moore’s law, but for the first time in history, for the bulk of the market, we can go back a couple of nodes and Just Do It Right.

Please bear in mind that I am not the only one listening to Christensen. Many people in the investment community do. So, ¿What would I do if I were Hector Ruiz? Not exactly what the rumor mill is telling you. Rather, here is my recipe:

1.) Make a partnership with some investor (Chartered? TSMC? Some European Player? Some Chinese bit player with no access to such advanced technology?). Give them 45% of the Dresden Fabs right now, for a much needed cash investment. Assure them steady business from AMD (let’s say, for 10 years or more), and full ownership at a later date. Retain operational control.
2.) Do step (1) in a way that is compatible with the covenants in your patent agreements with Intel.
3.) Use the proceeds to finance your Fab in the US. When that FAB is Up-And-Running, transfer the rest of the shares to your partners.
4.) The Fab in the US will be your main Fab, will be your Fab for advanced µProcessors and GPUs (or Fusion, whatever that means). 32nm with 450mm wafers means plenty of chips. Probably, will allow AMD to serve 40% of the Advanced X86 Market.
5.) Let your partner in Germany manufacture yesteryear CPUs, GPUs and Chipsets.

That way the boys and girls at AMD can survive. Will there be anyone interested in grabbing those Fabs? YOU BET!

Hey Hector, if you need more details, you can hire me. Or Christensen. Or both of us! (or just leave a coment)

Salud! Howling2929

Some Clarifying notes:
· If you already heard the podcast, you know one of the companies exploring this is Intel, in FAB 17. They have so many Fabs that for the 32nm nodes and beyond, they will have excess capacity. That is part of the allure of Classmate PC, or Atom, increase the demand of TRANSISTORS (not µProcessors). As usual, Jon Sokes has a great article about it « Beyond the BlackBerry crowd: life in a post-32nm world ».
· Is AMD exploring this? We do not know. Besides, the application of the TPS in the Fabs at Dresden is a problem of the one who buys the Fabs, not AMD’s.
· The investors from Dubai got their 6% in AMD as an investment, in the same sense that my MBA was an investment. They are learning first-hand the Ins and Outs of the semiconductor business from a global player. If the company itself turns a profit later on or not is secondary. Please remember that not every day there is an opportunity to enter such an important company in such a big way, so if the heavens give you lemons, you make lemonade! I guess it would have been impossible for them to buy such a big stake in Intel, Philips, IBM or Samsung at that particular point in time.
· Chinese companies are sitting on 130µm technology (more or less, depending on the foundy). And European regulations are more lax towards China than the US’s, I bet many Chinese foundries would LOVE to get their hands on Dresden, even at a premium.
· Samsung acquiring AMD was my scenario of choice, now is in the second place. I meant to write an article about that, but there is no point now.
· I was thinking on doing an article about Intel’s AMT. Is not Active Management Technology, if that is what you think, but searching for it in the Net is not easy). Does the respectable audience want it? Let me know.

About AMD's acquisition by Dubai or other countries

2008-05-11T11:15:00.002-05:00

Spark left us the following comment upon which I want to elaborate:

Eddie-

I was tossing this around. I also posted it on Robo's blog. What do you think?

We know this, obviously. The performance speaks for itself. I use the word “we” loosely, you make the stuff and know it well (as others on this site).
I know it because I buy the stuff a clock the shit out of it, and I’m personally invested.

Perhaps others, shall we say, possible future AMD investors/owners don’t, or even care? They may see an opportunity into buying into a world class, albeit 2nd class, semiconductor manufacturer.

These cash rich, technology/manufacturing/business poor countries are buying assets, big time. I see it all the time. A good percentage of the hotels in NYC are owned by Middle Eastern concerns looking for a business future when the oil runs out. A couple of billion is nothing to big oil money to buy into a fully operational big name semiconductor firm.

I’ll stick my neck out here, at the risk of loosing my head. Wrectors strategic long term goal is to make the company as attractive as possible to such prospective buyers.

The buyer(s) may see:

That AMD is quite capable of giving its competition a serious challenge, if not outright producing a better product. After all, they’ve done it before.

AMD not only comes with manufacturing capabilities with 2 FABs , but with also a world class graphics component, technically a one stop shop of an established world market in computing.

AMD also comes with a total platform solution, chipsets, laptops, and other marketable Intellectual Property, inclusive.

They have an established supply chain, market exposure, a broad customer base, and a competitive solution for the world’s top 500 HPC solutions. Additionally they have good, if not excellent performance, presently, in the 4P market.

They are slated to start construction on a new state of the art FAB with 1.2 billion dollars of government incentives in July of 2009.

They have open complaints against their main and only competitor, conceivably worth billions.

AMD has strategic allies abroad, the EU inclusive, and a relatively untapped market in the Middle East, where top performance would not be a factor, nor would unvarnished favoritism towards an Arab held company.

IBM is a major technology partner.

Wrector’s long term strategic goal of holding on to market share at all cost, an in house graphic component, competitive laptop solutions, major world market inroads, may indeed have a silver lining, after all. They could do it again, with a little help.

All they need to do is sell this to a buyer with deep pockets, who already owns an 8 percent stake, the entire middle east backing (read: trillions), and a dream of obtaining a world class facility for a miserable couple of billion.

At 6 to 7 bucks a share and under 4 billion in market cap, this might look like a goddamned bargain. Hey, Blackstone bought the Hilton chain for 26B, a nice buy, for private equity, choke change at 4 billion, for big Middle Eastern oil.

FTC, SEC, and other choke points you may ask? So, ultimately this rests in the hands of American political interest to force AMD to die? Nope, this time, unlike the Arab held World Port that failed, this one just may fly.

INTC licensing issues 49% is close to 51%, but not that close.

The slightest pissing hint of this would send AMD stock through the roof, double overnight in fact. We will know soon enough.

Just some food for thought.

SPARKS

AMD acquired by the Arabs, interesting topic:

We had a conversation in Investor Village about why China can not acquire AMD,due to the political influence of Intel, I think that this also applies to the Arabs, albeit not as much.

Regarding AMD's strategies, AMD's only problem of significance is the economies of scale disadvantage. Perhaps I should explain in broad strokes: The market for processors is global in nature, then the marketing investment to have a presence in the global market is relatively fixed, thus, greater number of products means smaller individual marketing cost. Most importantly, the research and development costs of working at nano-scales make sense only if the number of products will be huge, and the factory network becomes more capital intensive as a result of the increased difficulties of working at ever smaller nano-scales. This little company has demonstrated that with 1/5 of R&D budged can out-compete Intel in performance, that means that the problem is not how to do good enough global marketing, R&D, or top class Factories, the problem is that it doesn't have the scale to sustain a competitive parity.

Having clear what the real problem is, you see that AMD does something right: To hold on to market share at all costs. The ATI acquisition happened, in part, as a way to increase the scale of operations. Why is this a disaster? Because, according to me, it was the wrong way to increase scale, so wrong, that the net effect has been to reduce the scale:

The role that ATI fullfills inside AMD was being fulfilled MORE effectively by nVidia and ATI competition
At this point it is somewhat proved that there are no manufacturing synergies between ATI and AMD that could have emerged faster than in Joint Ventures.
Regarding "Fusion", the concept was totally devalued when it was announced that it won't lead to higher performance but higher power efficiency: absolute graphics performance leads to higher premiums, better power efficiency is difficult to demonstrate and hard to monetize.
AMD had the chance to launch the enthusiast and prosumer "coprocessor revolution" of graphic accelerators and physics/AI accelerators, a market where Intel couldn't have gotten to in at least three years, but it didn't, probably because nVidia was already a competitor.
The acquisition distracted a financial position that could have been used to improve the core business

We need to know how the licensing of x86 would be affected by an acquisition by Dubai or other country like that. I mean, we can know all about the letter of the contract, but that won't be enough because there is a very important political component of enforcement and negotiations between the parties, and this extremely important, but still, at this point, an acquisition doesn't show me how it will increase AMD's scale, it won't bring more customers, it won't create a new line of products, it would bring just money. It is hard for me to see in what strategic initiative would AMD place fresh money: If it doesn't sell Dresden, it won't make sense to build New York, and then again, who's going to buy the rather unpopular SOI equipment? how's AMD going to get rid of restrictions imposed by the governments that pitched in the money to build those fabs? Thus, we are to conclude that the money would be burned in the current cycle of lack of competitiveness.

Probably, AMD is done for, because it went this absurd route of reducing scale (acquiring ATI) and devoting all resources to a good for nothing architecture (you can't have single-die quadcore semprons, you can't have fast enough high-end quadcores if they are single die, so, AMD is only able to participate in the low-performance quadcore segment, a very limited segment); thus, in its current predicament, it doesn't even have a project that could save it provided it gets the money. More Dubai, or any other country, funding could still happen, but not on sound investing reasons, but because government officials may be getting "a cut".

AMD is not viable, by AMD's own admission

2008-05-06T14:25:00.003-05:00

I was reading "AMD: 'We must double market share or die", an article brought to my attention by "fair_say", let's quote the first two paragraphs:

AMD needs to more than double its market share to survive as a processor maker. This isn't the opinion of rival Intel, but AMD's own admission, in a court filing which forms part of an antitrust suit AMD is bringing against Intel.

At the end of 2007, AMD had 13 percent of the processor market, "less than half of what it requires to operate long-term as a sustainable business", the brief said, explaining that Intel's alleged efforts to shut the company out of the processor business had largely succeeded.

AMD seems to argue that Intel, understanding that AMD needs 25% of the market to be viable, made sure it never got there by whatever means, including illegal monopolistic practices. What is significant here, and it is mentioned in the article, is that processor customers care a great deal about long term viability of processor producers, thus, AMD is alienating further its customers by explaining that it is not viable, but perhaps it needs to do it because at this point, the normal business of the company are going nowhere and the last hope is the lawsuit.

I have repeatedly explained that AMD is not viable due to the economies of scale disadvantage to Intel. In that regard, I have criticized the ATI acquisition on the grounds that it turned nVidia from a great partner and supplier of complementary products, chipsets and motherboards which was pretty much forced by market realities to promote AMD-based computers rather than Intel-based ones into a powerful direct competitor while weakening the possibilities of the primary business by taking on the great financial burden of the acquisition, that is, the acquisition destroyed any possibility to solve the economies of scale gap, and this happened at times when the Virtual Gorilla was very healthy; on the other hand, it was clear that the ATI part of the company, that at most can pull its own weight, will not be capable of carrying the whole company forward. "Fusion"? if acquiring ATI doesn't lead to vastly superior performing General Purpose Processor/Graphics Processor combinations, it will clearly be game over for AMD. Since all the details of Fusion we know about today, nearly two years after the announcement of the acquisition, is that in its first incarnation it won't be vastly superior performing units, but at most better at power efficiency, we are to conclude that it is not nearly enough.

Regarding the recent spike from about $6.30 to over $7.15, I don't think it is due to information known by the public, that is, something may be going on that we, pedestrians, don't know anything about. I hear fools on the message boards saying that perhaps Wrector Ruinz will finally give some details about Asset Ligth (Smart?), or other speculation. I think those are fools because they miss the real point: There is no clarity whatsoever about what's going on at AMD and we are the last to get the information about it. Great that recently I have only taken $200 in positions on AMD, the little gamble (that now is worthless).

Little gamble

2008-04-17T13:48:00.004-05:00

I am not invested in AMD anymore. Thank god!

I wrote a while ago that AMD is a reactive position and since its future is determined not by its own actions, but the actions of other entities, I think those entities have too greater advantages to get information about the real state of the company as compared to "pedestrian investors" such as myself. Not only I still think the company is not viable, but I see plenty of confirmation in the latest events that this crisis may be of bankruptcy.

However, I think that I could indulge in a little gamble, since AMD appreciated over $6 due to Intel's results that dispel the economic crisis in the processor market (which I still doubt as explained in "Intel good investment?"), made me think that at least a portion of Intel's good results involve market share gains on AMD. That, together with the rather soft reaction to the news of 10% workforce reduction and worse than anticipated quarter, indicate that what it is to be announced today is ugly, so, I went ahead and acquired 5 may @6 puts at $0.40, just a little gamble. I do not recommend to do this play for anything but amusement, 'cos the implied vol. of those puts is astronomical.

Speaking of which, the reason I am not blogging much is because I am losing interest on the market, I am downsizing all positions: This business of the impending recession/depression is uncharted territory, so, it is difficult to anticipate what is Wall Street going to do to protect its money. I don't think I can perceive emerging trends and make money because just like it happened with Bearn Stearns, deux et machina a big player shows up and intervenes making irrelevant the market trends work; since I am not a Wall St. insider, I fear it will not be possible for me to guess exactly how Wall Street is going to protect itself.

Tips to visit Silicon Valley and San Francisco

2008-03-20T23:40:00.002-05:00

My investments are quietly tracking to prediction, I keep being busy, and still no inspiration to write about financial markets. My dear audience will have to bear with another off-topic article, also written in long flights while cris-crossing the U.S. I hope that since I will be talking about Silicon Valley and its companies, it would still catch a little of the attention of the people interested in investing in those companies.

I recently had a business trip to California. About the southern leg, I was so busy that I was barely able to squeeze a few hours to go to any touristic destination, and by chance it happened to be "Inspiration Point" in Corona Del Mar. That's quite an awesome place to watch a sunset. There I swam for the first time in the waters of the Pacific ocean, despite my friends' words of caution against swimming there without protection for the supposedly too cold water, but several months of adaptation to the really cold Chicago winter made it merely refreshing and relaxing after a busy day.

Anyway, I also had to go to the "Bay Area", and had the whole Sunday to go around. The first thing that really impressed me is how nice and cool the weather is all along the South Bay, and my friends who live up to Mountain View tell me that it is nice and cool year round, that only in San José and Silicon Valley itself it may get hot a few days in the summer, but that the South Bay area is cool all the time.

My businesses were substantially closer to the San José International Airport than to the San Francisco International, but since I am attracted to places with History and personality, I chose to go to the SFO instead. There is a very nice Creative Commons picture of the SFO passenger terminals by "druchoy" at flickr that I had seen a while ago,

that then I had the chance to see in real life from the plane when I arrived, at night, and with the benefit of more context. Anyway, my arrival to San Francisco couldn't be more auspicious, not only could I see the airport at night in full splendor, I was already sick of the warm/hot southern California weather and the lack of rain, but just arriving, there was a drizzle, so, I got welcomed by the city with everything I was yearning for: an uplifting aerial view of the city and Bay, cool/cold and humid weather.

In my initial plan, I wasn't going to rent a car, so, I took public transportation, but discovered that it is a rather tedious sequence of transfers to get to where I was going: You must take the train in the terminal that will take you to the Bart train, then you must take the Bart train in the direction of the city, once you are in San Bruno then transfer to a train in the opposite direction towards Millbrae... to then finally wait for the Caltrain and still spend about an hour without internet until you finally arrive to Mountain View; so, if you ever go through the SFO to Silicon Valley, rent a car!.

To me, the whole area between Tiburón and San José (Tiburón, Sausalito, Golden Gate Bridge, San Francisco, ..., Palo Alto (where the Stanford University is), Mountain View, Sunnyvale, Cupertino, Santa Clara and San José), feels like a very large University: The people is young, cultured, informal, nice to talk to, the radio plays eclectic music, shops are hip, and things are expensive, in all, an absolutely lovely place, although how expensive life is in the region really put me off. Another thing is that almost everybody uses Apple for computers and players, and it is nice that, at least in "Castro Street" in Mountain View, you have good free wi-fi courtesy of Google.

In case you are wondering, yes, I went to the Googleplex, it was within walking distance to where I was staying, and yes, I went walking there. The problem is that I didn't get past the receptionist, because when I arrived —on time!— to meet my partners, our business with Google was already done, so, I didn't get to know much about the place. When all of us were walking to the car in the visitors parking lot, I couldn't help but to notice how full it was, that there was a valet parking, an African American who sits below a round white tent with the Google colors. Ah!, and there were interesting license plate decorations, like a frame that said "Proud member of Pixar Animation Studios". On my insistence, we took a quick detour and went to AMD. The difference of atmosphere was more than noticeable, among other things the visitor lot was practically empty. Anyway, perhaps we arrived just at lunch time: I really wanted to see if I could get inside, so, I concocted a very goofy excuse: I presented myself to the receptionist as an investor who wanted to talk with someone in Investor Relations, naturally, the woman didn't do anything but tell me that it was lunch time and most people was out; so, I used and even more laughable "plan B": I told her that I was also an Engineer interested in working for the company, if someone from Human Resources could talk to me; then she said "Oh!, give me a minute and I will give you the telephone number of Human Resources so that you can set up an appointment". While she was doing that, I stared at the Ferrari formula 1 that they have at the entrance; the red really makes contrast with all the AMD Green in the building. By the way, I have always loved F1, but I have never seen up close a F1 car, it surprised me how small they are; I am not even 6 feet tall and still it seems it would be difficult for me to get into such small cockpit. On our way to San José, we went by the 101 to a place that has large buildings of Yahoo, WebEx, Intel, and Sun Microsystems. This large and beautiful Webex building set me off to think about what other products Webex makes, because it is unfathomable for me that a mediocre piece of junk used for remote collaboration has made so much money, leading me to think that or their customers are stupid, or the company somehow exploits the system; about the whole game of selling "puffware", about how startups ceased to be incubators of game-changing technologies to become hustlers that want to become as sexy a target for acquisition as possible; about the rat race of people living beyond their means in the opulence I was seeing... I will finish the thought in a minute.

By this time, I had already gone to the SFO to rent a car and driven back to Mountain View. You don't even need a GPS to go around the place, there is a freeway, the 101, that goes all along the South Bay, and if you don't want to drive freeways to get to know the place, you can drive along "El Camino Real", it is about 50% and 100% slower, with traffic lights, but I think the drive along "El Camino" is so scenic and nice to see the trees and shops, that it may even be worth it. You can open your window and breathe the air of the place, the freeway would be too noisy.

My friends wanted to go places like Larry Ellison's mansion, but I didn't feel inclined to do that, so, we split and I left with an old friend of mine who studies at Stanford to get to know San Francisco. It was Sunday in the late afternoon. I drove in "El Camino" for as long as she let me, but since we wanted to cross the Golden Gate before sunset, I took the 101. It is beautiful just before the bridge, there is a nice park, and after the bridge, the Golden Gate Vista Point. I went there not looking for photographs, but I must say that one hour before sunset, the view from there is spectacular: At the right, the Golden Gate bridge, below, the deep blue of the Bay waters, at the top, the light blue of the sky, and in the middle, a bright Yellow strip, the outline of San Francisco with its world-renowned skyscrapers. To improve upon perfection, we had dinner right on the shores of the bay in a restaurant in Sausalito, from where we could see the lights of the houses in Berkeley and Oakland already lit for the evening.

Now, I advise to arrive to San Francisco on Sunday at noon or so. Since typically the day you arrive to a city you don't do much in the way of businesses, you may go through the i80 to the island of Yerba Buena, and go around Treasure Island before continuing to Berkeley, to see the University, to then take the Richmond-San Rafael bridge (i580), and drive through the "Paradise Drive" (very winding road and not so well maintained, but still scenic) until you get to Tiburón or Sausalito, and from there, Vista Point, cross the Golden Gate, and enjoy nightlife in San Francisco, that is, the opposite direction of what I did. Doing this, you will have the rest of the week to hang around in Silicon Valley, go to Stanford, and do whatever your business may be.

After I left, while in the plane, I went on to meditate about all the people I met in my trip, the significance of technology for the economy of the region, and the whole region itself. It occurred to me that the people and companies based in there better be extraordinarily productive, because in almost any other place it would be way cheaper to do whatever it is they do, I was thinking of my friend who just bought a minuscule apartment for half a million and needs to keep paying her mortgage, but she is working on one of these startups that has just been acquired and the new owners set basically unrealistic revenue and profit schedules which mean that all the original employees are working mad hours; if they succeed, they just survive, if they don't, though luck, some more roadkills of the frenetic spin of mergers and acquisitions; unfortunately, it is a rat's race in which nothing of substance matters but the impression you cause on prospective buyers. I fear that very soon places in China and other countries that produce legions of excellent engineers are going to be overtaking Silicon Valley in innovation, it just doesn't make sense to develop an innovation there if it costs 20 times or more what it would cost to do it somewhere else, it makes me think whether I went there at the beginning of the decline.

2008-03-16T15:49:00.002-05:00

The last post about Obama generated an intense interchange about public policies. This is a subject I don't want to write about [1], but I fear that I must, to provide adequate support to opinions that I hold that are not conventional.

I am a firm believer that power corrupts, and absolute power corrupts absolutely, therefore my approach to politics is to support minimization of government and maximization of the power of individuals and thus can claim to be Libertarian. But, just like Democracy is not a pack of wolves and a sheep deciding what to eat for dinner in an election by simple majority, the complete absence of coordination is not Liberty but the law of the jungle. Why am I so skeptical of Government?: Because Truth is elusive and relative, it is morally objectionable to impose one's Truth to others that don't share the same beliefs. There is some people that think that the solution, then, is to homogenize societies: All that share the same beliefs should segregate themselves from the rest; but then I have a strong objection against that principle: If every human life is valuable, then it should be that every one has something unique, and the celebration of that uniqueness must be among the most "humane" of pursuits. Furthermore, being a scientific/engineer myself, I clearly see how the creativity to crack mathematical incognitas or pose models of the Universe, and the creativity for invention are very directly correlated to independent thinking, that is, respect and promotion of doing the same thing differently until an objectively better way is found. Even more amazing, Nature has produced the most exquisitely diverse biological mechanisms by randomly mixing and matching genes (sexual recombination) and managing to actually benefit from predominantly (when seen individually) destructive errors in gene copying (mutations); that is, the uniqueness of combinations of genes is enough for Nature to do wonders, and errors are not only tolerated, but serve the positive function of "supercharging" the engine of diversity. On a final note about this subject, Evolution through Natural Selection does not have the slightest characters of hypothetical or unproven for me; I have done research on Artificial Intelligence (that is, how to help computers "learn") using so called "genetic algorithms", which are systems that begin by proposing multitudes of stupid hyphotesis, generated randomly, and have them compete for a chance to "reproduce" by combining their qualities with the qualities of other hypothesis in successive generations, that is, imitating Nature's Evolution through Natural Selection; not just "learning" actually happen, but Genetic Alogrithms as those used by John Koza has gotten to the point to generate inventions that have been patented. So, evolution through natural selection is actually a proven, quantifiable engineering technique based on the promotion of diversity; it turns out that Diversity is good not just in the Moral arena, but also in some practical matters.

What I mean by "classic" libertarianism, as codified in the U.S. Constitution + Bill of Rights, has always been for me the the Paradigm, but one must question whether the world has become qualitatively different in the last 50 years, 200+ after the framework was designed, so as to grant some updates to the classical framework. Must of "classic" Libertarianism assumes that individuals may face the consequences of their actions without disturbing other individuals. Today, the individuals are so interconnected, that it is virtually impossible to leave everyone on their own. In the last post, there was criticism of my stance that the only sensible approach towards health is universal, free of charge (meaning paid by the whole of society), care. Some have told me: "What about the drug abusers?, Why am I going to pay for their lack of responsibility towards themselves?" this is a good example: In principle, we should let the people who didn't have the restraint to not become addicts on their own, it is not our fault their problems, so, at first approximation, there is no justification to force responsible people to pay the expenses created by irresponsible people. The problem is that whether the responsible people wants it or not, indirectly or directly they end up "paying the bill", the reason, again, is that the world is too much interconnected. An opportunity to paraphrase JFK's words: A society that is not able to help the many who are poor [ stupid, irresponsible, crippled ] can not the save the few who are rich [ smart, resonsible, healthy ]. I come from a country where rich, competent people thought that they could segregate themselves from the poverty and misery around. For a while that's possible, but it becomes increasingly difficult, until such a system collapses under its own weight. Larger countries may think that they can protect their wealth from the misery that prevails in the rest of the world, but that is just not possible, it just takes longer for the collapse to happen, and when it happens, it usually ends up worse than what it would be had the adaptation began earlier. A system of health care primarily supplied through private institutions funded by private insurance naturally decays into a system for the management of disease, I mean: A system where disease is the primary generator of treatment business; universal, free care leads to see disease as a problem to be rooted out, hence a much more effective focus on prevention than treatment. I wonder what's the matter that people who would readily admit that just like it doesn't make much sense to have private courthouses and private judges (although market forces may help in Law Interpretation, the primary system for Law Interpretation must be the universal, free provided by the State [2]), can't understand so readily that the market forces generate distortions on public health, thus the primary means should be State-supplied. While I am at it, ditto for Education. In general, these three primary services, together with Defense, work best while their primary supplier is the State, given the interconnectedness of societies, private offerings in these areas can't be infinitely superior to the public, free offerings, therefore, very quickly the best of private offerings reach a quality limit that can only be improved by the improvement of the public offerings.

Regarding NAFTA, it seems nobody understood the subtlety that while I am all for it, at the same time have objections. Regarding free trade with Mexico, I have the objection that the impairment between the incomplete freedoms that Mexican workers enjoy and much better freedoms the U.S. workers enjoy mean that it is easier for companies to go exploit Mexican workers, thus, the exercise of freedoms to trade erodes the freedoms of workers in the U.S. while strengthening the exploitative system in Mexico. As a libertarian concerned with maximizing overall freedoms, the tradeoff is anything but evidently positive. The solution here is to improve the freedoms of Mexican workers. Do you see? Liberty's price is eternal vigilance, the smart libertarian defends liberty when the attacks are incipient, it is easier and cheaper to defend one's liberties by fighting the attacks on other people's liberties: Other people's liberties are the firewall that would protect our own. Words attributed to Martin Niemöller very succinctly describe the collapse of freedoms:

First they came for the communists, and I did not speak out—
because I was not a communist;
Then they came for the socialists, and I did not speak out—
because I was not a socialist;
Then they came for the trade unionists, and I did not speak out—
because I was not a trade unionist;
Then they came for the Jews, and I did not speak out—
because I was not a Jew;
Then they came for me—
and there was no one left to speak out for me.

Going back to my departure with classical libertarianism, the world is so densely interconnected that the only sensible approach is to provide assistance to those that either by irresponsibility, stupidity or sheer incapacity can't help themselves. Should that "help" be imposed?: No.

Unsurprisingly, it turns out that my principled approach actually works more efficiently in the real world. Take for instance drug addiction: The "classical" libertarianism prescribes an approach of "leave alone the abuser", because the drug abuse does not directly infringe on any of the liberties of non-abusers. Nevertheless leaving the drug addicts on their own lead to nasty problems, so, almost all countries fight addiction, and since one of the sources of addictions is the availability of drugs, enormous amounts of efforts are spent in fighting their availability (a mild form of imposing "help"). Furthermore, some countries actually criminalize drug addiction (meaning that some countries impose criminal penalties to activities inherent of addiction), another form of imposed help. But these impositions are as expensive as ineffective. On the other hand, it is proven that spending efforts into helping addicts to voluntarily get out of the vicious cycle of addiction is both effective and efficient. I prefer the apparent contradiction of calling myself libertarian and still support programs that help people deal with the consequences of their own irresponsibility than the hypocrisy of calling myself "libertarian" and support the criminalization of fundamentally private activities.

Classical libertarianism suggest that the first step towards helping with the problem is to strengthen individual responsibility. How is it possible to improve responsibility if the punishment for irresponsibility is diluted? that's a valid objection, just that drug addicts become a problem for themselves at the same time they become a problem for everyone else. I have somewhat concrete ideas about how to strengthen the instincts of responsibility, they had to do with breaking legal systems that "baby" people, excessive and abusive intromission of government into people's lives, this, in turn, goes to the heart of why this country turned into a litigious society, a problem that was mischaracterized as something to solve within the realm of Health Care Reform; but I won't succumb as usual to the temptation to write an article about something like infantilizing laws, irresponsible citizenry, and societal litigiousness inside an article about something like Liberties.

The war of ideologies already finished, Liberty won, hands down. There is universal evidence that the support and promotion of the value of uniqueness is the engine of progress. Since all other ideologies were defeated, the task of this generation is to perfect the classical model of liberties, and I suggest to begin with adaptations to the qualitative differences derived by the vastly superior degree of interconnectedness of contemporary world. It pleases me that the friendly politician I met several years ago, Barack Obama, who for some people appears to be friendly to even more government intromission, in reality strikes me as both a libertarian and a pragmatist, is making merits to become the most representative figure in this generation to resume the greatest tradition of this country: To have served at times as the beacon of Liberty for the rest of the world.

[ 1 ] The reason why I don't want to talk about this subject is because it is not suitable for the rushes of blog reading even if I were to do the work to document the thesis adequately. Not only that, I have the great disadvantage of it being improper of me to praise or criticize any concrete example of public policy of my host country

[ 2 ] About my usage of the word "State" for U.S. readers: In the U.S., "State" almost always refer to the non-federal, state-level; and "Government" is used in place for the concept of State, but the correct meaning of government is almost synonymous with the executive branch of what here is called "Governement". I know that it is impractical to use the proper meanings when talking about politics of the U.S. because then it becomes tedious to qualify issues as State-level or Federal level, but since I am not talking about U.S. policies, I use the proper meanings.

A minute and a half with Barack Obama years afterward

2008-03-04T17:50:00.002-06:00

I was reading yesterday the fellow blogger Marc Andreessen's [ tongue in cheek gesture :-) he is the co-founder of Netscape ] article "An hour and a half with Barack Obama", and I thought that I could do a better job [ really ]. It happens that I haven't donated him $10,000 nor even a single dollar, I even declined his request to help him hand out a few flyers, and probably we spoke less than a minute and a half total, but boy, I have great things to say about those ~90 seconds and the successive years.

It should have been the Fall of 2003 the day I met Barack Obama, but just like Andreessen begins his article with disclaimers, before relating to you this story, I need to say a few disclaimers of my own: I have been as opinionated in Politics as I am in technical matters, the problem is that my effectiveness as a political organizer led to my blacklisting by the incipient communist regime in my home country and my eventual departure, thus, being just a guest in the USA, I try not to discuss its policies nor its politics. After a long thought about it, I concluded that I can still relate my encounter with Mr. Obama without it being a distasteful intromision into U.S. politics, and there are some ideas that I think are novel, worthy of communicating.

Anyway, what happened was that I was walking around the corner of Madison and Western, a predominantly African American neighborhood, and there was someone handing out flyers, for what seemed like a political campaign. When I walked by this person, who turned out to be Barack Obama, he offered me a flyer, but I had to tell him that I couldn't accept it because I didn't vote. Immediately, Obama said something along the lines that that was deplorable, that without voting no improvements may happen, to which I replied that I agreed with him, but that I still couldn't vote 'cos I was just a "visa-student".

At this point, Mr. Obama was already intriguing to me, it was his demeanor that denoted great culture, it helped he didn't speak with the thick African American slang typical of Chicago. Then, Obama said something I couldn't possibly expect, like "Really?, my father met my mother when he was a visa student!". Although we were interrupting each other's business (I couldn't vote for him so there was no practical objective for him to speak with me, and I was fairly in a hurry), we still wanted to chat; perhaps just like for me it was interesting to out of the blue make an acquaintance with a very cultured gentleman in a notoriously rough neighborhood, for him it may have been refreshing to speak with a cultured Hispanic without accent; so I asked him where his father was from, "Kenya", he said, and I replied that I guessed it was very different from the monotony of most of the U.S., to which he asked whether I still liked this city, and I said that sure, Chicago was special, that it had a distinctive personality in so many ways; that I had discovered skills at Photography trying to capture the visuals of the city so that my friends back home could enjoy. By this time, I was totally misled into thinking that this guy I was talking to was running for some City Council or some ward as Alderman... to this day I still don't know what was he was running for. Anyway, he talked a little about the personality of the city, from the point of view of the communities of Chicago. By that time at least a minute and a half had passed and we had to go on our businesses. So, we shook hands and told our names.

I quickly forgot his exact name, I could only recall the strangeness of it. Although I forgot some details, this was memorable to me because this encounter made me feel proud to live in a place whose city politicians were very likable, modest, "down to earth" cultured people like the one I just met. I told a few friends about this encounter, but no one cared much about it nor knew him.

About a year later, I had a conversation with a friend of mine from New York, and he asked me if I had ever heard of a Democratic politician from Chicago, some "Barack Obama". This was after his insertion into superstardom orbit with his speech at the Democratic National Convention of 2004, of which I didn't know a thing at the time, so, ignoring why my friend was asking, I told him that I thought I did, that I met a black politician with a funny name running for Alderman or something, that they had to be the same person because there weren't so many names like that, and that yes, the guy had caused a really good impression, the whole thing. My friend then tells me that I must be wrong, 'cos that politician was already a State senator, that the reason why he was asking was his recent speech. I immediately went to watch the video on the Internet and had one of the most intense "OH MY GOD!" moments of awe in my life (Google for it, it is worth!).

One of the things it still surprises me about Obama is his authenticity. I mean, it isn't an efficient form of campaign to individually hand out fliers on a Chicago corner, a successful politician doesn't normally do that, unless s/he has a genuine desire to speak with people; our encounter illustrates this point.

Anyway, then it came his bid for the U.S. Senate, and then the publishing of "The Audacity of Hope". By that time, I still wasn't paying too much attention to Obama, until Newsweek publishes a long excerpt of "Audacity", one that dealt with his religious tribulations until he settled for his current Church. I was very pleasantly surprised a third time by Obama, being an agnostic myself, I tend to see Religion not much more than as a problem that engenders intolerance and a handicap for intelligence and progress, but reading Obama's accounts on the subject, about the significance and value of spiritualness, about how Churches could help positive social change, I appreciated that here there was someone with the intellectual depth to be able to not just elegantly walk on the very sharp edges of the subject of religion, but to also be actually persuasive about propositions that I have been opposed to most of my adult life; then I had to read the whole book.

Reading "Audacity", it emerges a more complete idea of who Obama is. I had the advantage to have actually spoken with him before his superstardom, so, when he speaks in "Audacity" about the ordeal of commuting to Washington through the O'Hare Airport rather than using his privileges as a Senator to use private jets so that he can talk to normal people, I have evidence to think that what he is saying is sincere, no bullshit. Another thing is that although he is fond of being in touch with actual people, he is not at all the kind of demagogue/populist that appeals to voter ignorance; on the contrary, he is in his own right an academic of highest caliber and best selling author who is not afraid of disagreeing with his political constituency on issues like abortion or foreign trade when the reasons are compelling; his political success stems from his ability to appeal to reason to bridge differences. Being successful at getting support from diverse constituencies that do not agree 100% with him, it is no surprise his evident success at garnering "bipartisan" support for his legislative initiatives.

The guy actually gave me a fourth "punch". I am not an U.S. citizen, so, it is a given that I can look at the U.S. from the outside; but I have been invited to look at it from the inside and have been always open and exposed to its culture and its essence , so, I think I have both perspectives, that's why I venture say that Obama's speech in Des Moines on Dec. 18 had a flash of greatness that really touched me:

[My opponent] will not be able to say that I wavered on something as fundamental as whether or not it is ok for America to torture — because it is never ok… I will close Guantanamo. I will restore habeas corpus… And I will lead the world to combat the common threats of the 21st century: nuclear weapons and terrorism; climate change and poverty; genocide and disease. And I will send once more a message to those yearning faces beyond our shores that says, "You matter to us. Your future is our future. And our moment is now.”

We must remember the context in which this words were said. At the moment, Mr. Obama was nothing but the very long shot for the candidacy who had just become a not so very long shot. So, what is the point of demonstrating that you care for the "yearning faces beyond our shores", or that he cares for the "towelheads" accused of implications to the massacre of 9/11?. I think it is fair to say that the relationship between what happens to the accused in Guantanamo and what happens to the common citizen is perceived at best as abstract and remote by the vast majority of the citizens of this country, that the people probably supported the actions of the current administration in that regard, so, why antagonize something that is apparently popular for principles that are perhaps too nuanced for the common people to appreciate?; why did Obama said that at times he already was being criticized for not being a "true American"? Was it a blunder?

This is another example of apparent electoral inefficiency that reveals what Obama is about, and here I begin to speculate: The logical extension of the body of thesis of what Obama stands for is what the excerpt says, thus, I guess he thinks he would rather elevate the plane of discussion from the day to day bickering to the ultimate ideals he stands for, than trying to please everybody by being devoid of any meaningful stance that could be attacked. That is, he is going to be attacked sooner than later for everything, so its better to show the daring to express what he really stands for to come across as a principled candidate and force the opponents to risk coming across as unprincipled, cynic, mean spirited, to force them to accuse him of being a "hope monger".

I can't say that this is the "correct" electoral strategy because all over the world politicians are elected by spewing the bullshit their constituencies want to hear, I mean, for me, public policy issues have become hopelessly complex for ignorant citizenries that can't do anything but be manipulated; the greatness comes from not appealing to the low instincts of fear, envy, egotism, that have been proved efficient to win elections, but, at times the electorate seems to feel overwhelmed with primary concerns, to dare higher messages that are essentially generous and by actually making them prevail.

These words are not very original, in fact, compare unfavorably to others like those of John Kennedy's inaugural:

To those peoples in the huts and villages across the globe struggling to break the bonds of mass misery, we pledge our best efforts to help them help themselves, for whatever period is required—not because the Communists may be doing it, not because we seek their votes, but because it is right. If a free society cannot help the many who are poor, it cannot save the few who are rich.

Again, what makes them special is the context in which they were said: Kennedy wasn't risking anything by saying what he said, he already had won the whole thing and just needed to convey the idea of a grand beginning, Obama gives munition to the petty politicians in a very tight contest by aiming to objectives that may not be so popular, but are "right".

Another compelling thing about Obama is his intelligence. Take "Audacity", for instance: Is it a text of great literary value? I don't think so: It is not full of immortal "one-liners" nor anything of the sort, rather mundane things, at times it is even boring; but one must not fail to appreciate how fascinating it is his account of his most improbable role among the most powerful political entity the world has ever seen (the U.S.A.). Being a scientist/engineer myself, I took notice of the reiteration of this quality of being the "odd ball" that Obama has experienced his whole life: The improbable relation between his mother and father, his early life in Hawaii and Indonesia, growing up in mainstream U.S. not being white nor black, his religious doubts, his descent to organize communities in the the Chicago rings of poverty from the academic heights of the presidency of Harvard Law Review to his posterior ascent to the world wide prime stage is almost mythical, an invitation to think about Karmic fate, but more concretely his perennial oddity tells me volumes about the intellectual tools this person possesses: The good skeptic gets to deeper truths than the dogmatic, not being able to take things for granted, the misfit is forced to synthesize the elements of his success. Obama has walked the sharp edges of the great matters of life his whole life, well, "Audacity" demonstrates how good he became at it. Needless to say it, those are greatly desirable qualities for people in positions of great power.

Obama's increasing chances made me think about change, reforms and revolutions. Of the great processes of change in History, it seems that the most perdurable and profound are those initiated by insiders/outsiders: If complete outsiders begin a process of change, the momentum gets consumed in the replacement of the incumbent oligarchy, the ideals dilute due to the practicalities of consolidating power; if complete insiders initiate a reform, it tends to be "Gattopardian", things change so that everything remains the same. There is one notable partial counterexample, though, which is the History of the "American Revolution", that consolidated itself by radicalizing its principles, but anyway, when a reform gets initiated by the inside it gets better chances. Also, profound reforms initiated by the inside may lead to the collapse of the whole system, as it happened with the Soviet Union, here it is critical how good the leadership is to assess how far the system can move without breaking.

Paradoxically, South America is suffering a contagious infection of neo communism, so everything that smells to "progressiveness" (what is commonly understood as "liberal" in the U.S. is referred to as "progressive" elsewhere), that is, Obama, is seen as an ally of the neo communism while in fact it may be its deadliest enemy: His election would demonstrate that the U.S. is not an exploitative empire, communists would not be able to chalk everything bad that happens in the world to the "evil" U.S., they would have to accept more responsibility in their failures, demagogy becomes harder; this is what I try to explain to my friends there. I don't know much about the Islamic world, but the same principle I see clearly where I come from may apply to the Islamic world...

It gives me great delight that Mr. Obama and I are almost neighbors, we live less than half a mile apart, and frequently there is no detour to go by his place when I go home, which gives me plenty of opportunities to entertain my friends with this anecdote. Also, my wife is a Ph.D. candidate at the UoC where he used to teach; so there are several links that have me come closer to his figure; please excuse my lack of objectiveness, but before dismissing my
enthusiasm as just rooting for the local team, I encourage you to get to know him better. It happened to me that the more I learned about him, the more amazed I became.

Second Aniversay

2008-03-03T17:03:00.002-06:00

This blog began in January of 2006.

When I got some money to invest in the stock market in November of 2005, I discovered the very active community around the Yahoo message board for AMD, and began to participate there with intensity. The usefulness of the board indicated what was lacking: There were some propositions that I was thinking about that I didn't know how to summarize into items suitable for fora; and fora illustrates the need for reference material. On the other hand, and I don't feel any guilt or embarrassment to say it, Sharikou's blog demonstrated how far a blog could go. So, I decided to experiment with the concepts of blogs, and began to publish articles here.

At the beginning, I got to be popular really fast, hundreds of repeating visitors per day. The reason is clear: This blog was part of the system that made AMD's euphoria to resonate in technophile circles. Once AMD crashed, the credibility for my opinions and this blog crashed along with it. Fortunately, a core of readers kept coming back, perhaps because a minimum of readers realized that while I was very opinionated and arrogant, at least I never compromised in intellectual honesty.

Since a core audience never abandoned this project, I eventually came to appreciate that I should just continue with it, to continue to improve the quality of what I write; the part that gets me enthusiastic about you, the audience, is that you are neither mindless AMD cheerleaders (you would have left long ago), nor mindless AMD bashers, 'cos mindless bashers wouldn't ever respect the opinions of someone who used to be as optimistic on AMD as I was. Furthermore, the audience of this blogs tolerates the change of opinion form one extreme to the other. That is remarkable, to have filtered an audience from the cacophony of the internet to people who respects opinions.

I wanted to explain why I am so proud.

Anyway, lately I have been particularly busy with professional engagements, and as I said I would do, I reduced my positions on AMD to a minimum (due to the lack of clarity and ample opportunities the big players will have to manipulate this price), to construct a not so speculative and not so big bullish-Intel/bearish-Market combo, so, I have been sort of taking a vacation on the market lately. There are a large number of things to talk about, though. Perhaps I will squeeze the chances to actually write them, just that it has been over a month since my last post and I don't want to create uncertainty about the future of this project. It has been over two years, and I can see how much the constant effort of writing has improved my skills to get information and present that information, like I said, I very much appreciate the audience, so, this project has increased its importance for me; just that I can't keep the usual rythm in times my business are doing so well.

A clearer meaning on the Antitrust suits against Intel

2008-01-28T20:21:00.000-06:00

Long time no write!

I have been quite absorbed with work, and have no energy left... but, I think I would be nice to let you know that I am alive and well, and, well, post a little something.

This links comes from a more reputable sources than those we see in some blogs:
http://www.spectrum.ieee.org/jan08/5891

Here, an antitrust lawyer (a real lawyer) discuses the implications of the antitrust lawsuits against Intel. Pretty much self explanatory, just to dispel the confusion brouth to you by "some other blogs".

(Proud member of the IEEE for 14 years!)

Sun acquiring MySQL: Something positive to blog about

2008-01-24T12:34:00.000-06:00

The Acquisition of MySQL by Sun finally gives me something positive to blog about, I will try to explain in good detail why I think this is an excellent move by Sun.

Sun doesn't want to make most of its money from Hardware. They don't want to sell software either. What they want is to use their Hardware and Software products as marketing drivers for their services. The expenses in both categories pale in comparison with the amount of work and expenses needed to have hardware and software running smoothly in large configurations. To be able to effectively help companies to have smooth systems is something Sun is increasingly good at, therefore, their prospects look promising there and it is natural to be on the look for acquisitions to strengthen the company position.

People who has done Systems Administration probably would agree with me that Free/Open Source software gives you the feeling of being little bit "raw", or intimidating to people who is not master of a given package. This is where experience is valuable and companies such as Sun may provide assistance. On the other hand, once you are past what I call the "infantile mortality region" of the learning curve (when you do not have enough understanding of the software to make it useful for your purposes), Free/Open Source is much better than proprietary software: it does not imposes its policies on you. Proprietary software forces you to accept its policies, beginning with the "shrinkwrap" license on. For large organizations, that have non-mainstream requirements, frequently proprietary becomes increasingly frustrating, the "zealotry" of protecting licenses and stuff makes it much more complex to use third-party tools to assure corporate-wide compliance to policies, that is, proprietary software may become an obstacle for selling products and services that a compay such as Sun provide.

I think Java provides a good example to explain the principles that justify the MySQL acquisition. This wasn't obvious to me, it took me several years to understand how or why Sun may make money off things like Java, that are Free with capital F: In continuation with what I described above, Free software helps a vendor to create a free marketplace where products and services move fast [ free marketplace => market liquidity => efficiency ] where the best positioned vendor enjoys several advantages, and the best positioned vendor tends strongly to be the originator of the free software. I would say that while Sun invented Java, it didn't realize its full potential until recently, because, as I explain in "multiple personality complex" [ old enough to be the sixth article in this blog ], the original strategical role that Java was supposed to fulfill was ill-conceived: My interpretatin of "Code once, run anywhere" was old Sun's master plan to bite into the mindshare of software developers who only developed for x86 and where slighting Sun's hardware, but what really happened was that the few developers for Sun's boutique platforms used Java to free themselves of Sun's platforms [ I would say that Sun felt secure of its platforms 'cos Java would mean a significant increase in computing capabilities demand for the same software, therefore their reasoning could have been that software migrations to Java would be accompanied by hardware upgrades, since Sun commanded the high-ground, Java would highlight Sun's competitive strengths ]. I got to understand all the potential (for Sun) of Java not by looking at Sun, but becoming aware of how IBM had outcompeted Sun in the Java arena. From late 2001 up until late 2003 I worked heavily with Java, and I think this was a period of particular significance because it marked the sunset of IBM's Visual Age and the sunrise of Eclipse/Websphere while Sun was merely repackaging Forte as Netbeans. First, it came the observation that IBM had outcompeted Sun at Java, since the fact was very weird to me, it made me meditate long about how come IBM embraced so wholeheartedly a direct competitor's key product and turned it to its advantage. I had the advantage of a fairly good understanding of what IBM was looking for by embracing Linux, so, I was able to come to a conclusion by early 2006, soon after I wrote "multiple personality complex" [ like I said, it literally took me years! ]

It is nearly indisputable that IBM's transformation from a Hardware company into a Software services one was the success story of the 90's. Sun is also going that route, so, it is important to continue to discuss what IBM did. One of the key elements of that transformation was the development of a free marketplace where offering the services IBM could offer made sense, that's why IBM leveraged its participation in thus far compartmentalized markets such as PCs, Client/Server workstations and mainframes into a continuum of offerings. To accomplish this, IBM needed "glue" to hold things together when the customer wanted to shift gears up (or down) in scale, techniques focused on scalability. From old times, Virtualization, so that applications could be moved upward or downward without trauma. Settling on Linux for the Operating System wherever possible, because Linux runs well enough from embedded devices to mainframes, so that the Operating System won't become a problem, and Java for the applications themselves: "Code once, run anywhere". Since the PC market is a free enough marketplace already, it makes total sense for IBM to get rid of it if the corporate energines are better spent elsewhere, thus the selling of that business to Lenovo.

Coming back to Sun, now it is clear why Sun helps to develop its own market of services through not just Java, but Free/Open Source databases such as PostgresSQL and continued participation on proprietary databases alliances like IBM's DB2, Oracle and MS SQL Server, the whole point is that the database choice shouldn't be an obstacle. Just like the Operating System shouldn't: to continue to offer Solaris, the continued participation in directly competing Linux, and even Windows!. More recently, new offerings in Virtualization and now the acquisition of MySQL.

I would say that Sun's realization of these ideas was incremental, things like open sourcing Solaris could have happened much sooner, but I think they played a role in selecting Jonathan Schwartz as CEO, and by the time Schwartz was appointed the plan was very clear.

I read Dvorak's severely critical "The Sun-MySQL deal stinks" blog on the subject, and while I think he missed the whole point (I think beloved Dvorak wouldn't understand why Sun insists on Java either), he has provided me with the most convincing argument that Sun had a coup with the acquisition. I have to paraphrase and summarize his blog: The acquisition stinks because MySQL is far outside of the core competencies of Sun, so, the billion dollars will "simply vanish over time" together with the strength of MySQL. Dvorak suggests that since the great beneficiary of a dead MySQL is Oracle, Oracle would be using Sun through their long lasting partnership as its "stooge to do the job" of killing MySQL. One of the points that Dvorak wants to highlight is that Oracle is killing MySQL on the cheap by preventing a bidding war between interested parties: those interested in killing MySQL such as Oracle and Microsoft, and interested parties in its continued existence such as Google and Yahoo. I think that a monumental biding war for MySQL could indeed have happened, so, Dvorak's argument assures me that Sun did a great deal.

As to why the MySQL people sold themselves on the cheap, I am not sure, but it must has to do with two things: 1) Just like Microsoft is famous for acquiring companies just to kill their incipient competing products, MySQL's value for Microsoft and Oracle is "how much does it cost to kill it?", and "if we kill it, how much more could we exploit markets before an alternative fills the void MySQL would leave?", so, I guess companies with "ill intentions" to acquire MySQL have a tougher negotiation ahead for not so great benefits; and 2) Net customers such as Yahoo or Google may not have the willingness to develop the product or its market, so, the value to them is not so high. But Sun is particularly well positioned to make the most of MySQL on both senses: On behalf of its customers who want good and cheap databases, and on behalf of MySQL in terms of product development and corporate backing; this happened with IBM/Linux to the great benefit of the Industry and all the parties concerned, this acquisition will go the same route.

Is Intel a good investment?

2008-01-15T13:49:00.001-06:00

I have been downsizing my AMD positions because, as I explained before, when a technology company is in dire straits, it is in a reactive position that makes it so much easier to manipulate the stock price. I don't like to be at the end of the line of important information.

Anyway, what I did with the money was to put it in other companies such as Intel. A mistake. I had a nice moderate bearish bias in my portfolio 'cos I was bearish on AMD, my main investment. I lost that bearish bias 'cos I haven't found good candidates to take bearish positions on, so, I turned bullish the market just before the market crashed, and Intel has done horribly wrong lately, so, I am really "hurt".

"Year to date", AMD is down 20%, Intc 15%, the Nasdaq 10% and the Dow Jones 5%, approximately. So, the talk of recession has really hurt Intel, but is Intel really vulnerable?

Intel has just gotten rid of a major competitor that put a clamp on profits, the worst (for Intel) of having Chimpzilla doing great products like the Athlon 64 X2 that force you to compete with gigantic cache memories in your Netburst lineup, is not that you lose market share itself, there isn't much difference between 85% or 70%, the real difference is that you lose monopoly status, and to prevent or recover lost market share you must lower prices. Since the attack was all across the board, the profit cuts where universal.

I wrote an article that now sounds very silly, but that illustrates this point. In March of 2006 I thought Intel wasn't going to succeed with the price war, and I wrote why. The prediction turned out the opposite because Intel managed to come back in great fashion and in great strides with the Core micro architecture line up, that is, outright superior products. The key are the superior products. Since Intel is at the brink of not having to concern itself with what AMD may do, it is close to once again be free to exploit the market at will, that translates to monopolistic profits.

In another area, Intel has been executing superbly. It succeeded at the challenge of bringing massive amounts of Core products and getting rid of the "Himalayan Mountain" of Netburst inventories, and the new families of products, with the advancements of transistors with metal gates and high dielectric constant field effect insulators so, from the execution point of view, shinning days lay ahead.

Having literally marginalized the competition to the scraps it leaves and being particularly strong in future prospects, product wise, the current Intel stock price is even lower in absolute terms to the price it had in early 2006, before the market fully realized that the K8 micro architecture was vastly superior to anything Intel was offering, thus, to understand the current valuation of Intel one must suppose that The Market thinks the business prospects for Intel are much worse today.

But are they? A significant component of Intel products are not consumers but business, the processors are a practical need that is not elective like, let's say, iPods. Its market is global. Part of its production is in the U.S. and part is outside. While Intel would surely be affected by an U.S. recession, or even a global recession induced by an U.S. recession, all of my analysis indicates that it should track way above the market, because it has more than average advantages and strengths to undergo a recessive period. Since Intel is much below the market in the beginning of this year, in my opinion a contradiction has showed up that I intend to exploit: Intel must not just catch up to the Nasdaq and Dow Jones, it must give better returns (or not as bad). Since there is already a 7%+ difference between Intel and the indexes, the closing of that gap represents more than 3.5% gain potential doing sort of an arbitrage "bearish the market and bullish Intel" in equal amounts.

I also think it is bullshit that the market for semiconductors will track worse than the broad market, yesterday's IBM results are sort of a confirmation. Unfortunately, the market keeps disagreeing with me...

George Soros, Morton Topfer, Mubadala and Chicagrafo

2008-01-09T18:59:00.000-06:00

George Soros, Morton Topfer, Mubadala and Chicagrafo: Who are they?

George Soros

George Soros is a self-made billionaire that now runs an important Hedge Fund. A very successful investor, who developed a theory about how the Market exaggerates trends, how Market Value and market participants' perception feed each other until Valuation and reality diverge to a breaking point. Mr. Soros used this model for his most famous exploit, when he "bankrupted the Bank of England" short selling the Sterling Pound in September 1992: The facts were that the Pound was coupled to the other European currencies because of its participation in the European Exchange Rate Mechanism, but wouldn't have comparable rates of interest. The perception was that the Pound was strong enough to sort of live an independent life of its own. Soros had the conviction to short sell 10 G$ worth of pounds on the reasoning that something had to give, and when the pound was taken out of the European Exchange Rate Mechanism the devaluation gave Mr. Soros more than 1 G$ in profits.

Soro's model deals with emerging trends and exhausted trends. Most investors try to detect emerging trends that The Market will embrace, but what I found valuable about Soro's model is the other part, that when a trend is fully embraced by The Market, this "reflexivity" of market participants becoming aware of the trend become a positive feedback loop that makes market valuations to lose the sense of proportion. I venture to say that AMD's recent crash lost its sense of proportion, but I won't delve deeper about this subject in this article.

Morton Topfer

Morton Topfer sits at the AMD Board of Directors. He was vice Chairman of Dell and was an important executive at Motorola before that, presumably he got to know Dr. Ruiz while at Motorola.

Mubadala Development Company

Mubadala Development Company is a State Owned investment company.

Chicagrafo

And I am a commentator of the technology equity markets.

So, in this group there is representation for Hedge Funds and their managers, large investment companies, directors of publicly traded companies, and "pedestrian" investors.

What do we have in common?

We all have lost substantial amounts investing bull-side on AMD.

According to this site, George Soro's Hedge Fund bought AMD around $23 by the end of 9/2006 and sold around $21.6 by 12/2006. He insisted buying @ ~$15.5 by 3/2007 and sold by 9/2007 @ ~$13.4. This page documents the approximate value of $20 millions that Mr. Soros owned of AMD by 9/2006 in 782,600 shares, or over $24.85 per share. We know that he lost money because the stock price never went back to those levels after 9/2006. What was he looking for when he took bullish positions on AMD? perhaps the materialization of the Dell deal that finally broke Intel's exclusivity?

It is important to remember how highly coveted a customer Dell was for AMD before the deal, the ties to Dell of Mr. Topfer are not to be underestimated. In any case, Mr. Topfer purchased, out of his own pocket, 1.8 M$ in 28 Jul '06 (100,000 shares @ $18+ per share) and another $2 M$ in Nov. 06 (100,000 shares @ $20.85 per share) of which he gave up 100,000 shares in 24 Jul 2007 at a price of $15.07 and still has more than 100K shares...

The "poor" Mubadala company saw its 622 million dollars in AMD reduced to $271 millions (49 million shares at the current price of $5.53 per share), or less than 44% of what they began with...

As a matter of fact, AMD has attracted all kinds of investors (bull side) and almost all of them have lost money.

This company remains an anomaly among publicly traded companies being one that has net losses on its 30+ years of history.

There is something that has kept attracting investors to this siren call.

The point I am trying to make is very simple: While I made a terrible mistake, I realized I had screwed it up much sooner than Soros, Topfer, or Mubadala, despite my great disadvantages of only having access to freely available web sites and fora for investors to get the information to guide my investments. Why did I got ahead of them?: Because of my superior knowledge of the technology:

In July '2006 I advised to sell AMD while Soros was buying because I realized that the Core micro architecture was as good as Intel was advertising it, that AMD was in denial of the threat, and it won't have competitive products, this before knowing about the ATI acquisition.

The ATI acquisition was a very confusing factor for me, until by January 2007 I had assembled the whole puzzle (*) and got to the easy to understand conclusion that this acquisition is a blunder of suicide magnitude.

About the same time (*), I correctly interpreted the extended L2 cache latencies of 65nm K8 and their slow speeds as evidence of serious problems in the schedule of the 65nm process; furthermore, I acted with extreme conviction regarding the implications a bad 65nm process had for single-die quadcores, because I then understood that to commit the company to pursue a challenge as hard as the "triple challenge" [ single die quadcore/immature process/substantially different architecture simultaneously ] was another suicide-magnitude blunder.

Despite not having even a thread of information from inside AMD, much before Mr. Topfer sold half of his position, I was already sure that ATI acquisition won't ever pay off, and that Barcelona and Phenom were very mediocre products. Just like Mr. Richard, Mr. Topfer sold AMD before the shit hit the fan, before the launching of Barcelona, the first K10.

By the time Mubadala took a position on AMD, it was already very clear to me that this company is not viable.

Unfortunately, this chronology does not mention all the hesitation, tribulation and doubts I have experienced in the over two years I have been on AMD: At the beginning I had the extreme opinion that AMD was supposed to topple Intel not just in the technical leadership, but in the market too, took market positions as extreme as my opinions and lost equally extreme because the market and I disagreed from Feb '06 on regarding AMD. Ever since I had the "pessimistic" extreme opinion, AMD has declined fast, all right, but didn't crash as I expected, until recently, at a time that I wasn't prepared for. It is ironic that I turned out over-cautious when the crash really happened (from $12+ to $6-) because I still can't understand how is it that the market prices-in today information we knew as far back as August!

I really don't know what is the lesson to learn from this experience, but I am mulling over it.

(*) The blog articles linked were written much after the periods mentioned in the text. For me, it is easier to refer to articles that explain the ideas in their polished form, and for the reader perhaps it is also easier to read the polished version, but if I get requests to come out with incipient expressions of these ideas, I can dig my old posts in Investor Village about this subject. Some of them proved prescient, it is not that I am making wild claims of predictions, the record is there that among all the cacophony of opinions and my own flip-flopping I had the trends clear. I was always skeptical of the ATI acquisition but flip-flopped because I didn't really understand it and the Market and everybody else praised the gamble until I got to definitive conclusions; regarding the triple challenge, I still have problems to believe how irresponsible AMD's management had to be to go this path...

AMD Manipulation and Bankruptcy

2008-01-02T15:44:00.000-06:00

Happy New Year.

Last time, when I spoke of the AMD Analysts Day, I tried to construct an interpretative framework to make the most of it. I said that the opinions of Management should be studied within the background of inviability, and I detailed how is it that AMD's management has over a year speaking of "perfect storms" rather than addressing the real problems. I am sorry to say that Management is still in denial of those problems, they just promised a better future for the company, but not at all how is it that it will improve, so, I begin to fear the worst. Normally, this would call for renewed conviction about bearish positions on AMD, but it is not so simple, as I try to explain:

Since recently it became evident for the Market that AMD is not viable, the stock price has collapsed very quickly. But there is an issue nagging me that I have not been able to explain: This AMD crash began right after Mubadala invested 622 M$ to acquire 8.1% of the company, that was announced in November 16. The price, rather than taking off from $12.64 per share, began the crash to today's low of $7.02. This does not make sense to me, because by November 16 we already knew in what disastrous shape the company was:

We knew that Barcelona is not even in the same league as other Intel processors,

that meant that the K10 design sucks,
thus Phenom, its twin, was going to suck too.

We knew that there were serious problems with the 65nm process, otherwise the speeds of introduction for the already very late Barcelona wouldn't be as abysmally low.
Thus, we were perfectly aware that the single die quadcores were expensive to manufacture and would have to be sold very cheap
We knew that the company was trying to hide all these problems behind outrageously optimistic promises
We knew that Fusion continues to be very far in the horizon, and, despite being hyped as the second coming of Christ, Fusion is just a power efficient General Processing Processor/Graphics Processor package; hardly anything that would take the market by storm.
We always knew that "Asset Light", or how it is now called, "Asset Smart" was 100% bullshit
We always knew that AMD's Goodwill was inflated, it did not reflect the reality of the lost value of ATI
We had reasons to expect some nasty "show stopper" bug in K10
And we knew that the "Fat Lady" had already sung: The best shot AMD had, K10, had been fired and fizzled.

So, my concern is that the stock price collapse should have happened gradually, every time these items became more clear from April to October; the Mubadala acquisition of 8.1% of AMD turned out to be the most unlikely wake up call to the reality that AMD is not viable, I can't explain how is it that right after the Mubadala deal suddenly all the analysts began to seriously talk about the subject of AMD's inviability and to "connect the dots" mentioned above.

These coincidences make me think that the price was manipulated for most of 2007, otherwise it would not have remained above the absurd level of $12 per share in the face of extraordinary losses and uncompetitiveness. While the crash was happening, the company actually had a bit of positive news, the Mubadala injection of $622 was important, then there was the launch of the not so bad "Spider" platform, and the small vindication of the launching of the new series of graphics cards that closed the gap to nVidia a little bit. And the latest news are that the TLB bug is not as important as I initially thought, it has proven to be very difficult to replicate, so, people may as well forget about it, especially the Windows users that expect the system to crash every once in a while, so what does it matter that a processor bug makes it crash a couple of times per month?, and the Linux users for whom the Operating-System level patch does not hurt performance. Amd's Management didn't say anything new in the Analysts Day, they just repeated the same bullshit of a fictitious recovery they have been saying, so, that shouldn't be reason to continue to crash.

Although I am nearly sure that AMD will experience a very close encounter with Bankruptcy, I have reasons to think that the next round of manipulation will be bullish, thus my certainty does not translate into conviction to take bearish positons. The reason is very simple: AMD is in a reactive position, so, it must sort of "obey orders" from important market players. Those players have a great advantage over me about when the things are going to happen, so, by putting my money on AMD, either bull or bear side, I would just be exposing myself to be caught in the manipulation maelstrom.

I see that the manipulators have two important cards that they have not used yet:

AMD has, apparently, succeeded at staving off questions about the inviability of its schedule of capital expenditures by saying that thanks to "Asset Light" or "Asset Smart" the company won't need as much money;
And the manipulators may succeed at circulating rumours of an AMD acquisition now that the market cap is less than 4 G$.

The problem is that while most analysts and commentators insist on considering the possibility that AMD could sell factories to outsource most of its production, or the possibility of an acquisition, the dutiful investors of "Investor Village", "Yahoo Finance" and "Silicon Investor" knows better: AMD has important limitations on how much it can outsource production due to the x86 license, and the said license impedes a change of ownership too.

The conspicuous ignorance in the official press about the above subject is very suspicious to me, the ignorance, as it is today, helps the Bull case, to emphasize the licensing restrictions will emphasize the bear case.

So, the bottom line for me is that I should not have my money on AMD despite of being sure that my analysis of the fundamentals is correct: The closer the company is to bankruptcy, the more desperate the actions of the company, the better the information the manipulators have, and the easier the manipulation. The great crash that had to happen from above $12 to less than $10 already happened. Now that the price swung so much, the manipulators have an easier time to make it rebound on phony reasons, or to let it go further below, depending on their desires. Also, the less relevant AMD becomes, then Intel has better reasons to squeeze more profits. The way that I am going to ride this out this year is to unwind all my AMD positions with great patience, and trying to preserve the moderately bearish bias I've had after the price went below $9

This blog is first in Google search!

2007-12-17T20:19:00.000-06:00

I just noticed that Google is giving high search rankings to posts in this blog.

I am particularly proud of one search query at which this blog shows first:

w-h-y
a-m-d
d-o-i-n-g
s-o
b-a-d

The reason I put the hyphens is to obfuscate the words, I don't want Google to point to this article if you put that search query.

The link points to "Does AMD know what it's doing?" written in June, a good link indeed.

The celebration of the second anniversary is coming, I am happy that things are "clicking" for the blog: The market has vindicated the author, I am finding good material to work, the quantity has increased, and the articles have gained much more acceptance. The hike in Google ranking is also reason to celebrate for you, the reader: It means that a truly independent medium to express opinions, not conditioned, mediated or controlled by Wall Street remains open for your passive participation (or, if you are commenting, active!), while it is raising in its significance.

I hope to be able to be up to the heightened responsibility.

Note: I found out about this particular search query because I have a service that, if the visitor comes from a search query, it keeps tabs on the queries.

Analysts Day

2007-12-13T05:04:00.000-06:00

Today AMD will be holding its annual Financial Analysts Meeting. To put the meeting into perspective, I wanted to write several things about what AMD's management has been forecasting and what has been happening. I can understand the optimism of AMD a year ago, after all the period of great successes had barely finished. You can check the review of 2006 in Bob Rivet's presentation to get the feeling. The problem is that they applied the model of great successes for a period on which it didn't apply. As I explained in "important about K10", AMD is in "full lying" mode, it can not say the truth because it is just too horrible, then, it is important for tomorrow to be able to detect lies. To help in that regard, below I will summarize other statements from the company.

Fortunately, Roborat64 already summarized the last meeting for us, he wrote an article about this subject [ formatting changed ]:

[H]ere is what AMD projected for 2007:
K10 quad-core ramp: 2H’07; actual result: pushed out possible mid Q1'08
Barcelona performance: 40% better; actual result: ~40% worse (non-compliant SPEC benchmarks)
CAPEX: $2.5B; actual result: 2007 estimate will be at $1.7B (Fab38 delayed)
Revenue (long term target): ~$7.6B; actual result: $6.02B (average analyst estimates)
Gross Margins: 50+/-2%; actual result: 35% (last 3 qtrs)
2007 growth: 10% above industry (16%); actual result: -455% [ sic ]

I wish to mention a few things more:

In Mr. Seyer's presentation, slide 16/52, the quadcore was projected to have 40% superior performance, accelerated virtualization, and 60% improved power efficiency. Well, the kind of workloads that the TLB bug affect more are related to virtualization, it can be as much as 50% slower. Regarding the power efficiency, Jason Mick @ Daily Tech wrote a blog demonstrating the lies about K10 power consumption [ thanks to the Intel vs AMD blog for the link ]:

To put [the datum that K10 consumes 137 Watts] in perspective, a 3.16 GHz Xeon X5460 from Intel squeaks in at a still weighty 120 W. While AMD failed to disclose in the white paper on what frequencies its selected processors operate, it is almost surely 3.0 GHz or lower, as 3.0 GHz is the highest speed K10 processor currently demonstrated. The best case scenario is that a 166 MHz slower AMD processor consumes 17 more watts [my emphasis]
[...]
However, if the samples tested were lower than 3.0 GHz, obviously the picture becomes far worse. And since AMD's 2008 roadmap states that its 2.4 GHz processors are rated at 125 Watts TDP, this is almost certainly the case. Architecture and design advantages aside, K10 is a chip that is almost a gigahertz slower but with a significantly higher power consumption rating.

So much for the often repeated superior power efficiency of the "native" quadcore...

We can not forget that last year the company was speaking of fabulous forecasts in December 14, and less than a month afterward, they had to report a miss warning because the fourth quarter was much worse than anticipated.

In Q4 2006 CC (transcript), Mr Meyer's presentation said things like "We need to improve our financial performance relative to what we delivered in Q4. We will do so by delivering improved products, lowering our manufacturing costs, increasing our operating efficiencies across all disciplines, and continuing to grow share". Interestingly enough, things like the employee count hasn't gone down, which means that perhaps there weren't synergies between AMD and ATI, at least from the Human Resources perspective. So much for all Mr. Meyer said. Dr. Ruiz "I am incredibly optimistic and excited by the future of this company, more than I have been in the seven years that I have been with this company": Very well, let me know the next time you feel optimistic, I will gamble against your optimism. Mr. Rivet reiterated the Analysts day guidance, when it already was very clear that the guidance was pure fiction. Also, Mr. Meyer felt "very bullish" that as soon as the "native quadcore" was introduced, it would recapture the performance lead...

I wrote "Catastrophe" regarding the tragic comedy of Q1 2007 CC (transcript), so, I will not reiterate it here.

Then, it is Q2 (transcript). Meyer: "Our Fab 36 conversion to 65-nanometers is complete, with yields exceeding expectations and we now turn all our attention to 45-nanometer" [!!], "We are on a path to bring our gross margins and operating expenses back into a reasonable balance and improve our cash flow". Then, in the Q&A: Meyer: "First of all, we’re very happy with our 65-nanometer yields across all products, including Barcelona, so no issue there. The fact of the matter, Barcelona, while being an absolutely great product, is complicated and it’s taking a little bit more design work than we anticipated getting the final rim in place", Dr. Ruiz: "as Dirk mentioned, on 65-nanometer have been phenomenal, been outstanding". Rivet: "We would really like Q4 to be break-even, or to be specific, not just the month of December but definitely Q4". Then, there is an all-time greatest pieces of bullshit by Henri Richard that I hope someday to write an entire article about:

I don’t know of any IT manager that ever asked what was the nanometer in this processor and I don’t know of any student walking into a store and really wondering what the die size of a processor, let alone in some cases what’s the frequency? What they do is they look at more and more what is this machine going to do for me? How does this look? Is it a fashion statement? Is it responding to my needs?

In Q3 (transcript): Chris Danely, JP Morgan asks: "When do you guys expect to start shipping either at 2.4GHz or 2.5GHz Barcelona?" Meyer: "The plans that we have haven't changed from what we talked about around the timeframe of the Barcelona launch, which is to ship the 2.5GHz product in the middle of this quarter", answering to another question: "Based on the input we're getting from our customers and end users, there is a lot of demand for Barcelona, I tell you. We're just seeing people licking their chops and ready to get their hands on the product".

I am saving the bullshit of "asset light" for the end: Asset Light is empty talk because very probably AMD is forced by contractual obligations to manufacture in Dresden, otherwise the government wouldn't have pitched in. The x86 license caps the number of processors that can be outsourced. If AMD cuts its production scale, then it will suffer worsened economies of scale. AMD's inviability stems from being forced to sell a quantity of products to remain in a given scale, but since the products are mediocre, the only way the market can absorb the quantity is through very steep discounts that induce severe losses.

Since ATI imploded inside AMD, sooner than later the company had to adjust the "Goodwill". Currently, AMD's net tangible assets are negative, that in a way means that the company is worthless. This subject will be covered soon, but since we have the analysts day, I wanted to advise to interpret the statements of today in terms of viability of the company. Today most investors and analysts are not really thinking on an eventual bankruptcy, but as I have been explaining, the crisis may be more severe than what it seems at first sight, so, the question of viability will arise later and today is the day to be preparing for that. I am very surprised of AMD's recent stock price crash, because in reality there are no news, all the latest stuff of the K10 bug, delays, slowness, lacklustre performance, etc., are mere confirmations of things that were very plausible possibilities. Think about what may happen if today you do your due diligence and determine that AMD is inviable, and then, in 9 months time the market begins to seriously question AMD's viability? You would make a bundle!

The important thing about K10

2007-12-12T16:45:00.000-06:00

I have been reading articles like "Has Intel Crushed AMD?" by Jon Fortt in Fortune's BigTech blog, the Mario Rivas interview [he is the Computing Product Group Executive Vice-President] by Damon Poeter in ChannelWeb, as well as many other numerous discussions in message Boards about AMD, and I grew increasingly frustrated at how people is losing sight of the truly important things about K10.

There is the perception that if AMD solves the k10 problems of bugs, slow clocks, manages to produce them in quantities, then AMD may continue to consolidate its duopoly player status, and continue to be a force in the industry that must be taken into account. I think that all this optimism, very unfortunately, is unfounded.

Let us suppose AMD had launched K10 processors at 3.0 GHz, for both servers and desktops, around June of this year, and without any bugs of importance. Still AMD would be headed down, only not so fast. That is my point. Why? because the K10 design itself proved to be a dud at so many levels that it is exhausting just to mention all of them. I think that the important thing of K10 is that it proved inferior in IPC (instructions per clock) to Intel's existing double duals. This is a fact in a context of two extremely alarming things: Intel's double duals are handicapped by the front side bus (they can't communicate die to die directly, and every new core or processor on the same and the same bus diminishes the effective memory bandwidth per core) and external memory controller delays. Still, despite the handicaps, the double duals beat fair and square any K10 quad at same-clock comparisons in the vast majority of workloads.

This will get much worse, because Intel is already enjoying the advantages of 45nm, over the horizon looms the new advances in transistors, the high dielectric and the metal gates (* see note at the foot), as well as their QuickPath implementation of P2P that does away with the handicaps. I have demonstrated that there is no need to do something as good as AMD's DCA/Hyptertransport because for the vast majority of applications they were used only minimally (just to save a bit of money on the external memory controller, and to reduce the points of failure, helping speed to market), so, the industry has every reason to expect a much more competitive Intel in the short, medium and longer terms.

Does K10 has the room for future improvement? I was very wrong regarding Core, I honestly thought that the P6 line didn't have room for improvement, but Intel proved me wrong. I will try again to formulate predictions, though:

I don't think the cache hierarchy in K10 works. The independent L2 caches, half of the total cache space, are inefficient. The L3 level is too small compared to the L2 level to be justified (according to my simulations, for the latency steps on cache level of typical architectures, the sizes should be at least four times bigger than the previous level. These are numbers that I use in high performance optimizations where I try to adapt my software so that the "working sets" maximize the cache hierarchy performance. Also, I have said many times that the L1/L2 hierarchy of K8 behaves more like a "one and a half levels", that's why it is so size-efficient), thus, unless AMD changes this radically, I see K10 underperforming in memory-intensive applications. While the whole L3 is of dubious merit, it still occupies a significant fraction of the processor area, and consumes a significant fraction of its power... Some might say that I am saying this in hindsight, but in reality it is just that the actual performance numbers of K10 have given me confidence to go public with reservations I had from the beginning. I don't find the lackluster performance problem of K10 in any of the important advancements of this architecture (ask Ron, "Cove3" in the InvestorVillage message board for a complete list), but it has to be something, and I think the cache hierarchy may be a partial answer.
I don't think the migration towards quadcores will happen fast, not anything close to the migration from single core to dual core. A second core really adds usable computing power for normal Windows usage, as valuable as 70% of the first core, but the third core adds computing power that is hard to use, so it is only 35% as valuable. The fourth core is even less valuable. That's why I am so interested in three-cores, I can really think of ways to use a third core, but the fourth is still too far. This has to do with software engineering and the principle of combinatorial complexity. From the design perspective, the problem with these facts, is that while the single-die principle of K10 is oriented towards maximizing the efficiency of the four cores, it does so at very steep bin-split, yield and complexity penalties. Intel's existing double duals have the priorities reversed: inefficient multicore performance but with quick to market times, ease of manufacture and capable of top clock speeds. By the time this situation reverses, Intel will already be in the market with single-die designs, so, I am afraid K10 won't ever have the chance to be the adequate design for its time, at least from the perspective of multi-cores.
The problems we have seen of K10 are not accidental, I fear they are fundamental: The architecture is single die/four core, thus complex, thus requires time to develop, it is error prone, difficult to produce, and hard to make it run at top clock speeds.

I hope to have explained with sufficient detail why I think this is not a circumstantial crisis in the processor business of AMD, but an structural crisis that will aggravate.

The words of Rivas are very contradictory: He implies that the total performance of the processor really doesn't matter for the enthusiast, which is a lie by itself; but yet, the architecture he sells, optimized for multicore performance, is as enthusiast-directed as it gets. He minimizes the performance penalty of the BIOS fix of the TLB bug, contradicting the Tech Report benchmarking (in an article by Cyril Kowaliski that "Chico" asked me to read in his latest comment, Tech Report pounds on Rivas for this), and of course, it is literally brimming with promises of improvements that I don't see how to justify. Rivas is the same AMD official that acknowledged in March that the single die quadcore had been a mistake (Ashlee Vancee @ "The Register"), and digging a little bit more, Rivas, in an interview exactly one year ago, promised a place in heaven regarding Fusion (EETimes, Junko Yoshida), when the company was still trying to justify the ATI acquisition. Read the contradictions of Rivas, that will lead you to conclude that AMD is in full lying mode, presumably because the officials can not say the truth, that is, the news are to become much worse.

I never agreed with the Opteron/K10 comparison. It is true that both are monumental challenges, but that's about all their similarity. Opteron was revolutionary in ways that the industry was prepared to embrace, like the P2P connectivity, the emphasis on setting the way for single-die dual cores; and it was conservative and evolutionary on things the market wasn't willing to change: A true upgrade path for the x86 instruction set architecture for 64 bits, AMD64, while Intel was at the apex of their attempt at consolidating the Itanium ISA. K8 wasn't "marketing driven engineering", that's why it insisted in the technically superior approach of slow clocks of highly optimized execution rather than marketing gigahertz of idle instructions, represented by Netburst. Today, K10 tries to "innovate" in what is not necessary, like the single-die quadcore, the third cache level, etc., rather than innovating in things the industry is desperate for, revolutionary coprocessors for the consumer market, for example; on the other hand, today the risks associated to the K10 challenge are not at all mitigated by Intel's insistence on the incorrect approach, like at the times of the K8 challenge, but quite the contrary, the risks are heightened by Intel's practical and effective approach. Finally, AMD, at the times of the K8 challenge enjoyed the momentum of the superior product design, the Athlon, while today AMD suffers the negative momentum of having the inferior design (thus calling for a more practical approach).

My advice is to be suspicious of the theory that AMD just had a bad streak of problems and mistakes, at least regarding K10, it is very clear that AMD exposed itself to great suffering, and now that the gamble failed, the real pain is about to begin.

(*) AMD, unsurprisingly, is downplaying the silicon process race. Of course, it is so much behind already and getting ever further behind that it has to resort to deny the negative; but this subject is better left for another article.

Scott Wasson @ Tech Report: a mistake

2007-12-10T12:40:00.000-06:00

We have been talking about the "Tech Report" coverage of the K10 TLB error.

Scott Wasson published an article where he explains that he made a mistake

I wrote more than once in our coverage of the erratum that AMD had initially suggested the problem didn't affect lower clock speeds of the Phenom. Turns out that's not the case. Here is the text of my notes, verbatim:
TLB problem w/virtualization
2.4 will have the complete fix
Have to enable something in the BIOS for the 2.2 and 2.3
Can degrade perf a little bit
[...]
I think I may have read this incorrect information online somewhere

I also followed internet sources that said that AMD explained that the Phenom 2.4 GHz had a bug and that's why it was retired from the market, but that the same bug wasn't present in the slower versions. The Inquirer may have been the culprit,

This problem was found during speed-binning the B2 revision processors, and this was the cause for the Phenom FX 3.0 GHz delay. It turns out that some CPUs running at 2.4 GHz or above in some benchmarking combinations, while all four cores are running at 100% load, can cause a system freeze.
[...]
9500 (2.2 GHz) and 9600 (2.3 GHz) parts are unaffected by the errata [ my emphasis ] Some 9500/9600 parts may even be overclocked to 2.6, 2.8, 2.9, 3.0 GHz and they will have no problems whatsoever, while some will have this error.

I thought it was important to correct this at the "new-post" level rather than merely an update to old articles or a comment. This emphasizes the importance of having the sources properly linked to, you can backtrack the origin of your assertions.

Impact of BIOS patch of TLB Errata 298 measured

2007-12-06T10:56:00.000-06:00

Scott Wasson, whom we have quoted before, wrote an article for TechReport whose conclusions state that the performance hit of the BIOS patch for the erratum 298 is as severe as 20% in average. Even while taking out of the benchmark mix the memory performance tests, the performance hit is still more than 13%. Then, it has been confirmed the initial assessment of 20% performance penalty and that AMD once again tried to misled the public into diminishing the importance of the bug.

The 'net is abundant on reports on how the Phenoms are slower than plain old K8s in certain workloads. Since most of the consumer applications are very low-threaded, Phenom doesn't really have many chances to out compete their K8 dual core brothers throwing more cores to the workloads, but now that the BIOS patch castrates them of their memory performance, they look truly horrible. In some of the very long comparison tables of Wasson's article, the Phenoms are last in performance, by large margins. The BIOS patch affects severely the only competitive edge that K10 has over Intel products, so, the comparison turned hopeless against Intel processors.

Who are the suckers who are buying these Phenoms?

I wish I could leave it at that. But I can't. It turns out that at the height of the crisis, AMD officially came out to say that they are shipping the hundred of thousands of K10 processors they guided the last quarterly report conference call [ Mark Hachman @ ExtremeTech reports that AMD personnel emailed statements with that information ]. On top of the desperate and unethical behavior I describe in "terrible news", I can't fathom how stupid this company may be:

We know that AMD is quite simply not selling all the K10 it was supposed to sell [ we know that they are performing "application screening" before actual shipment of Barcelonas, they never launched the expected 2.6 GHz Phenom, had to retire the 2.4 GHz, IBM never launched the systems to the public so it couldn't certify its benchmark ], so the statement of tracking in accordance to previous guidance must be an outright lie; but that is not the worst about this statement, AMD actually believes that people will interpret the information that they are selling hundreds of thousands of severely defective processors as good news...

Wasson says that since the performance of Phenom is so mediocre, its only redeeming quality may be the cheap price, so, some average consumers may be interested in it, but

I doubt whether the average sort of consumer is likely to purchase a system with a quad-core processor. One wonders where that leaves AMD and the PC makers currently shipping Phenom-based PCs. I'm not sure a recall is in order, but a discount certainly might be. And folks need to know what they're getting into when purchasing a Phenom 9500 or 9600-based computer".
[...]

[A] credible source indicated to us that at least some of the few high-volume customers who are still accepting Barcelona Opterons with the erratum are receiving "substantial" discounts for taking the chips [...] I doubt AMD would have shipped Phenom processors in this state were it not feeling intense financial pressure.

AMD's other major concern here should be for its reputation [ my emphasis ]. The company really pulled a no-no by representing Phenom performance to the press (and thus to consumers) without fully explaining the TLB erratum and its performance ramifications at the time of the product's introduction.

It is even worse, Wasson forgets something he mentioned that I already quoted: AMD also misled the public by telling early reviewers that since the external bus of Phenoms was going to be 2.0 GHz, they should set the external bus to that speed for their reviews, while in fact the external bus of the actually launched Phenoms are 1.8 GHz.

I think all of this deserves REPUDIATION.

For a slight touch of comic relief, follow this link.

gfor said of Dave Orton

2007-12-06T10:19:00.000-06:00

gfor left a comment in "A-TItanic comments" that I want to share with all the audience:

You negative comments regarding Orton are misplaced. As the CEO of ATI, his first and foremost responsibility was to ATI shareholders, and he took excellent care of them.

1) He managed to get $5.4 billion dollars for a company that, had it not been sold, was hading for ~$2B market cap by April 07 based on dismal profits and R600 fiasco.

2) He knew full-well what a disaster AMD-ATI would be and did his shareholders enormous favor by demanding cold hard cash. The fact that the outside people most familiar with AMD's finances (ATI management team) did not want to touch their stock with a 10-pole should have set off red flags all over. "We will create a dominant company... yeah, and we don't want to be paid in it's stock".

Orton's ability to get AMD to overpay by the factor of two for his company, and pay the bulk of the sum in cash (which they could sure have used now) is nothing short of a genius. The man was looking out for ATI shareholders and he took great care of them.

According to the wikipedia entry on David E. Orton, he "enthusiastically supported ATI acquisition by AMD and was one of the main forces behind it". The history of this business deal is well understood, so, I won't write contemporary history tratise, but I think that Dr. Ruiz and the rest of the managerial team that approved this catastrophic acquisition did it in good faith, but they were scammed by Wall Street and the ATI personnel into paying twice what ATI was worth in an unnecessary acquisition. They are that naive and they have such inferiority complex that anyone who says "you could do X that Intel can not" will get their attention, even if X is the most stupid thing in the world. [ This inferiority complex also manifests into the sickening submissive attitude towards Microsoft ].

I wrote about this and the broader subject of big mergers in "Big Merger=Bad Merger": The deals receive excellent financial media press, because Wall Street and their Investment Bank branches stand to gain hundreds of millions of dollars in commissions and other fees, so they have every incentive to use their considerable leverage on the financial media to give the big mergers good propaganda. Also, the managers of both companies get richer, a phenomenon explained in links in that article.

This is like departing tenants throwing a party: There is lots of excitement, people come and have a good time, but by the morning, the owner is faced with a mountain of trash, vomit in the floors, the toilets clogged, the garden all trampled and all sorts of weird stuff. The owner is, naturally, the shareholder of the acquiring company.

Erratum 298

2007-12-05T21:23:00.000-06:00

The error in K10 that has generated this flurry of controversy is called Erratum 298. I will explain what it is about below, but I first want to put this problem on what I think is its due context.

In "terrible news" I spoke about AMD launching Phenom knowing about the existence of this bug. Because of technical characteristics of the bug and the Linux patch that works around it, I think that the BIOS patch can also work around the problem, therefore, this is not a problem that grants a product recall. Nevertheless, the performance hit of patching a system through the BIOS may be very significant, AMD claims around 10%, independent testers claim around 20%; but it seems that if the Operating System can be patched too, it only hits 1%. In practical terms this bug and the patch are as if AMD would have launched processors 10% slower.

According to "Daily Tech"'s Kristopher Kubicki, AMD halted shipping of K10 pending "application screening", that is, AMD is checking whether the applications of a customer would likely trip the bug or not before shipping. It seems that the bug may only occur when the operating system needs to set the "Accessed" or "Dirty" bits of the page table entry [ I found this article for the people interested in learning about Paging, the meaning of the accessed and dirty bits is explained there ]; like I mentioned in "terrible news", some workloads like supercomputing may not trip the bug, the reason seems to be that supercomputing doesn't do very sophisticated virtual memory management, at least not as complex as virtualization, so the simultaneous conditions required to trigger data corruption or system crash may not occur.

This means that the flow of Barcelona processors to the market is slower than anticipated, and some other customers that chose AMD because the specific advantages of AMD processors for workloads like virtualization are not receiving any product at all. In the case of "consumers", it seems that the company will give the chance to disable any patch and have a buggy system, or take the 10% to 20% performance hit.

Now that we come to that, the choice of disabling key functionality of the L3, Kubicki also quotes AMD saying that some tri-cores will have the L3 disabled. This makes sense, so, I guess it may be interpreted as good news. Let me explain why:

Caches have been sort of a "loose cannon" in the world of µarchitectures, for instance:

The original 266MHz Celerons without any cache were so slow that Pentium MMX 233 were noticeable faster,
then Intel solved the problem a bit overkill and launched the cheap and very overclocking-friendly Celeron 300A that became famous because its half-size, full core speed L2 cache made it faster than the much more expensive Pentium II's with double size, off-die, half core speed L2 caches, especially while overclocked allowing 100 MHz memory rather than 66MHz (I owned a Celeron 300A for years, it ran at 450MHz with 100Mhz bus without a hitch and outperformed Pentium II and Katmai Pentium III of the same speed).
the problem that killed the hyperthreading feature of top of the line Netburst processors was the cache contention, despite the large sizes of Netburst caches (they were that sensitive to cache misses),
one the reasons for the superiority of AMD's Durons (in their price/value space) was their supersized L1 caches,
and one of the great reasons why AMD's K8 could compete with Intel processors of FOUR times the total amount of L2 cache was the very efficient "exclusive" architecture of L1/L2 caches (here exclusive means that the data in L2 is not "repeated" in L1)

so, I can understand that the L3 cache in K10 could have been a good idea in the designing stages, but the test in real life conditions demonstrated that the extra memory latency and higher manufacturing costs wasn't really compensated by how much it helped performance. Still, AMD expended lots of money, opportunity costs, time to market, and risk exposure to bugs to develop this feature in K10 that ultimately was proven of dubious value. This highlights, once again, that AMD shouldn't have skipped the intermediate steps between K8 and the "triple challenge", or that the "business exploration" is very important.

Another positive lesson about the Erratum 298 is how much more responsive the Open Source software is when compared to proprietary offerings. Linux already has a patch that emulates the "Accessed" and "Dirty" bits of page descriptors, so, the performance penalty gets reduced to much more numerous page fault exceptions; on the other hand, Microsoft isn't even bothering to patch around the K10 problem; it is true that the patch performs nothing short of "major surgery" in memory subsystem of the Linux kernel, but while AMD can actually make a patch for Linux, I guess that it is unthinkable for Microsoft something as radical. For the same reason, I expect the Open Source virtualization projects Xen and VirtualBox to be much more agile than, let's say, VMWare, to tend a helping hand to AMD to still allow early K10 to run virtualization without an extreme performance hit.

I received an anonymous comment that pointed to "andikleen"'s comment that leads to the code in x86-64.org of the patch and the explanation. [ Thanks to whoever posted the comment, but please, leave a name, there is no need to sign in to anything, just overwrite "anonymous" with a name of your choosing and that'll do ]. Cyril Kowaliski @ TechReport also comments on the bug and the Linux patch finishing with a very important thing, the apparent contradiction that AMD says that few customers will be affected by this problem, but at the same time it strongly advises Phenom motherboard manufacturers to enable the BIOS fix that zaps at least 10% performance without giving the option to disable the fix. By now the whole world knows that the bug is severe, I honestly don't understand what is AMD trying to do by insisting on minimizing it...

According to the Kubicki's article we have been talking about, AMD will continue to ship defective processors until the next stepping, B3, of both Phenom and Barcelona, gets launched in March... although the "2.6 GHz Phenom model 9900 is not affected", so, presumably, the Phenom 9900 would be the first B3 K10.

There are more K10-related news: AMD is re-emphasizing 65nm K8, "Brisbane" [ DailyTech ], "of course!" is what I say. There never actually was any need for AMD to forget about K8, the world is barely moving to the dual core wave and AMD should have focused on improving their dual core offerings rather than the "triple challenge" foolish adventure that led to slower processors than what is acceptable, hotter, and buggier too. K8, on the other hand, still actually has untapped potential. Unfortunately, since AMD has such bad 65nm process, it just can't go for the 3.0 GHz and 3.2 GHz speeds, currently manufactured processors at that speed are all 90nm and will be discontinued.

In any case, AMD will have to ride three more months and more on the back of the architecture it has been slighting for over a year now, K8...

A-TItanic

2007-12-04T21:27:00.000-06:00

This article is dedicated to Henri Richard, and to a lesser extent, to Dave Orton, because they have been the top rats that got a fortune from AMD and have abandoned the ATItanic(1) ship before facing the consequences of their decisions.

Mr. Orton was the CEO of ATI who managed to sell to AMD at 20% market premiums that nest of lice. Mr. Orton didn't allow much time for the evidently catastrophic situation AMD was in to hurt him, he resigned in July of this year.

The inertia that Mr. Orton's ATI carried over to AMD was the disappointing and power hungry 2900 series. It is also interesting to note that although AMD acquired ATI primarily to guarantee support for its processor initiatives, once inside AMD, ATI hasn't done even trivial things like supporting Quad FX. Now that the company has announced that it is killing the Quad FX, we can be sure that there will never be any ATI chipsets for it, the existing nVidia will be the only one...

Speaking about Quad FX, that foolish platform (2) must have been the invention of someone at AMD, very probably Mr. Henri Richard, Senior Vicepresident of Marketing. Since only now that Mr. Richard is not in AMD the company terminates this initiative, it makes you think whether it was his project.

There are other decisions. Most managers at the upper echelons must have pushed for the disastrous "triple challenge" (3). Someone, very probably from marketing, thought that it was a good idea, one year ago, the last quarter AMD had strong demand, to give preference to OEMs and probably specifically Dell, rather than the historic businesses in the Channel, beginning the string of net losses of about $4 per share. Someone must have thought that ATI, a company with few tangible assets beyond its technical and marketing skill, was fairly valued. I don't think that production-minded people like Mr. Meyer or Dr. Ruiz would have taken the decision to acquire ATI without assessments of people from marketing. And finally, someone must have decided that the lesser evil was to launch defective products than to postpone the launching of any K10 altogether.

Mr. Richard departed AMD within two weeks of the very late (paper) launching of Barcelona, the first K10 based processor. Exactly what happened with K10?:

The company is not able to produce them even in small quantities, not even enough for IBM to certify its benchmark.
Not able to produce processors of even mediocre speeds, nothing close to what it desperately need, even slower than the already reduced estimates.
The company launched defective Server and Desktop K10 knowingly.
Promises of quantities or debugged products for late Q1

But all of the above is not really important, I heard/read Dr. Ruiz at least in two occasions saying that Barcelona wasn't going to materially affect the financial numbers of the company this year, that the production this year was for "design wins"; but the most important thing we now know about K10 is that it sucks, big time.

I find the chosen timing of Mr. Richard's departure as very good, he left just before the shit hit the fan.

Guys, I have to thank you. Even though you fooled me several times, in the end your departure allowed me to read through your bullshit and thus you indirectly helped me to hold on to my very bearish portfolio bias on AMD with conviction. That has paid off handsomely.

(1) A fellow "cass"posted a comment here where he refers to AMD/ATI as ATItanic
(2) Quad FX is a very foolish platform without coprocessors: A regular "desktop" computer finds very few uses for more than two cores; the economy/speed of unbuffered DDR2 at 800 MHz memory instead of registered DDR2 667 MHz of Opterons does not compensate for the platform premium cost nor the lack of options; the Quad FX, without consumer-oriented coprocessors, always was an expensive platform for cheap memory, an oxymoron.
(3) Triple challenge refers to develop a new architecture, K10, in an immature process and with the complexity, yields and bin split problems of single die quadcores; all at the same time, and unnecessarily.

More terrible news about Phenom and K10

2007-12-04T16:56:00.000-06:00

[ UPDATED 12/5/12:04 CST ]

More lies come from AMD, and the performance of their products is significantly worse than in early reviews:

Giant in a comment at Roborat64's blog mentioned something important:

TechReport reports that their original Phenom benchmarks were done incorrectly, that the actual performance is worse than reported, you may find it at the penultimate paragraph:

We don't yet have a BIOS with the [ L3 Cache ] workaround to test, but we've already discovered that our Phenom review overstates the performance of the 2.3GHz Phenom. We tested at a 2.3GHz core clock with a 2.0GHz north bridge clock, because AMD told us those speeds were representative of the Phenom 9600. Our production samples of the Phenom 9500 and 9600, however, have north bridge clocks of 1.8GHz. Because the L3 cache runs at the speed of the north bridge, this clock plays a noteworthy role in overall Phenom performance. We've already confirmed lower scores in some benchmarks.

It is reasonable to assume that other sites may have done the same mistake, so, the already bad Phenom reviews are actually worse...

But that is not the important thing I want to talk about, it happens that "techreport" almost confirms that AMD lied regarding the reason why it couldn't launch Phenoms at 2.4 GHz and faster, that supposedly only affected the 2.4 GHz and over; it turns out that the problem is pervasive to all the current K10 incarnations, from Barcelona to Phenom, this is what Scott Wasson at "techreport" said about this subject yesterday: "Apparently contradicting prior AMD statements on the matter, [Michael Saucier, Desktop product Marketing Manager at AMD,] flatly denied any relationship between the TLB erratum and chip clock frequencies".

Not just this, but since the bug first showed up at Barcelona (that eventually led to a drastic cut of supply of defective product, only to those who have usage patterns such as supercomping not likely to trip the bug as opposed to virtualization workloads that are likely to trip it), AMD should have expected Phenom to have the same problem, but instead of postponing the launching of Phenom, the company went ahead and launched a defective series of processors.

Scott Wason connects the dots and mentions this:

[T]he presence of the TLB erratum may explain the odd behavior of AMD's PR team during the lead-up to the Phenom launch, as I described in my recent blog post. The decision to use 2.6GHz parts and to require the press to test in a controlled environment makes more sense in this context

It turns out that the BIOS patch that prevents the problem, that also includes microcode updates, turns off functionality of the L3 cache with an official impact of 10% of performance, or 20% according to early independent reviews. Let's use the official 10%, if we simply reduce clock speeds by 10%, the products AMD launched were not faster than 2.1 GHz... But this patch is not available today for the majority of 790FX platforms!

There is also the rumors that AMD will launch triple cores without L3 cache. This would confirm my appreciation that the L3 cache provides dubious performance advantages, but as you may see, it is another point of failure in the development of the architecture.

In summary:

K10 is buggy, in accordance to the predictions regarding the "triple challenge" of developing a new architecture on immature process and managing the complexities of single die quadcores [ I wrote an old article about why I expected that the sheer complexity of "Core" was going to be too much for Intel, but it happened that it was the "triple challenge" complexity what is too much for AMD, just like "Intel's 65nm is Marketing" applies much better to AMD ].
AMD lied about why it couldn't launch Phenoms at 2.4 GHz and over (2.6 GHz were promised a long time ago), this is more of the same bullshit as saying that the L2 latencies in Brisbane were higher supposedly to allow for larger caches in the future (the caches didn't increase in the 12 months after the launch of Brisbane, by the way).
Knowingly, AMD launched defective products
The performance reviews of Phenoms must be revised downward significantly, once the actual bugfixes are availabe, which make take a while!
AMD influenced reviewers to make a mistake (to set the external clock to 2.0 GHz) that would show Phenom in a more positive light
AMD tried to hide the problem at the launching of Spider.

I felt the need to update this post because I didn't speak about the implications:
Traditionally this is the most important season for businesses like AMD, but the products in the market may even be recalled and it will take some time, in the order of months, for AMD to be able to correct the problems, we are talking of late Q1, the worst business season...

I just wrote in "A-TItanic" that Dr. Ruiz several times said that K10 will not affect the finances of the company this year, that early production was for "design wins", but if something is very evident is that even bug-free K10 stink, so who is going to wait more months to buy such mediocre products?, or what motherboard designer is going to bother with K10 features like HyperTransport 3 and such?, what is AMD going to do with the K10 products it already manufactured? What about Penryn? This is all too much to ask to the venerable K8 architecture.

After all, it seems that K10 will affect the finances of AMD this year: very negatively.

Another margin call!

2007-12-01T00:54:00.001-06:00

It is getting annoying the margin maintenance rules of eTrade: I have an investment system for AMD, that believe it or not, every time I make lots of money, I get a margin call!

It has to do with the margin rules. In eTrade, as many other brokerages, the shares you own may be used as collateral for the margin loan, that is, the guarantee you give of being able to pay your margin balance are the shares themselves. Nevertheless, options can not be used as collateral, then, if for some reason you gain lots of money on options while you lose comparatively less on shares, you may lose "margin equity" and get a "margin call". This has happened to me so often that I lost track of the number of times.

My investment system is not very easy to describe, so be prepared to read this several times: I write short term at-the-money covered calls, meaning that I sell calls of strike prices close to the current stock price to expire in a few weeks backed up by shares, but in reality, I use the covered calls as a hedge and money flow to pay for the real investment, quantities of very long term and far-out-of-the-money puts. Since I gain either way with the shares moving up or down (or even more when they move sideways, yeah, I am like the casino: "The House Always Win") I go full tilt with margin purchases, and when I say "full tilt" I mean that I really buy everything I can buy on margin [ note: there are a number of adjustments that I do that may imply acquiring calls or other complicated plays against the market or bullish the market, but the bottom line are the written covered calls with shares overprotected ].

Anyway, when AMD crashes, as it happened recently, those puts really appreciate, much more than what I lose on the shares (the gains on the written calls are not significant in this case); but since the puts do not count towards margin equity, I get a margin call, and typically it forces me to sell a chunk of long term puts, which pisses me off 'cos I have to make sure that the order gets executed the margin call day and so I get hit with the bid/ask spread that may be huge in highly volatile environments...

Fortunately, this time I really wanted to reduce my AMD positions because half the downward movement I expected to happen in 2007 already happened, so, the next half is not so clear: I am not so sure that AMD will go below $7 now that it is @$10, not with the same conviction I had when it was at $13.50 that it will go below $10. I could, in principle, "neutralize" the position to not speculate on whether AMD will appreciate or not with the intention to just "milk" the written calls at over 1% per month of total gains including margin interest and all; but I think I can give my money better use. All in all, I sold 1/4 of my AMD positions and I am now 1/2 as bearish as I was before.

How Foolish of Me

2007-11-27T23:11:00.000-06:00

I have been thinking for a while about writing an article about my mistakes and the learning process that made me turn 180 degrees. I hope my personal experience may help other investors. I have written about my screwups several times, especially in the recent article "Exploration", but this subject has not been covered comprehensively. Anyway, I was a bit too ashamed to really get done with it, waiting in hopes to get a bit of vindication from the market, which happened recently. Also, somebody posted a comment for my last post pointing out some of my mistakes, the author actually did some research of old posts of mine, and his help giving me a cue has been "the straw that broke the camel's back".

I began as an "staunch" AMD supporter and wrote profusely about the chances this company had to displace Intel, both in technology and finances. Nevertheless, Eventually I renounced my own opinions, after losing lots of money and having several changes of mind. I finally settled at pretty much the opposite opinion, that AMD is collapsing, although I have been very consistent about AMD's deterioration this whole 12 months. I also anticipated the market with my investments, which recently led to significant gains, so, I got half vindication, perhaps I am not a total fool after all.

Still, the most expensive mistake in my whole life has been to be dismissive of the Core µarchitecture from late February to October of 2006. You may go back to my posts explaining why I made the mistake, but from July of 2006 on, the process of discovering how wrong I was is very well chronicled in this blog and you may find a good summary in "Exploration". There is one thing I have been half-right about Core, though: I said that Intel will be relying solely on shrinks to improve speeds and performance, which has been half-true, it hasn't been just shrinks, but overall silicon process improvement, and a new µarchitecture with substantially different features like point to point interprocessor communication and integrated memory controller is approaching. Anyway, I think this subject has been well covered in the blog, so, I am going to concentrate on other aspects:

The fellow commenter quoted from "Third Factory" (late May of 2006) this list of reasons for "AMD to get to over 50% market share":

Good, proven management
Good, proven, exciting technology
The brand name has appreciated significantly, creating a loyal customer base
Technological leadership assures media exposure, free good publicity, public awareness, toghether with the enthusiasm of partners in the ecosystem
The ecosystem itself
Production Capacity!

I was right on several of these items, or at least there weren't too many reasons to think otherwise:

Was AMD's Management good, up to May of 2006? -- Yes!. For the most part, the people in high positions at AMD are either those who saved the company and succeed big time with Hammer or their chosen successors. Hammer was quite a gamble, full of technical and market very hard challenges at which AMD triumphed. With the good work this people inherited, they broke barrier after barrier, taking the company to a position of undisputed leadership. But, as I explained in "Exploration" and many other posts, they later demonstrated to be clueless about how to capitalize on the leadership AMD attained and overstretched the company's resources for tragic consequences. In late May 2006 there weren't many indications of the catastrophic decisions to come, if anything, only the dull launching of AM2 and the insidious denial of the Core µarchitecture threat. Yet, as I explain in "Exploration", I had every intellectual tool to suspect that AMD's management could fail miserably with AMD in a position of leadership, that was terrain unfamiliar to Management, thus, on top of making a huge mistake, I missed my unique opportunities to realize it before it was too late.

AMD still has the exciting technology. You only have to read "Cove3" posts in the Investor Village AMD message board to get convinced, Cove3's unfailing hopes on an eventual AMD superiority still have a bit of chance due precisely to the design superiority.

How is it that AMD still holds to a larger than historic market portion, especially now that every single AMD processor is very far from Intel offerings, that Intel is providing better value, and the new processors are as mediocre or worse than the old generation?: AMD enjoys the inertia from the massive momentum it generated the days of K8's rule, the brand awareness expansion, the opening of business with all major OEMs, etc.

How was I supposed to predict that AMD's management was going to kill the "Virtual Gorilla"? I am still puzzled by the irrationality of the ATI acquisition!

Regarding production capacity, at the time AMD had a credible schedule of capacity growth and having production sold out, even after Core-based processors were launched.

So, I wasn't quite wrong from the point of view of my analysis of the possibilities of AMD, just that Management did very weird things with those possibilities. Conversely, what I identified as Intel mistakes turned out to be Grand Slams because AMD made turds of its possibilities, I still don't think that I was all that wrong regarding Intel. That was yesterday, things now are totally different, Intel rules and AMD tries to follow.

Also from "Third Factory", I was quoted this:

Confirming that AMD is closer to the bleeding edge of technology than Intel, there is the potential of things such as Z-Ram (Zero Capacitor RAM with 5 times higher densities than regular six-transistor flip-flops). I don't know about the introduction rates for semiconductor technology, but it seems that very soon, like in the scale of one or two years, AMD will be able to include Z-Ram either as L2 or L3 cache memory. All that separates AMD from glory (and Intel from demise) is 8 Mb of cache internal to the µ-proc. Z-Ram may be precisely that. Remember that the gigantic L2 caches is the snorkel that prevents the already shit-submerged Intel from drawning, Z-Ram may nullify that...

I screwed this up. But still, the greatest single contributor to Core superiority is the large shared L2 cache. AMD, due to its pathetic incompetence to both evolve the K8 architecture towards shared L2 cache and to manufacture large caches, led to the cache architecture of K10 with its performance hits of inefficiency (half the cache, the four L2s are not shared), small size (2 MB shared L3, 4*512 KB L2 not shared/L1 exclusive, 8*64Kb L1 total for a quadcore), and the introduction of a third level with its associated latencies. I may have adopted the thesis that the shared cache could led to race conditions, but I think I quickly grew out of it, the shared caches are superior, period. Another thing is that I had faith on Z-Ram, only recently I lost confidence on it, the same way I lost confidence on SOI (more about this in a minute).

The commentator wrote the following:

And here's a secret for you - EVEN if AMD implemented high K, immersion litho ADDS NOTHING TO PERFORMANCE - it is merely another technique to print the same size 45nm features (Intel chooses a 2 pass process on the critical steps instead). In the end the feature size is the same. Immersion is just another PR gimmick to make it seem like AMD is ahead, while the scary truth is Intel has far superior litho capabilities as they are able to EXTEND AND REUSE the older dry litho one generation further. Sorprisingly even with a 2 pass process, it is still cheaper than a single pass immersion process as the immersion tools are nearly 2X higher price, run at slower speeds and are less mature than existing dry litho technologies.

I never said that immersion would give AMD any performance edge. It is true that, if anything, immersion gives production costs advantages; but my thesis has always been that AMD should prioritize performance over everything else, then power efficiency and only then production economies. Unfortunately, the company chose, apparently, exactly the inverse order of priorities. Recently I have hypothesized about the reasons: AMD assumed it was going to be capacity-bounded, even after the early warnings regarding the Core µarchitecture, and kept executing plans that assumed extraordinarily strong demand for entry level/mid level performance even in the face of mounting evidence that Vista was a flop, the market was saturating due to Intel's "osbornization" of Netburst and AMD-specific demand deteriorating fast.

AMD's management insistence on prioritizing efficiency over performance always stroke me as "fishy", being production costs easy to misreport and power efficiency an easier goal than absolute performance. Then, when the highly anticipated 65nm launch happened late, in scant quantities, fat (75nm equivalent shrink), slow, worse IPC, and saying bullshit to explain the worse IPC, I finally got conviction for the Bear case.

Until then I had trusted AMD's Management. I had increasingly stronger disagreements with Management regarding strategy issues like not launching the "coprocessor revolution", not being decided to make the Linux market an stronghold, but I always gave them the benefit of the doubt. I took the assumption of the "triple challenge", together with its difficulty and its "unnecessariness" as evidence that AMD's manufacturing capabilities were superb. I couldn't conceive that Management could be so irresponsible as to commit the whole company to this without having guarantees of success, but the bad 65nm process was overwhelming evidence to the contrary. This had staggering implications: If AMD's management could be that irresponsible, there was no reason to suppose they knew what they were doing when they acquired ATI, the single die quadcore couldn't possibly be any good, no new good processor would be launched this year, ATI would hemorrhage its Intel-based market share to nVidia without mitigating increased AMD-based market share, the finances of the company would deteriorate to the point of mortgaging the R&D and capital expenditures necessary to accelerate the development of Fusion and to escalate the investments the 45nm and beyond feature sizes would require. This would become a vicious cycle, an exponentially accelerating decline, and, finally, the kludge-but-practical approach of the double-duals would become a great instrument for Intel domination and a bridge to architectures that would close the design disadvantage. Metaphor: AMD tried to jump ahead of Intel but stumbled and fell, suffering life-threatening polytraumatism.

I was yet to be disappointed once more by AMD's management: the Analyst's Day last year in December. I got fooled because I still thought Management could not lie so shamelessly as to promise all the things they promised. The market was fooled too, the price momentarily shot up, but very soon reality took over.

When AMD's 90nm process was no worse than Intel's 65nm process in early '06, there were reasons to think that the upcoming 65nm process would be vastly superior, and that SOI had inherent advantages over strained bulk silicon. Within that frame, "65nm is Intel Marketing" made sense. The key argument there was that there is a problem of "diminishing returns" for ever smaller feature sizes, and I misidentified Intel's strained silicon as more vulnerable to this problem than SOI. I still would like to know what is so special about AMD's 90nm process that makes it superior to its successor, but given the evidence, it seems that the diminishing returns in SOI are more acute than strained silicon, perhaps the heat dissipation disadvantage of SOI aggravates more than the inherent advantages of smaller feature sizes, and I realized very late the significance of Intel's R&D muscle when applied in full force, the great advances of metal gate/high K transistors.

I am particularly ashamed of "Good time to buy AMD", published in October 19, 2006. That the price actually went up until December is besides the point, that article reflects doubts about the Bear case/optimism, like trusting Management on several topics ranging from the merits of the ATI acquisition to seeing them capable of great initiatives like the "coprocessing revolution" while they already had farted the "Quad FX"; seeing strength of AMD demand while all there was was simple inertia; not understanding that although Intel was in a reactive position, AMD's successes and failures at so many innovations gave Intel a clear view of what to prioritize, just what it needs to allocate its resources efficiently to ultimately bring formidable competition.

I wasn't clueless in the AMD-Intel periphery: Dell crashed, the Dell-AMD deal apparently turned out not so good for AMD, Vista flopped, Sun solved its personality complex, VMWare turned out the sensational IPO (although I was too timid to join in early and tried to milk volatility at the worst moment), Apple is triumphant with its iPhone, Google has gone stratospheric,... I developed a partial model concerning price manipulation that actually boosts my already successful and proven "money pump" system... But I can talk about those subjects with concrete predictions in subsequent posts

AMD's 65nm Process Hurts AMD

2007-11-26T17:11:00.000-06:00

In our blogosphere neighborhood Roborat64 addressed the topic of the involution of AMD's product line. I would like to complement his words with a bit of updated concrete evidence.

In "New > OLD" [ Note: I tend to shorten the names of articles if they are properly linked to, this article originally is named "The Fundamental Law of Progess [ sic ] NEW > OLD" ], Roborat64 says: "the fundamental law of progress [...] demands all NEW PRODUCTS [TO] BE BETTER THAN OLD PRODUCTS", but "it is increasingly alarming how AMD seemed to be moving backwards". "The introduction of slower 65nm CPUs and now K10's inferior performance to K8 are just some of the bad habits AMD seemed to be developing".

If we rewind one year to the introduction of 65nm K8, we will see that, from the point of view of the customer, AMD offered worse new products: Processors with some increased L2 cache latencies, that is, an slightly smaller IPC, and clocks not as fast as the fastest 90nm products. At that time, some people thought that AMD emphasized low production costs over higher premiums because AMD was production bounded, especially due to the possibly great increase in demand coming from Dell [ Many other posts contain abundant references as to the catastrophic consequences of this strategy ], and then the optimists assumed that there was no problem with AMD's 65nm process, the company was going to be able to quickly jack up clock speeds in the new process. But that didn't happen. The optimist then insisted on the superior power efficiency of the 65nm, but unfortunately the market cares very little about this parameter and they don't want to accept this fact.

I predicted serious problems with the speeds of the 65nm as soon as I saw AMD's explanation for the increased L2 latencies in 65nm K8: Supposedly, the architecture increased the latencies to leave room for future L2 expansions. Taking into account that the L2 of Brisbane already was half the capacity of the high end 90nm, 512MB versus 1MB per core, and that AMD "could cross that bridge when it got there" for a subject as simple as L2 parameters, there was no other way to interpret AMD's explanations as bullshit, that the company was forced to cut corners because it could not do a good shrink. Taking into account that the 65nm was introduced later and in smaller quantities than expected, I hypothesized that the problems were serious. To confirm this appreciation, AMD has launched ever more disappointing processors, and contrary to any tradition, the products of highest clocks are all old process!.

We must visit AMD's official pages to confirm this highly unusual situation, go to http://products.amd.com/en-us/DesktopCPUFilter.aspx and select both "90nm" and "65nm" in the "Manufacturing Tech (CMOS)" pull down list:

90nm top of the line: 6400+: 3.2 GHz with 2 MB L2, 1.35/1.40 V, 125 Watts.

65nm top of the line: 5200+: 2.7 GHz with 1 MB L2 (half the size), 65 Watts (half consumption, or roughly 61% power consumption accounting for the speed difference, much better, but then again, what does it matter that it consumes less power if things are slower?)

It may be argued that the top of the line in 65nm product is the Phenom 9600, the quadcore @ 2.3 GHz. Too slow, that is what I say. It is so slow, that it has been proven slower in many workloads than AMD's own dual cores... [ link may be found here ]

A very similar thing happens in Opterons:
No 65nm dual core Opteron, measly 2.0 GHz top of the line Quadcore, the 2350 and 8350 [ link ], and a top clock of 3.2 GHz for the 90nm top of the line dual cores, the 8224 SE and 2224 SE [ link ]

AMD's own price lists demonstrate the horrible catastrophe the company is in:

Family	Model	Process	Freq	QC/DC	Price	Price per core
Opteron	2350	65nm	2	QC	$389	$97.25
	8350	65nm	2	QC	$1,019	$254.75
	2224 SE	90nm	3.2	DC	$873	$436.50
	8224 SE	90nm	3.2	DC	$2,149	$1,074.50
Athlon 64 X2	6400+	90nm	3.2	DC	$220	$110.00
	5200+	65nm	2.7	DC	$125	$62.50
Athlon 64 FX	FX 74	90nm	3	DC	$300	$150.00

An interesting first observation is that the price per core of 90nm may be more than four times (!!!) the price per core of 65nm processors...

We know that 65nm processors take more than half the die area of 90nm processors because the shrink was to an equivalent node size of over 70nm, we must also expect the yields of the 65nm process to be smaller, and the binsplits to be worse. Furthermore, in the case of quadcores, we also know that the yields and binsplits are quadratically worse than dual cores. From the point of view of production costs, the 65nm are not even twice as cheap, but from the point of view of ASPs, they are way less than half the 90nm, it is clear from the table above that the 65nm is actually hurting AMD! because it is more expensive to manufacture the 65nm product to obtain a smaller selling price.

It may be argued that this is a biased explanation because AMD chose the 65nm process for volume and 90nm for premiums, but this is illogical:

We know that the market is saturated by entry-level crap (Intel Netbursts still being purged, Celerons, and even Yonah/Sossaman Core Duo/Solo incapable of 64 bits), thus the product moves only through steep discounts, thus if AMD would be able to, it would target the 65nm product for the upper segments.
65nm should have many inherent advantages regarding performance, by insisting on the semi-exhausted 90nm product for top of the line performance, AMD is mortgaging the future of the company.

AMD's words that they already shifted the focus to the 45nm process is a very laughable statement: It has been pretty much demonstrated that there is something serious on the 65nm process that hasn't been solved, why would it be any different at the 45nm process?. Perhaps it is something like that 65nm didn't allow for the same performance of the 90nm process due to inherent limitations, perhaps, the power consumption didn't go down in the same magnitude the heat dissipation problems of SOI went up, I don't know, I am just speculating, but what I do know is that there is a serious problem and AMD is denying its existence.

I feel as if I were beating a dead horse by saying that if the 65nm process didn't scale, it is of very little relevance that AMD will make immersion 45nm if it doesn't have the excellent advancements of High-Dielectric-Constant / Metal Gate transistors Intel is bringing to the market. It is also beating a dead horse to point out that K10 demonstrated that it is a dubious improvement on IPC due to the increased latencies in the L3 cache because Intel comes with Integrated Memory Controller/Point to Point interprocessor communication architectures with enlarged caches and higher clocks!. But what AMD and its cheerleaders are doing, of pegging new hopes on the 45nm process and the dual core K10 to come, is like putting the cart ahead of the horse.

Exploration of the Business Space

2007-11-20T19:05:00.000-06:00

[ Article Preview ]

In the parallel evolution of AMD and Intel, the advantages of Intel's economies of scale express in several ways that are not very obvious. This post will explain one of those forms that I didn't fully take into account when I was bullish on AMD, and from this principle I extract an important lesson regarding investment in the stock market.

How was it that Intel regained the absolute leadership of the processor market? At the heyday of the Netburst architecture, and with the company absolutely committed to its development, Intel still gave the P6 architecture chances to develop. Not only that, but the company also persevered at the Itanium while quietly it kept developing the strategic plan B of Yamhill, what eventually was christened 'EM64T', the AMD64 clone. So, while officially the future of Intel was the Itanium architecture, and the Netburst architecture represented the required transition; the company still kept going forward with architectures that were their antithesis: the AMD64 ISA capable Netburst and what is much more remarkable, to insist in the apparently exhausted P6 architecture [full line here].

At times I thought that it was a gigantic waste of resources to expend R&D on so many dead ends. I mean, after I studied the Itanium architecture it became clear to me that the thing was going nowhere [ too complicated to implement, too disruptive for the industry, and it had too many 'brain damaged' features to exclude the competition ], and I became a fervent supporter of the original Athlons because it was obvious that Netburst was all marketing gigahertz, but although I disagreed with the directions that Intel took, I still thought they knew what they were doing, that is, I thought that Intel could somehow force the market to become a monopoly of very inferior products the way Microsoft forced the Operating System market to turn into the monopoly of the worst Operating System of its time.

By contrast, AMD's plans seemed crystal clear, and sound: To concentrate 100% energies into an evolutionary approach (AMD64), to capture the best features of the architectural propositions of the time, like the Point to Point interprocessor communication that implied integrated memory controller, SOI versus plain ole' bulk silicon, and so on. That is, I though that although Intel had several times the R&D budget of AMD, since Intel was so wasteful and AMD so focused, the underdog had plenty of chances to topple Intel from its leadership position for good.

But needless to say, I was wrong, and paid a dearly high price for it. My mistake was to overlook that the competitive situation between these two companies is so complex that it was justified to expend R&D money in several contradicting approaches, no matter how improbable their success may seem. I should have known better, because I have worked too much in the field of Artificial Intelligence, thus, of all people, I should've realized that Intel was conducting extremely valuable "search" (exploration) of its business space. That the more contradictory the approaches it followed, the higher the assurance of ultimate success. And sure enough, although they grossly miscalculated their priorities assigning them to Itanium and Netburst (and in that order!), the 'Plan Bs' of Yamhill (EM64T) and P6 saved their skin and allowed them to ultimately restore their leadership and monopoly.

On the other hand, AMD enjoyed immense success at focusing at the right things and following the sound design principles embodied in K7 and K8. It seemed as if the success was going to break Intel's monopoly for good, and anticipating that, I vested my money aggressively into that thesis, and lost acutely.

Now, again, why did I lose?
I explained that I always understood what a great challenge (the triple challenge of "Does AMD...") it was the single die quadcore, and that naïvely I thought that AMD's management knew what they were doing, I couldn't conceive that AMD's management could be so irresponsible as to gamble the company at this huge undertaking if they didn't have guarantees of success. Then, it was clear that they didn't have any guarantees, as a matter of fact, no reason whatsoever to suppose the single die quadcore/new process/new architecture challenge was going to be successful, but it was too late already, two thirds of my money had gone.

Did I have any chance of being right, though?
Not really. I should have followed my convictions to their conclusions. Not only the single die quadcore represented a huge challenge, it was a totally unnecessary one too, and again, I thought that AMD's management knew better than me:

I knew in 2005 that the market will not require full quadcore performance as early as 2007, not even 2009; the reason is very easy to grasp for a seasoned software engineer: The combinatorial complexity of multithreading software. To do software that makes effective use of two threads is more than twice as hard than single threaded, to do software that makes effective use of four threads, is more than 10 times harder than two threads, no exaggeration. I knew that the cores will be severely underutilized in the vast majority of applications, in the vast majority of the market. Since the market won't need full quadcore performance, the logical conclusion was to bet on practical approaches to the quad core issue, that is, multi chip processors. Either double duals, like Intel's, or four cores in a die and a large shared cache at an adjoining die. I also knew that the K8 architecture as it was had bandwidth a plenty and short enough latencies for quadcore processors in Master/Slave configuration of dual core dice. Then, the approach of the single die quadcores wasn't called for at all and that should have been more than enough to erode my confidence in AMD's plans.

But that is not all. Although very late, I saw that AMD was in denial of the threat of Conroe. Even though I heard Henri Richard to speak with deference about Conroe, that somehow AMD's management had internalized that the product was very threatening, that didn't express into any change of plans. AMD went ahead with all sorts of plans that assumed massive market share gains, including negotiating the New York fab, to consolidate flex capacity through Chartered, and to acquire ATI (that wouldn't have made sense if AMD would not be able to compensate lost ATI Intel-based business with extra AMD-based), so, the company greatly overstretched its resources anticipating a great demand that never came; but more than that, it was the absence of a contingency plan, AMD's management never cared to tell us, the people who care and supported the company, what it was going to do if Conroe turned out as good as it seemed; Management only spoke on dismissive terms about the threat. Improvement-less AM2 should have been another late warning.

While it is still a mystery for me why the company went the perilous single die quadcore route for no good reason, we can all be sure that it greatly contributed to the catastrophe the inflexibility of AMD's plans. And this inflexibility is inherent to the scarcity of resources to try experiments, business experiments, to explore the business space. Once AMD chose an strategy, there was nothing else to do but a prayer and to work as hard as possible to make it succeed, mid-term revisions were pointless. If you know that AMD is in "projectile" trajectory, that once it fires all is inertial flight, as I knew it was in April 2006, it was possible to determine whether it has reached a top or not -- it had, because the improvements of the K8 had become smaller and smaller until non-existent. Today, you may readily appreciate that AMD is in free falling, 'cos it fired the K10 and the shot fizzled, from here on, it is nothing but accelerating decline.

I have been referring several times to the discrepancy between my opinions that derived from fundamentals and the strategies decided by the management of both Intel and AMD; You may be wondering how to determine what is the superior analysis, because that is key for successful speculation, and here is how: Decide for the thesis of the most informed.

If you have enough knowledge to reach a conclusion from pure fundamentals, such as "Itanium is not possible to implement satisfactorily", "Single die quadcores are not necessary", then, in the absence of concrete evidence that contradicts conclusions from fundamentals, follow your instincts. I find it fascinating that a pedestrian may understand certain key issues of multi billion companies better than their managers, but it happens all the time. The reason is that there is a disconnect between management and reality. While from the point of view of software engineer you are seeing the real stuff, the real value of an architecture, the CEO, despite all of his privileged information, is not seeing the real thing, but third or fourth level interpretations (the opinion on the opinion on the opinion of someone about something) , and there may be interests to distort his information.

On the other hand, if it is something like "I think the P6 architecture is exhausted, that it is impossible to substantially increase its performance", but at the same time a huge organization like Intel does a 180 degree turn to commit to a P6 derivative architecture developed by a group of people out of the power rings of the organization, you can be sure that their architecture is so fucking good that its objective merits prevailed over the intense politicking of a big organization, that is, your opinion is wrong.

A closer example: When a national investment company throws 600 M$ to AMD when you think the company is doomed, who is right, the Arabs or you?: Answer: Think about "what do the Arabs know about the semiconductor industry?", "are they in the centers of power that decide stock prices, media spin?", and also: "Has this organization explored the semiconductor business?" if you get to the conclusion that it is not likely that such organization has privileged information, you may be right. It would be much better if you also had a model to explain why the organization put the money in AMD.

Sometimes it is a much tougher call. For instance, "will Microsoft succeed at DRM?" I meant whether Microsoft will succeed at becoming the de-facto multimedia distribution channel by temporarily jeopardizing the Operating System monopoly with DRM restrictions that allienate the customers. Microsoft is a company that routinely fails at home-grown initiatives, despite following many different routes or covering all the bases. This is evidence that although Microsoft thoroughly explores its business space, its "business cartography" doesn't make its way to management all the time. Why would that happen? If you watch the "developers" video of Steven Ballmer, you get a hint. And Bill Gates quotations about the internet are a famous example of business myopia -- This could be a problem of management personalities that do not allow information that contradicts them to flow. Looking even closer into Microsoft successes, such as the Internet Explorer in the browser wars, you may see that sometimes, when Microsoft is actually threatened, it does the right things; perhaps only when management is willing to admit being wrong, the company may capitalize its thorough knowledge of its business. The problem is that from the outside it is nearly impossible to know if the company is using the business cartography or not.

Apple Computer is another example: I may have the opinion that Mac OS X should be licensed to run in non-Apple personal computers, but I must be wrong: Steven Jobs surely has much better information about this topic, Mr. Jobs has demonstrated that he learned the lessons of his long penitence after being fired from Apple and losing an arm and a leg in NeXT, and Apple continually demonstrates how well it understand its business space. Thus, I have to keep studying Apple to improve my model of that company.

Going back to AMD and its management, it is clear that those guys don't have a clue about their business space. Once they got out of their traditional "value proposition" space, they made blunder after blunder:

Never capitalized on the enormous significance of AMD64 by continuing to partner with Linux to force Microsoft into promotion of AMD64 for all segments, beginning with mobiles [ what did it take to finance the development of Linux drivers for the few wireless chipsets that ran on AMD-based laptops? AMD could have become the "centrino" of Linux, and this would have induced multiple effects that would have turned AMD64 into premiums ]; this because AMD never knew how to behave like an industry leader when it had the undisputed leadership.
It tried to create the consumer market for coprocessors only too late and too timidly, while having had years upon years of all the elements for coprocessing in place.
It didn't capitalize on the desperate need that platform partners had to support AMD (because Intel is treacherous and tries all sorts of nasty tricks to block competition to get into its platform business). Contrary to all rationality, they went ahead and became the direct competitor of its second best partner (nVidia) and destroyed half the business of its fourth best partner, ATI. I think here that AMD's management were not ready for the big leagues. They were scammed by Wall Street into a disastrous acquisition the way hustlers scam the farm boys when they go to the big city
It showed that they were ignorant of how to deal with big OEMs because in periods of high demand for their products, rather than making lots of profits, the preference to OEMs expressed into the destruction of loyal, historical and natural channel business and losses!, then, they fell in the trap of overproduction instigated by the OEMs to have cheaper products.
Having gambled the company with the "triple challenge".

Business Space Exploration has a cost and an expected benefit. The cost does not increase with company size, the benefit gets multiplied by company size: It is a much better option for large companies than it is for small companies, another form of economies of scale. For a company as small as AMD, and being so expensive to explore the market with several architectures, it is not cost-effective for AMD to explore its business space. But this doesn't mean that small companies don't have a chance: On the contrary, they should have the advantage of having their management closer to reality, that is, a better chance to succeed following best principles. When you see a small company like AMD straying from the best principles (such as going the route of the triple challenge), "short" the stock, statistically you will succeed.

P6 Line:
Pentium Pro, Pentium II - Klamath, Deschutes, Tonga, Dixon, Xeon Drake, Pentium III - Katmai, Coppermine, Tualatin, Xeon - Tanner, Cascades, Pentium M - Banias, Dothan, Yonah/Xeon Sossaman, 'Core' - Conroe, Allendale, Kentsfield, Woodcrest, Clovertown, Tigerton, Harpertown, Merom, Penryn, Yorkfield

Phenom

2007-11-19T21:54:00.001-06:00

I said that Barcelona (and Phenom) as a strategy implied absolute confidence to succeed at three important challenges:

Extraordinarily good 65nm silicon process, to try to close the competitiveness gap to Intel
A new architecture developed without the help of a thoroughly understood process
The single-die quadcore feature that implies a hit of yields and especially binsplits

Since it is now very clear that AMD failed at all three, it is easy to find articles in the press that detail the situation, and I would like to compile some of them.

Adrian Kingsley-Hughes writes "AMD's Phenom - For suckers only". There we find a reference to "Tom's Hardware" that demonstrates that the 6400+ X2 (3.2 GHz, 90nm [you may go here and select the 6400+ model to confirm the specifications]) beats the fastest Phenom, the 9600 2.3 GHz at a variety of tests. That is, even today, a year after the launch of 65nm product, it is the 90nm products the ones that have the performance crown of AMD. No wonder that the highest selling price processors [AMD's official price list], both Athlon and Opteron, are all 90nm. Not only the 65nm processors are slow and the company sells them on the cheap, but inexplicably, the 65nm K8 are an involution compared to the 90nm, even taking into account that the company has five and more years of experience with the K8 design. The 65nm is not slightly better, but slightly worse, AMD cut corners like increasing the L2 cache latencies.

Rumors have surfaced regarding bugs in the K10 architecture that have delayed its introduction [example]. AMD has had to develop the silicon process at the same time it tries to debug the new architecture, that's the recipe for low yields, unacceptably slow speeds, and late introduction. There are good improvements in the K10 architecture, but I think the existence of a third cache level could be the culprit of the K10 lukewarm performance: The K8 had a an architecture of two levels that due to the exclusivity of the L1 resembled more the delays of a 1.5 levels, but now, rather than having a large shared L2 cache, as the successful Intel approach demonstrates, the K10 has three levels. Why? my speculation is that a quadcore design requires a large shared cache and I think AMD didn't dare to try this radical change at the L2, so, it came with a third level that offers dubious performance advantages. Do you see? A shared cache is more natural in a single die design, yet, AMD has insisted in a less efficient independent L2 and that forced it to introduce a third level, shared, creating an inefficient three level hybrid.

We also know that AMD will launch triple-cores, speaking volumes about its dramatic failure at the challenge of single-die quadcores. To further illustrate the principles that dictate exponentially worse yields and binsplits in single-die multicores, AMD is launching an overclocking application that allows the user to control individually the speeds of every individual core.

Yet, AMD didn't need to to follow this route at all. It could have developed 65nm not with the intention of increasing numbers but premiums. AMD speaks of "Asset Light" today because it has plenty of production capacity of low performance products of which the market is saturated but doesn't have any high-premium product; perhaps because AMD saw the 65nm process as a tool to minimize production costs and increase production volumes rather than the process for the new generation of flagship products. The emphasis on volume/cheap production costs rather than performance while developing the 65nm process may have its origins on AMD's "pharaonic" plans of having to supply all the OEMs with plenty of product, especially the production capacity increase that Dell meant. Perhaps performance had to wait. But not even that strategy worked: we know what happened when AMD, a year ago, gave preferences to Dell and other OEMs rather than the channel: the destruction of the loyal and natural businesses of AMD.

AMD didn't need a new architecture to market quadcores, it had several MCM options at its disposal. It is clear today that the excellent interprocessor bandwidth of DCA and CCHT would have been more than enough to have processors with two dual core dice in which only one has interface to memory and the other communicates through CCHT. Actually, AMD had every advantage to put quadcores in the market before Intel; but of course, the company decided the strategy of skipping all intermediate steps for the big leap of the single die quadcores and this catastrophe happened.

Also, the company may have opted for a new architecture that actually increased performance. The most pathetic thing of all is that K10 quadcores, even having the large advantages of single dieness integration and point to point (busless) interprocessor communication, is actually SLOWER per clock than the Intel double dual kludge. When you try not to improve performance, but to solve the problems that derive from single-dieness, you may end up with an architecture that is good for nothing.

Adrian Kingsley-Hughes again: "So really, what’s the bottom line? AMD have put time, effort and truck loads of dollars into developing a quad-core processor that really isn’t that good".

Now, let's look at Phenom versus Intel products:
Anandtech (referenced by Kingsley-Hughes): "While AMD just introduced its first 2.2GHz and 2.3GHz quad-core CPUs today, Intel previewed its first 3.2GHz quad-core chips", "Intel is currently faster and offers better overall price-performance (does anyone else feel weird reading that?). Honestly the only reason we can see to purchase a Phenom is if you currently own a Socket-AM2 motherboard".

Tarinder Sandhu @ HEXUS.net (also referenced by Kingsley-Hughes): "We've disseminated all the various enhancements that make Phenom a better clock-for-clock proposition than Athlon 64 X2. We've identified that the design is elegant[.] But what we've also seen is that AMD cannot match the clock-speed of Intel's slowest quad-core processor and, worse still, can't match Core2 Quad's performance on a clock-for-clock basis either." and "the Spider platform - where AMD tries to harness the innate synergies of its processors, chipsets and GPUs - can be bettered by a mix-and-match assortment of Intel and NVIDIA" -- so much for the "synergies" of the ATI acquisition, over a year later, there is unanimous agreement that Intel+nVidia is superior.

But the real problem is not that Phenom (and Barcelona) stinks: Intel is busy finishing a new busless platform and architecture. AMD demonstrated that most of DCA and CCHT are overkill for the vast majority of computers, that is, Intel doesn't have to do something as fancy as DCA and CCHT, but something just good enough to get rid of the most important limitation that their architecture has: The front side bus. Also, from the "pure muscle" point of view, Intel is already putting processors with metal gates and high-k dielectrics (that is, much more efficient and faster) while AMD is still trying to catch up to its own 90nm!; so, the competitive position of AMD will become worse, much worse!

Jason Cross @ Extremetech (also ref. by Kingsley-Hughes) mentions this in passing: "As Yorkfield CPUs mature and come down in price, the only way for these Phenom chips to compete will be to offer much better clock speeds without blowing out the power envelope, and they won't get there on 65nm. AMD simply can't afford to let Intel's Nehalem redesign hit the market, mature, and come down in price before bringing out a wide range of 45nm Phenom CPUs."

I think that nobody should be talking about AMD's 45nm products when the company is still flunking repeatedly the 65nm grade.

Anyway, regarding AMD's future, things are turning hopeless: It can't get rid of the fabs it owns due to either x86 licensing restrictions or contractual obligations with Dresden, thus, no "Asset Light", but expensive Fabs that will be less and less competitive to what Intel is doing. nVidia keeps getting ahead relentlessly in the graphics business while ATI is still shedding Intel-based market share and no synergies in sight. AMD can only move product on price, but it is already enduring losses of nightmare; all while Intel comes with vastly more competitive products and AMD already used up its best ammunition...

Vista Failure: A reason for celebration

2007-10-24T21:01:00.000-05:00

Apple is selling record numbers of computers, it has gotten to 8% market share. Ubuntu launched "Gutsy Gibbon" with the cool 3D interface Compiz Fusion, Ubuntu also cracked Dell and is now a preinstalled O.S. in Dellland, users all over the world keep demanding XP in their computers rather than Vista, which still is plagued with incompatibilities, even 100% userland applications like Firefox are able to "blue screen of death" it, and I am still thinking of Jim Louderback, one of Vista's major media cheerleaders deserted it.

Despite all the media spin [ that I will speak about ], we can say that Vista is a failure and Microsoft's insistence in shoving it to users is creating so much frustration that many users are divorcing Microsoft to discover that Mac OS X is very cool and that Linux is actually usable.

Why is Vista so unsuccessful?

In the above link [ incompatibilities ], we begin to get an answer: Vista requires to do things differently, both for users and vendors.

It could be said that this is the price of any progress, but is Vista any better than, let's say, XP? There are many ways to compare how good (or bad!) Vista is relative to XP. Is it easier to use? faster? allows better hardware? is it at least less vulnerable to virii and worms and all kinds of nasty intrusions?

My wife uses computers 100% of her working time, although her work is not technical, she is just a user. Since her old laptop wasn't up to her demands, we bought an excellent HP Turion dual core with 2 Gb of Ram around February. Naturally, it came with Vista Premium preinstalled. Ever the techno-adventurer, I advised her to try to get used to the new way to do things in Vista that she may ultimately like it, because if she ran into trouble, I was volunteering to help her (so that I could have first hand Vista experience). Well, it didn't work for her, she got tired of not having the things were she was used to for no good reason. In the absence of any benefit, there was no reason to insist in Vista's, she asked me to install XP. Oh! amazing!, the speed jump was extraordinary, really! I had no idea how fast, smooth, responsive, this laptop could be.

Peter Guttman explains in full technical detail what's the matter with Vista's performance. The problem is that Vista spares no effort to control the user, it makes so much effort on enforcing the restrictions on usage that media companies demand, that it renders the Operating System, performance wise, defective by design [ I like the phrase very much, you may also go to the site ]. The computing power is spent distrusting the user, distrusting what he installs in the computer. That's why it is inherently slower and requires more resources (computing power, memory, disk space, etc), not to please the user, but to restrict him more effectively.

With all the distrust even among hardware devices in the computer, to the point that if Vista doesn't like a device then it sends "tilt bits" that command all other devices to cease to function; naturally the drivers are also harder to make; so, like [ incompatibilities ] tell us, companies that otherwise might offer drivers for the new Operating System for products just one year old, may not even bother, too hard. Others, less smart vendors, may think that since drivers for Vista and older Microsoft Windows are so different, and supposedly Vista is the future, then they shouldn't even bother to develop the drivers for the older Windows.

The same situation regarding hardware drivers apply to Vista applications, albeit in a not so acute way; but Microsoft insists at it: Microsoft refused to back port DirectX 10 to XP, and it argued many excuses, but in the end, it is all bullshit:

For instance, like "The Inquirer" reported in July, [ thanks sgrady @ investorvillage ], apparently good technical reasons like the incapability of XP to virtualize memory prevented XP from being able to run full specification of DirectX 10. But since nVidia sort of never really cared much about DirectX 10 [ opposed to ATI that bent over backwards and got out of its ways to be the prime partner of Microsoft with Vista and DirectX 10 ], never implemented this feature, so, what did Microsoft do?, it made memory virtualization optional [ tossing away ATI's extra effort ]. So, Microsoft compromises everything to get nVidia on board with DirectX 10, but XP compability? out of the question. This demonstrates that Microsoft routinely exercises its power over its users, treat them like pawns.

Microsoft promised that Vista was going to be a secure Operating System, and it really had it going to become a secure O.S., after all, the fundamental principle of its construction was distrust.

But just like repeated accounts report, Vista crashes very often. The dim-witted Fuad Abazovic generated news by blaming Firefox 2.0.0.8 on Vista blue screens of death. The guy is a moron, because in no way it could be blamed an application that doesn't have any privileged driver code, totally "userland" like Firefox, for any Operating System crashing; on the other hand, if decidedly non-malicious userland applications may drag Vista into a blue screen of death, what is possible for malware?, that's the real news.

Userland applications crash Vista. It can't be any other way. I've spoken repeatedly about the architectural deficiencies of Windows [ you may read the articles indexed by this post ], so no point in repeating them here. While Vista can be very obnoxious in restricting the users, it is the same shit when it comes to protecting him from malware. So, I must amend my previous assertion that the fundamental principle of Vista is distrust to make it distrust of the user!

Media Spin

In our technical world, Microsoft is a giant. Naturally, media companies must bend their ethical principles of journalistic integrity to the practicalities of marketing dollars. I think no magazine as big as PcMagazine may be as big without Microsoft money. Since they can not outright lie regarding the true merits of Microsoft products, because they would lose credibility, then they do the next best thing: to sugar coat as much as possible the shortcomings, to emphasize the few advantages as essential, to discredit criticism.

I invite to read Jim Louderback's farewell editorial in PcMagazine, even though it dates to August:

I've been a big proponent of the new OS over the past few months, [ and very vocal, being the editor of PcMagazine, ] even going so far as loading it onto most of my computers and spending hours tweaking and optimizing it. So why, nine months after launch, am I so frustrated? The litany of what doesn't work and what still frustrates me stretches on endlessly.

Take sleep mode, for example. Vista promised a new low-power sleep mode that would save energy yet enable nearly instantaneous resume. Poppycock. The brand-new dual-core system I built a few months ago totters off to sleep but never returns. I have to cold-start it to bring it back. This after replacing virtually every driver inside. It's gotten so bad that I've actually nicknamed it Chip Van Winkle [ a mention to the fictional character "Rip Van Winkle"]. And I've nicknamed my primary Dell notebook Philip Marlowe [ the main character of "The Big Sleep" and "The Long Goodbye" ].

But it's not just the long sleep. My home notebook acts as if it comes from Starbucks rather than HP [ that is, very hot? ]. It used to snooze—but now, after a recent Vista update, it never goes to sleep at all. Its new nickname: Compuccino

I've never read such a devastating critique of a flagship Microsoft product by someone as encumbered as Jim Louderback while editor of PcMagazine, I find no coincidence on the fact that he was leaving, on the contrary, I think the very reason we could afford such "sincerity" was that he cut loose, at least temporarily, from Microsoft advertising budgets.

The [ incompatibilities ] article mentions something very worrysome: Products certified for Vista don't need to be full-featured in Vista, they merely must be able to offer any functionality. That is misleading, but both vendors and Microsoft are partners in this scam. In any case, this is more marketing spin, another example of how it is possible to bend the facts to make them fit into a description like 'Certified for Windows Vista'.

Please, dear visitor, do not fall into the media spin/marketing trap!

Celebration

In any case, Microsoft wields a lot of power over us and we are in varying degree forced to use whatever it wants us to use while waiving rights in the process. This power stems from the mass of users, and that's where Vista helps, because it is forcing users to look for alternatives, and the users are actually finding them.

In a previous article I explained that Vista is Microsoft's gamble to become the de facto distribution channel of multimedia. The strategy is more or less as follows: There is a phenomenon of convergence in which people is increasingly enjoying multimedia through a computer, but the market hasn't saturated, thus there still are huge opportunities there. To become the primordial distribution channel of multimedia, Microsoft sells to the media companies the illusion that the usage of the content will be as restricted as the media provider wants, thus the emphasis on distrusting the user. Then, the media companies will buy the illusion, and Microsoft will become the primordial distributor. I will next explain that it is a given that Media companies are as stupid as to buy the illusion; the challenge in Microsoft's strategy is that the restrictions will necessarily alienate a large portion of its users; thus, Microsoft is risking its monopoly position to become the primordial media distribution channel.

The media companies are as stupid today as they were when the studios gave Macrovision the complete monopoly on DVDs, in fact, for the most part, they are fighting teeth and nails the technical changes that have obsoleted a great deal of their business practices, buying legislators left and right and promoting aberrant laws that are causing great harm wherever they are enacted; but that is not a problem for the rest of the world, because, as I explained before, this is a process of natural selection, those who are incompetent to live in a world in which bits move freely will be displaced by those who know how to profit from free movement of bits; to fight the free movement of bits is ultimately futile.

Incidentally, all of these topics are important regarding ATI/AMD, Intel and investment in other technology companies. Regarding ATI/AMD in particular, I have written in several occasions: 1, 2, 3

I must thank Jonathan Schwartz [ CEO of Sun Microsystems ] from convincing me that the future is not as gloomy as I though it was, with Media companies purchasing legislators to take essential freedoms away from people. The following words awakened me to the realization that those who fight technical developments will just be displaced, from his blog, "Better Honest Than Polite":

I found myself talking to a group of media company CEO's. I asked a simple question, "do you have a general [legal] counsel reporting to you?" The answer was universally, yes.
[...]
But then I asked a harder question: "Do you have a chief technology officer reporting to you?"
[...M] ost did not[, w]hich seems backward for a media company. Why?
Because convergence isn't a legal phenomenon. It's a technical and social phenomena first and foremost - that's why you can't talk about media without talking about software (what is an MP3? AAC? Java? Flash?). You can't talk about distribution without talking about free media, social networking or mobile devices (technical assets that reach more of the planet than all other network outlets). Ask Eric [Schmidt, CEO of Google] or Terry [Semel, Yahoo] (or Steve [Jobs, Apple?] or Mark [there is another Mark, Shuttleworth, Ubuntu] if they have CTO's reporting to them. Of course they do, they're media companies using technology to win. Or vice versa. It doesn't matter, they've converged.
Which brings me to a simple, and heretical conclusion - for which I'm sure I'll be apologizing for years to come. But I'd rather be honest than polite.
Media company CEO's without a CTO on their staff should prepare to be acquired or broken up - they are fighting the future rather than monetizing it. [ My emphasis ]

Everybody wants to use computers to enjoy multimedia, audio, video, games, and they are the natural device to enjoy content: Play it whenever you want, the fragment you want, with whoever you want, etc. that can only be accomplished by programmable, configurable, general purpose computers. Nevertheless, media companies think that people is going to use computers for purposes at which mono-application devices such as a TV set are better suited...

Really, there are reasons to think that enough users are discovering that Windows just doesn't work. Windows is a phenomenon of mass-conditioning of people. People has been conditioned by Microsoft to accept that computers crash every once in a while. That they must protect from Virus. That they are cranky and complicated.

Mac OS X dispels all of those assumptions, so, I guess that other than being locked by an abusive vendor as Apple into a non-mainstream Operating System and its lack of choice, Apple computers are superior to Microsoft. And there is yet another option, to roll up the technical sleeves and go Linux.

Under the hood, both Mac OS X and Linux are Unix. I have been trying to track a phrase that I attributed to Ken Thompson, that in the early eighties was asked what the Operating System of the new millenium was going to be, and he replied that he didn't know what the name was going to be, but that for sure it was going to be Unix. Operating Systems is something that was figured out over three decades ago, it is Unix. Just like Henry Spencer said, "Those who do not understand UNIX are condemned to reinvent it, poorly", but of course, Unix has a catch: It appeals to the technically oriented people, because it is them who can make the most of it and that makes it disagreeable for the less technically oriented. Ultimately, it doesn't matter, because the technically oriented people, thanks to the innovation of the Free/Open Source model for Software Engineering, end up developing Operating Systems and applications so good that they inexorably displace the applications developed through less efficient models [ Note: Mac OS X has roots both in the classical Unix tradition that in modern language would be called Free/Open Source; is itself a derivative of Free/Open Source Operating Systems. ].

With users increasingly aware that computers may "just work", a small migration of users to Unix/Linux may empower the developers of Free/Open Source software with more market awareness, and more money. Those extra resources may express in increased migrations; that is, a virtuous cycle that may turn into a runaway growth of software and freedom development. To be able to see the dawn of a better era is a privilege worthy of celebration.

MOZ_NO_REMOTE

2007-10-19T21:55:00.001-05:00

[ UPDATE 10/23 ]
A friend told me about the command line option -no-remote documented in http://kb.mozillazine.org/Command_line_arguments that does the same thing the environment variable does. This is much more practical because it doesn't mess with the default configuration. I am still investigating why this option is called the way it is called and official and complete documentation

There is a wonderful feature for Firefox that allows to run several firefox processes, each with its own User Profile, in the same Windows/Linux. The keys to the multi-process/multi-profile firefox heaven is the environment variable 'MOZ_NO_REMOTE'.

Firefox (Mozilla) is capable of managing several user profiles. The same user may want to have several user profiles or may want to run simultaneously several Firefox processes:

Someone interested in testing different versions of Firefox may want to run them all at once to better compare.
Someone that uses a firefox profile stored in a flash thumb drive, so that he can have his same bookmarks, cookies, passords, etc, with him everywhere he goes, in any computer he uses.
Sometimes, he may not want to use a profile that contains cookies or passwords to visit other sites for security reasons.

So, it may be cool to have more than one user profile. And if it is possible to run several user profiles at once, then you can customize them in very interesting ways.

For instance, I have a user profile with numerous plugins installed, that I use when I want one of the features of the plugins, but I seldom use it because it is slow and clunky (too many plugins), so, I have a 'light' profile for most of my usage.

You may run several processes of Firefox simultaneously by setting the environment variable 'MOZ_NO_REMOTE' to one. In a DOS/Windows command line '.bat' file, you can do something like this:

Set MOZ_NO_REMOTE=1
*path to firefox*\firefox -ProfileManager
Set MOZ_NO_REMOTE=

The '-ProfileManager' is necessary because every simultaneous Firefox process needs its own profile, so, this will display the profile list to create/delete/select a firefox profile.

Note that there is no assigned value to 'MOZ_NO_REMOTE', this deletes the variable from the environment.

But nobody I know likes the ugly black command line window to be opened while firefox is running. There is an option, but it is more complicated:

You can use Windows Scripting to set the environment value before running 'firefox -ProfileManager' in a simple Javascript file:


var shell = WScript.CreateObject("WScript.Shell");
var env = shell.Environment("User");
env("MOZ_NO_REMOTE") = 1;
shell.Popup('Enabling MOZ_NO_REMOTE');
shell.Exec('C:\\Program Files (x86)\\Mozilla Firefox\\firefox.exe -ProfileManager');

[ DO NOT FORGET TO CHANGE THE PATH TO YOUR INSTALLATION OF FIREFOX ]

And save this as a file 'ON.js'. To use this script, just doubleclick on the file.

From that point on, every time you double click on 'firefox.exe' or any of the shortcuts to it you will open a new Firefox process. If you want to open more windows from a particular Firefox process, do Control-N or the equivalent, all the windows and tabs opened from a Firefox window will run within the same process.

If any other application wants to open a firefox, it will be another process, but it will fail. It will fail because firefox tries to open the last profile used, but since the last process is still using it, the profile is locked. But remember, you may still open as many windows and tabs from within every process.

To allow other applications to open firefox windows, you have to delete the MOZ_NO_REMOTE variable:


var shell = WScript.CreateObject("WScript.Shell");
var env = shell.Environment("User");
env("MOZ_NO_REMOTE") = '';
shell.Popup('MOZ_NO_REMOTE cleared');
shell.Exec('C:\\Program Files (x86)\\Mozilla Firefox\\firefox.exe -ProfileManager');

That would be 'OFF.js'

It is necessary to open a new profile because the firefox window that other applications may want to open will try to use the last profile, that is locked by the last firefox process, but even if you close this final Firefox process, from then on the default will work without trouble.

This may be a little complicated to grasp the first time, so, feel free to ask questions.

COMCAST is the end of the Interregnum

2007-10-19T11:14:00.000-05:00

Interregnum:

#2: a period during which the normal functions of government or control are suspended

There is important news today that it has been proven that COMCAST disrupts on purpose Bittorrent and P2P connections. The way it does it is to impersonate P2P hosts and send close connection messages.

We are getting to the point in which the Internet Service Providers assume the right to profile the kind of network traffic they allow to their subscribers, and this is the end of the internet. From then on, it will be intercompany.

Let us recapitulate: The internet became the phenomenon it is today because it just moved bits from one end of the net to another without restrictions, which unleashed a gigantic creative wave on how to make the moving of bits useful. Now there are so many applications that make it so useful to move bits, that governments and companies feel that there is no need for neither more creativity nor more usefulness, but more control and more profits.

In the times pre-internet, everything the citizen could use to be informed was mediated by governments and publishing/media companies. The advent of the internet gave a real chance for the communication of subjects and ideas that were not considered important by governments or companies, or even worse, communication of subjects and ideas that governments and companies actively wanted to prevent.

Actually, Publishing and Media companies can not exist in opposition to governments[1], and the politicians that get to become the governments can't get there without media endorsement, so both Publishing/Media companies and the government are the same for the purposes of this article.

Since the internet, because it is a space of freedom, is full of ideas that governments/media don't want to circulate, the freedom of the internet is their enemy.

Up until now, the internet was resilient, because in the words of John Gilmore, the internet interpreted censorship as damage and routed around it. But what if the censorship entity is so big that it can actually impede the re-routing?

I think that when COMCAST decides to disrupt bittorrent, it does it as a result of a calculation: Is COMCAST big enough to impede the internet to route around it when it tries to control what their subscribers may or may not do with their connections? and their calculation is that COMCAST is big enough. Perhaps not COMCAST alone, but together with other internet carriers and government laws that won't defend the freedom but instead to enshrine the principle that the owners of communication channels may filter the communication that takes place through their channels any way they please. That would be ok if at the same time there was legal protection for the creation of independent internet carriers, but there is not. Remember that AT&T was the archetypical example of monopoly. It was broken up in pieces, and guess what? the pieces reassembled themselves into pretty much the same monopoly... So, what freedoms are the governments to protect: Those of the channel owners to do as they please with their channels, or those of the citizens to have communication freedom?

Since there was a period of internet flourishing when governments couldn't control what people communicated, there was an interregnum of creativity, that sadly, is on its last legs.

It may be interesting if a big player such as Google decides to leverage the existing resilience of the network by, let's say, becoming the last freedom internet carrier itself. That may happen, and since the principle that dictates that in the internet damage is routed around is still very strong, it could lead to huge profits. But do not misunderstand the possibility of Google taking on the defense of freedoms as evidence of their resilience, in the end, it will make more economic sense for Google to capitalize by exploiting the network rather than to allow it to keep growing. The only possibility to save freedoms is to defend them directly the same way other freedoms have been defended, that requires understanding of their value. Remember the words of Judge Dalzell writing the three-judge panel decision on the subject of the CDA in 1996 [next to last page]:

The Internet may fairly be regarded as a never-ending worldwide conversation. [...] As the most participatory form of mass speech yet developed, the Internet deserves the highest protection from governmental intrusion.

[1]: Take the example of television: The radio frequencies for Television are property of the nations, that is, the governments. It frequently happens that governments use their ownership of radio frequencies to blackmail companies into editorial lines of their liking. The process doesn't have to be as clumsy as in third world countries, it can be very subtle as it happens in the industrialized nations. There are degrees, though, it may actually happen that some publishing media can really work independently of government, fortunately.

AMD reported, I don't have much to report

2007-10-18T21:49:00.000-05:00

AMD did better than expected, losses not as terrifying as expected, 7% improvement in Gross Margins, a bit of market share gained in both mobiles and desktops, lost market share in servers.

The market was indeed strong.

What's happening?

The market wanted lots of computers and people is not caring about the Intel brand, since AMD processors are cheaper, but perceived as perfectly comparable to Intel, they have some demand strength.

Does this mean that AMD is on its way to survive? -- No. Let me explain why:

For Intel is very expensive to asphyxiate AMD in a price war that needs to be fought in all segments, and Intel's management may feel the pressure to just increase short term profits. This is a reasonable moment to dedicate to profits, because AMD is lagging behind in competitiveness in a definitive way. The strategy for Intel is very simple: To grind AMD with the economies of scale. They are about to launch 45nm high-k/metal gate, and then 32nm in immersion process. AMD flunked the 65nm process and only will have immersion for 45nm... not significantly better transistors. Like I've said many times before, Intel then will get rid of the FSB/MCM disadvantages, and AMD will be a sitting competitive target.

AMD is losing money at a terrifying rate, and there is no plan to return to profitability. There are no competitive products in the roadmaps. This company is still as inviable as it was yesterday, despite a good quarter.

The stock price? -- good to take bearish positions little by little.

Nothing to new to say.

Going to AMD's Q3 Earnings Report

2007-10-18T02:43:00.000-05:00

AMD's Management promised a radical transformation of the company in Q1's CC. Did it happen? -- No.

Management also talked and talked about 'Asset Light'. Is any of that talk materialized in policies or strategies? -- No.

According to the numbers in Google Finance, AMD gained in equally spaced periods of 13 weeks, 89 millions in Q2 '06 (net income), when Athlon X2 was king and Intel didn't have but pitiful Netbursts and 32-bit Yonahs to compete. The inertia helped yet another quarter, 136 millions in Q3. By that time, ATI was already acquired, and then it followed losses of 574 millions in Q4 ($1.08 per share), 611 millions ($1.11 per share) in Q1 '07, and $600 millions ($1.09 p/share) in Q2. According to AMD's investor relations numbers, the losses in Graphics and Consumer Electronics accelerated in the same period.

Just like it was predicted in this blog, Barcelona was launched and disappointed in many ways: Late to launch, small numbers, slow clocks; even having the single die/Processor to Processor interconnect advantages it is barely at par in instructions per clock to Multi Chip Modules/Front Side Bus-choked Core processors. These products are so mediocre that in fact the top of the line dual core Opterons have far higher absolute and relative prices, according to AMD's own price lists. Furthermore, there is no high speed 65nm processor model in AMD's entire lineup, the consumer quadcore products are being pushed to 2008, and AMD dared to market triple-cores. That is, there is a mountain of indications that AMDs 65nm process sucks big time. And there doesn't seem to be any enthusiasm for Barcelonas among OEMs, so much for the often repeated talk of eagerness of customers. I invite the dedicated researcher to read the transcript of Q2's Conference Call, there you would see the 'alternative reality' of Mr. Meyer, President, and Dr. Ruiz, Chairman and CEO, who reiterated how wonderful the yields at 65nm are, and how extraordinarily good the 65nm process is that it allows the company to close Fab30 (that is, to cut the necessary expenses to convert Fab30 into Fab38).

On the other side, Intel has leaped forward in semiconductors with the double-punch advancements of High-K (dielectric constant) gate insulators (that allow thicker gate insulators than 5 molecules of Silicon dioxide while allowing the same electric field effect [insulator thickness is important because at these quantum physics scales the electrons are probabilistically simultaneously at both sides of the insulator, so there are leakage currents that grow very fast the thinner the insulator is ]) and metal gates, that increase the density of electrons in the gate and favors faster switching [ see IEEE Spectrum article ]. Also, Intel already announced products that will eliminate the disadvantages of the Front Side Bus. Since AMD's Direct Connect Architecture never was taken full advantage of, I think it doesn't take a very sophisticated P2P/Integrated Memory Controller architecture for a performance jump, that is, just a reasonable implementation of Processor to Processor interconnects will be enough to significantly improve the competitiveness of Intel's processors.

In the graphics department, AMD has lost more where it hurts most, in the mobile segment, and elsewhere, giving nVidia a feast of profits and market share gains.

AMD won't bring competitive products in the foreseeable future, and this is not speculation, just plain official roadmaps. Intel is zooming, with 45nm, high-k/metal gate, processor to processor interconnects, integrated memory controller.

Thus, AMD is conceding territory at everything high-end and going back to its unprofitable existence of value/volume player, the only difference being that now it is a supplier of all the major OEMs, and thus its market is less flexible and the losses are larger. The only way to hold on to market share is by selling cheap, but since the processor is turning less and less a cost component of a computer and as much a determinant of performance, at the low end of the performance spectrum it is less and less attractive to save a few dollars in a processor, that is, the low end of the market is becoming more price inelastic, and that means that price cuts to stimulate demand hurt more total revenues.

I am very eager to see how the losses of AMD have decelerated in this quarter, but what we are seeing is an inviable company: It can not produce more because it just doesn't have the products to drive market share expansion, it can not produce less because then it worsens its competitive position being weaker at silicon process development and manufacturing because less production heightens the economies of scale disadvantage in R&D; the company has rotated not just once, but TWICE! the debt it took to acquire ATI: 2.2 giga dollars in April and 1.5 giga dollars in August, that is, about half its present market capitalization value. It is important to notice that in this milenium, AMD has never earned more than $0.37 per share in a year, and lost ten times that, $3 per share, this year. I treated these themes in many posts, including 'Long year', January, 'Disaster', 'Catastrophe', and 'The ATI acquisition' back in April, and especially 'Does AMD know what it is doing?' in June, the historical perspective is particularly hilarious -- I am getting back on track, making predictions that actually turn true!.

Fortunately, the market for computers is strong, so, AMD may have experienced a break this quarter. How good would that have been? I can not say what is going to happen with the stock price from tomorrow on, not even if I knew exactly how much AMD is losing; what I know is that with patience, increasing bearish positions on AMD, the reality that this company is not viable long term will impose over any temporary stock price strength. And this may be the only way, patient and bearish, because Wall Street has every chance to know intimate financial details of AMD given that AMD will have to go cap in hand to Wall Street to borrow money to finance its inviable existence, and that will confer lots of opportunities to Wall Street to manipulate this stock price with obscenity and impunity; and on the other hand Intel will hold the keys for AMD's annihilation in the form of pricing and roadmaps; thus, there is no way the non-informed of privileged insider data could successfully day trade this stock.

Although not financial and not technical, there are very positive news coming from AMD, though. AMD decided to release specifications to enable Open Source drivers for its video cards. I celebrate this decision, but beyond my personal preferences, I think this is the correct strategy: Ally with entities with stakes in innovation, and not with status-quo maintainers like Microsoft and DRM, but that would require another post.

Alive!

2007-10-18T02:37:00.000-05:00

In case you are wondering about this blog, it is still alive and I will keep posting, just that I haven't devised a plan for it: mission, audience, editorial line, content and resources.

I started this blog in January 2006 as an experiment. In November '05 I decided to invest my savings in the stock market because there was what I thought the opportunity of a lifetime, to invest in AMD bull-side before the whole world discovered and understood the technical superiority of its products, that was so great, that it will lead to an historical role inversion between AMD and Intel. By January I was inspired by Sharikou's blog, as an opportunity to express authentic opinions, not toned down by 'political correctedness' or other considerations, I got to see that regardless of how complex a subject may be, like comparing architectures of processors, it was in principle possible to gather together an audience/community to circulate ideas and to develop them.

Early enough I realized that the blog that inspired me for my own effort wasn't just a free expression of opinion, but that it gravely suffered from lack of intellectual honesty. Then it came the great dissapointment of losing money and credibility by the disastrous turn of events after the announcement of Intel's Core architecture; and once I realized that the same reasons that led me to invest in AMD-bull side, an exponential growth, could lead me to the opposite if the crucial parameters were slightly lower, indicating an exponential implosion. Thus, I 'flipped', and allienated beyond the point of reconciliation the core of the audience of this blog. Then, I got interested in the subject of volatility management through equity options, and that further allienated the audience. It gets even worse: the community I was participating in, that fed traffic to this blog, the Yahoo message board, underwent a fork after the change of format, and my faction, the more educated and seasoned participants, successively moved a second time to Investor Village; but that is not all, since the more educated and seasoned participants of the AMD Yahoo message board were naturally very entrenched die-hard supporters of AMD, they gave a very optimistic bias to the board, and after the successive rounds of AMD crashing and burning, the bias depopulated it.

For those reasons, this blog, that began as a project to complement a community to develop ideas around the topic of technology investment, turned into a personal project, even intimate, without a clear content orientation; and this evolution highlighted several issues: If I am going to have a low-traffic blog, there is no reason to put up with the very annoying inconsistencies of blogger/blogspot or any other free blog service, I could mount my own domain and use the tools that better suit my purposes. Another thing is the issue of privacy: A more personal project may require to lose privacy, but since I am a professional that has been called and may be called in the future by Intel, AMD and other companies, being publicly associated with very controversial or critical opinions hurt my possibilities to work, and hurt more where I am more knowledgeable/skilled and thus more opinionated... Finally there is the issue of content: What's the community of ideas that this project will concern itself with?

I have been meditating about these issues for a while and chose to slow things down to a 'hybernation rythm' while I am undergoing important personal and professional changes to see where are the strengths of this project and where they may go. Fortunately, I am at an advanced stage on these transitions and the panorama is becoming clearer. The visit statistics tells me that there is still a worldwide audience for this project, I am still participating in fora, and there are mountains of good content to publish, so, I can say that for the time being this project will continue to be alive and developing links.

The Return of Hyper-Threading (Technology)

2007-07-28T23:18:00.000-05:00

When one sees the comparisons between the upcoming AMD processors and Nehalem, many people seem to forget that Nehalem will mark the return of Hyper-Threading Technology (HTT for short). I know that the first instinct of some of the readers will be to laugh at this, and say that HTT failed before and will fail again, but bear with me, as I try to show you why this may be more important than you think.

HTT is just the commercial name Intel gives to their implementation of SMT (Simultaneous Multithreading). SMT was first researched by IBM in 1968, and saw its first implementation in a commercial microprocessor in the Alpha EV8 (never released). Other processors with SMT include the PowerPC G5 and the SUN Niagara. So now you see HTT is not a dumb concept invented by Intel.

When Intel released the first implementations of HTT, depending on the application, you could get a speed boost from 30% to ¡¡¡-30%!!! (yes, that is a minus).. Latter designs improved the situation yielding gains from 0% to 30% depending on workload (in both cases compared with a P4 with HTT disabled). Intel Indicated that, in the P4, the increase in silicon area to include HTT was around 5%.

¿So, why Intel incorporated HTT in the processors? A few of the reasons are:
* The P4 had really long pipelines (way too long in my opinion, but that is easy to say now in 2007). By putting HTT there, the processor could do useful work in case some execution units where idle, masking a little bit the long pipeline problem. Oh, and memory latency is always a problem for any µProcessor manufacturer.
* Intel is interested in selling more microprocessors, so even if they did not believe in multicores (at the time), they would have loved (at that time) to sell something like AMD’s 4x4. But, without the software makers getting serious, that was not possible, HTT was a cheap way to get “Multiprocessing” to the masses, to let people see the benefits, and to let developers have a test bed of sorts where to try multithreaded code. Actually, HTT is credited with finally forcing Creative Labs to correct the SoundBlaster drivers to work in machines with more than one Processor (real or virtual).
* To have another bell to list in the brochures in the fight against AMD (¡Nehner nehner! ¡We have SMT! ¡and you do-on‘t!).

So, if SMT is a good idea, used in many other processors aside from Intel’s, and if there were good reasons to launch it ¿Why it became a joke?

Let’s explore what can fail in an HTT implementation.

There are factors which are not under Intel’s control, like applications not being designed to profit from HTT, or the OS scheduler may do a very dumb work assigning threads to the real or virtual processors.

There are others that are, more or less, under Intel’s control:
A.) The memory bandwidth may not be enough, “starving“ the microprocessor.
B.) There can be “Cache Trashing”, or cache insufficiency.
C.) There may not be enough Execution Units in your processor to handle both threads, leading to contention.

Solving ‘A’ is easy. The brute force approach will be to increase the FSB frequency. The elegant approach would be to design a better access method to memory and Inter Processor Communication, like what AMD did integrating the memory controller and doing CHT, or what Intel plans to do in Nehalem with CSI and an integrated Memory controller as well.

Solving ‘B’ again is easy. The brute force approach is to have a bigger cache. The elegant solution is to increase the “way-set associative-ness ” of your cache (going from 4 way set associative to 8 way, or 16 way)

Solving ‘C’, on the other hand, requires a brand new processor.

Now look at the differences between a P4 and a Nehalem.

Where the P4 had a FSB with around 533Mhz at the time of HTT introduction, and no integrated memory controller, Nehalem will have CSI and an IMC, and even if they had still a FSB, the FSB is now in the 1600Mhz territory, try to imagine the FSM at Nehalem‘s debut.

Where the P4 had a mere 512KB cache 8 way set associative, Penryn will have around 6MB (shared between two processors). And since the “set associativeness” for the current Core architecture is 16 way, one can only wonder what the cahce size and set-associativeness for Nehalem will be.

Where the P4 had four execution ports, the current Core architecture has 6, and one has to wonder how many of those will Nehalem have.

Couple that with the Dynamic acceleration technology and try to imagine one of your cores lying dormant while the real core, now accelerated serves your single threaded (i.e. gaming) needs, while the virtual core serves your OS and ancillary needs. If on top of that the needs are different at the MicroInstruction level (the game is doing heavy SIMD, while the OS is doing mostly integer) so much the better.

Finally Linux has adapted to HTT and Multicore, MacOS as well (remember, the PowerPC G5 had SMT), and so will be Windows by the time Nehalem debuts.

The analysts and comparers better begin to figure out how much of a speedup will the reintroduction of HTT bring, and factor it in the comparisons.

Does AMD know what it is doing? - Strategy

2007-06-13T09:07:00.000-05:00

Examination of AMD's strategy induce several tough questions that I want to explore in a multi-part series.

Today, I will address the strategies around single die quadcores

Barcelona:

Intel's approach of putting together two dual cores is inefficient because both dual core chips compete with each other and with the expansion buses to access memory. The chips also block the bus while they are communicating among themselves. In this design, the bottleneck is the shared bus, every new core added diminishes the bandwidth the other cores may have. From the point of view of the customer, although going from dual cores to quadcores requires double the power consumption and it doesn't give anything nearly twice the performance, it may be cost-effective because most software licenses are charged based on the number of processors, not the number of cores. Then, for about the same cost in Software licenses, the quadcores provide substantially more performance. From the production point of view, there is an additional cost with MCM (Multi Chip Modules, packages with several chips), but there is no problem regarding yields or raw speeds because the dual cores put together are basically normal.

In AMD's DCA (Direct Connect Architecture) to add processors increases overall bandwidth because every processor drives its own set of memory banks, and each processor has "Cache Coherent Hypertransport" links to other processors to allow them to share memory. This is why AMD had many choices about the design for quadcores. It could have used a multi chip slave/master configuration in which only the "master" chip is actually connected to memory or other processors, but it chose the "clean" option of single-die quadcores.

Like most other AMD fans, I was very enthusiastic about AMD's designs because they are much superior to Intel's, but to succeed with single die quadcore design implies to succeed at three though challenges:

Contrary to the MCM approach, single die quadcores imply a yield and binsplit hit, a potentially devastating blow that can erase any performance or production cost advantages: For a quadcore to work at 3 GHz, obviously all four individual cores must be able to run at 3 GHz. Let us speak of an hypothetical example, say that the current production techniques give 20% of dual cores good enough to run faster than 2.8 GHz; then, if the process behaves just as well with the Quadcore design, then merely... 4% of the quadcores will be capable of running at that speed. I illustrated this argument of exponential worsening of yields in "65nm is just Intel Marketing", and will treat the subject in greater detail later on. But for the time being, it is clear that this issue is a pervasive problem regarding single die quadcores
AMD deemed impractical to do quadcores with the 90nm process, perhaps rightfully so, at 90nm there wasn't a transistor budget per die big enough for quadcores. Then, for the argument expressed earlier, not just the success or failure, but the life and death of the single die quadcores hinged on extraordinarily good 65nm process.
Furthermore, to integrate four cores may require a core redesign, to include features like the shared L3 cache or more Hypertransport links.

As can be seen, the moment AMD chose to go for the single die quadcores, it must have had absolute confidence about succeeding at this triple challenge. While I understood how difficult the triple challenge was, I interpreted AMD's decision as proof that Management had confidential information that assured success, and thus, the company was in very good shape because in particular, the new 65nm process should have been working so great in early 2006. Needless to say, I was wrong, but there were some elements to think that AMD may have pulled off the 65nm tricks it needed:

1.- There are objective reasons to think that APM is a very much superior method of production (at least compared to Intel's "Copy Exactly!"), things like Sematech's award for the highest performing fab:

2.- Fab30 was producing absurd percentages beyond official capacity, meaning that everything production-related was very good at AMD

3.- The partnership with IBM for the development of 65nm and 45nm inspired confidence about the 65nm transition goals

4.- When the fastest dual core was the FX-60 at 2.6 GHz , fastest single the FX-57 at 2.8 GHz, the overclockability of 90nm Athlons made me think that the production process itself was centered above 2.5 GHz with a very tight variance (due to the fantastic Fab30 over production, over clockability and top speeds).

These things taken together led me to believe that all was well regarding the production capabilities and schedules for the 65nm process and the yields and binsplits hits of quadcores.

And the new core design didn't seem a problem at all, we are speaking here of the "Grand Masters" who brought DCA, AMD64, AMD-V, the emphasis in instructions per clock rather than clock speed, and the K8 design is very old already, the designers should have had more than enough time to prepare a new design.

Has AMD any chance of succeeding with this strategy choice?

Of these three items we can only be sure that AMD is producing 65nm products, under the family name of "Brisbane". But regarding the 65nm process requirements for successful single die quadcores, several red flags arise:

Despite the inherent advantages of 65nm and the acute urgency to have competitive products, all AMD has done with Brisbane are:

Mysterious and "bullshit-explained" extra L2 latencies, that is, slower processors clock by clock
Unimpressive shrink of die area
Slower processors, up to 2.7 GHz when the company desperately needs something over 3.0 GHz and while some 90nm dual core products (the Quad FX 74) are 3.0 Ghz
Small quantities, especially if believing what the company says, that the crossover point in the transition to 65nm manufacturing and several other milestones have been reached.

It can categorically be said that current 65nm is not up to the requirements of successful single die quadcores. That is why it was no surprise at all the underwhelming clock speed of the officially demonstrated quadcores, around 1.7 GHz. It seems that the 65n process is so bad that only underclocked product works at all.

In this first part, we have seen how AMD's management chose an strategy for the flagship products that implied success at three major challenges. Today we don't have enough information to decide whether this was lunacy, overconfidence, or a calculated risk that went wrong; but since failure at Barcelona ripples in many ways for AMD's prospects, other strategic decisions must be seen in the context of the choices of Barcelona, that will be explored in successive parts.

Vista: Slower at 3D games

2007-05-07T14:15:00.000-05:00

The review site "Hardocp" compared the average frame rates of several popular games, including Microsoft's very own "Flight Simulator" and found that Vista is noticeably slower.

Let's see the results for two popular video cards:

One of the phony reasons Microsoft has given to the public for the transition to Vista is supposed to be better gaming experience. This claims have support because Vista supposedly provides services of interest for game developers. If so, it is to be expected that with the very low adoption rate of the operating system games still haven't been designed to exploit those benefits. But this doesn't explain why old games run slower.

Vista deals with video in a very different way to its predecessors, Microsoft insisted that the new "Windows Display Driver Model" was so different that DirectX 10 couldn't be backported to XP nor predecessors, but still, since the gaming segment is of great importance for Microsoft, and Microsoft has always cared about backward compatibility a very great deal, it could be expected that games for DirectX versions older than 9L would behave like they have always done; but this doesn't seem to be the case.

Why? I think the reason can be found in Peter Gutmann's "A Cost Analysis of Windows Vista Content Protection": The DRM-infected Vista device drivers must distrust the user, the other hardware devices and the software running in the computer to protect Microsoft's interests (claim explained here), and this obviously taxes performance. But of course, I am dismissing a plausible explanation that DirectX < 9L runs emulated for WDDM devices, because I think WDDM's potential technical benefits are just an excuse to force the device drivers DRM infection.

I may be wrong, but I get the impression that AMD (ATI, that is) has been cheerleading Vista much more than nVidia. This is off-topic, but I am concerned about AMD's management attitude towards Vista, for instance how they keep insisting that adoption will provide momentum for the industry. It makes me wonder if their policy decisions are based on this, like introducing 65nm product first for desktops, where its only attractive point of better power efficiency is relatively irrelevant compared to Laptops perhaps anticipating a spike in desktop demand due to Vista. I also wonder if AMD's management understands who used to be their custormers: Gamers, for instance, that wanted freedom, choice, the greatest bang for the buck and when K8 was the king of the jungle, performance leadership. Vista provides exactly the opposite: DRM infection, restriction in drivers and hardware, expensive proprietary bloatware; and performance retardation.

Ron (Cove3) rant about Options

2007-05-01T20:43:00.000-05:00

What follows was written by Ron (Cove3) as a message board post, part of a thread we were talking about. I have inserted my commentary in a different color. My intention is to post a complete rebuttal, but for the time being I want to comment on Ron's ideas.

Chicago, I have read your link many times [Ron refers to "Options Are Cool", where I explain some benefits of options], but as you say, no argument will convince me. As regards personalizing, since you are a spokesman champion of options, I do, IN ONLY THIS INSTANCE, regard you as an adversary, much as I would were you the Tobacco industry proclaming the benefits of smoking or the Narcotics industry proclaiming the benefits of cocaine. Both would say, as would you about options, not harmful in moderation, but of course moderation is never what happens, but primarily abuse.

You, I and other longs on this board have lost money on AMD in part due to hedge funds and speculators having a vast arsenal of weapons with which to manipulate markets [I have lost money, and I was also convinced that some stock price manipulation happened, but today I see that manipulation or not, what I though was a solid company in reality is a very bad business, and that is more than enough to explain the money that I lost. Since this explanation is simpler, by Occam's razor it is better]. The wealthy have pooled their money into unregulated hedge funds giving them an ability to stampede stocks up at down at will (see Cramer [Jim Cramer even confessed that he knew multiple ways of how to manipulate stock prices]). Not being content with that atomic bomb weapon, they pile on more advantage on top of that.... Margin, naked shorting, derivatives, and of course options. [You are putting together very dissimilar things, this makes it harder to understand what is your complaint: Naked shorting is illegal, options are but a particular kind of derivatives, margin is necessary for any kind of short selling. Nevertheless, I will assume the defense of Margin, non-naked (proper) shorting, and options in particular]

The leverage this gives them to create volatility and gain is unimaginable and have turned what should be capital markets for long term investment for the good of all into mere gambling casinos. There's simply no rational for a company's entire outstanding stock to turn over in 3 or 4 days. AMD should never have driven up or driven down to the levels we've seen and wouldn't have been without the arsenal of weapons at their disposal, one of which you're so vigorously defending [Actually, I disagree with this argument for technical reasons that you are not aware of. To write options is a very great deal more complex than to go long on them, that may explain why most discount brokerages have more restrictions and demand more qualifications from option writers than option purchasers. Since to write options is a harder subject, and requires larger commitments of capital to obtain smaller gains, I conjecture that the activity of writing options is more natural for big players than for retail investors; this issue is key, because it contradicts your implication that these instruments are used to increase volatility: Whoever writes options is implicitly taking a stance, that volatility will decrease. Then, if Big Money assumes more often the role of option writer, it is not in its best interest to propitiate increased volatility. I see many good phenomena that explain why market volatility has increased, I will detail below and in my post]

The Fed and SEC could stop all this dead in it's tracks if it weren't controlled by Wall Street.
1. 100% margin [Why 100%? I understand that some people use margin leverage incorrectly, but there are ways to use lots of margin leverage that are even safer ways to invest than simply hold shares, and I will explain how]
2. 3 year holding period for long term capital gains, 3+ yrs being what an investment is all about. [This is ridiculous. Markets are not what they used to be because of many reasons, in particular, in this age a company like YouTube may go at "internet speed" from non-existence to being valued more than one billion dollars in less than the three years you mention. (YouTube in particular was demoed in May 2005 and announced its acquisition by Google in October 2006, less than half three years!. I don't see anything particularly bad with some legislation to be in accordance with the accelerated pace of our times. Your criticism distills strong opposition to liquidity, I can, on the other hand, show how liquidity is an essential positive characteristic of modern financial markets]
3. Tax capital gains and dividends at the same rate as labor, which needs incentive also.
[Allow me to mention some criticism about capital gains taxation that I do not necessarily agree with: If you agree that after the government receives the payments of income taxes, the remainder should be available to be used in any way the contributor chooses, thus, it has weak legitimacy to tax that money again because it multiplied as an investment. I would like to see your refutation of this argument]
4. Add a transaction tax to make it much more expensive to churn stocks. [More opposition to liquidity]
5. Tax inheritances to get at least some of the manipulation/inflation profiteering gains back [Well, this is an entirely different subject: It seems that you think that whoever leaves money in inheritance is guilty of some form of misdeed. This is a political discussion that I will decline to participate in]
6. Use this tax income to reduce the deficit, the burden of which falls primarily on the middle and lower classes who least know how to defend against the inflation which deficits create. [While it is true that the deficit is a middle and low classes killer, the solution is for the citizenry to demand legislation that blocks the government to expend more than its income, this has very little to do with our subject]
7. Ban or regulate hedge funds. [It seems that you hate any mechanism to invest that doesn't require explicit government permission. If you assume that the government is able to decide what ways are good to invest and which are not, then why wouldn't the government, in its infinite financial wisdom doesn't administrate all the money of every individual and company? You can't fire accusations so general, the system of individual liberties is based on the principle that agents can do as they please as long as they don't trample on the liberties of others, that is, government intervention occurs only to protect liberties, it doesn't work as you suggest: "Eliminate these liberties so that there is no abuses"]
6. Eliminate options. Risk can be managed by diversification or selling the investment [Why does it have to be diversification the only mechanism to handle risk? Diversification is very bad at it, risk may keep mountains of money from being invested if it were not for more developed mechanisms to handle it. Your blanket opposition more than anything else reflects ignorance]. Markets functioned before there were such a thing as options. [Many types of derivatives have existed since time immemorial, in recent times, there was ground breaking work that allowed investors to more easily agree about how to price equity options, the Black-Scholes model, and the rise of the options market is the natural consequence of that and other developments. You seem to oppose innovation because it may lead to changes that you don't like. I liked the times when you made a phone call and an actual person took the phone, I loathe and hate the automated voice systems that take your call, but I would not even suggest to outlaw them. Regarding your claim that markets functioned well before there were them, is factually wrong by duplicate: They have existed ever since the market existed, and there is no reason to think that old times were better. What is the difference between your attitude of being opposed to progress and the Fundamentalists who go to the extremes of killing people massively or to impose restrictions on half of the population, women, including denying fundamental rights as the right to be educated; only because they have an idea of how without modernity we would be better?]
All these tortured devices have gotten ownership further and further away from the real thing [yes, they have increased the level of abstraction from the underlying; but this is just a demonstration of the successful development of markets. Just as you have the option to actually buy a business and manage it and nevertheless you choose to take a step of abstraction and own the business indirectly through shares in the stock market, I very much defend my right to take one abstraction step more than you and use derivatives over the share ownership you seem to sanction as morally acceptable] and created massive pyramids which nobody understands [speak for yourself!, but really, don't you see the cognitive dissonance of claiming ignorance about the subject of options and yet being so strongly opposed to them?] Why not have an options market for options? [In a way it actually exists, financial institutions trade "pure" volatility]

It's also increased the disparity in wealth which history shows leads to bad things [This is another political stuff that I don't want to discuss, but it has a side very much pertinent to our discussion: You and I are technologists, that puts us in a very good position to understand the "regressive nature" of our times: Those countries, companies or individuals who get ahead from the pack in the usage of technology use that advantage to further develop technology and get an ever increasing advantage. See it from the point of view of two households, one with Internet, and the other without. This may be a difference as little as a few dollars per month, but which amplifies itself enormously, it is either a virtuous or vicious cycle, what in systems is properly addressed as "a positive feedback loop" meaning a system where a deviation from the equilibrium point leads the system to further deviation. Nevertheless, the argument that technology is to blame for poverty is wrong: although it doesn't benefit all equally, it benefits the whole. The same thing applies to the development of financial markets that allows for margin leverage and options.]. Warren Buffet said there's class warfare going on and his class in winning, [yes, but Warren Buffett's opinion is not that of a Luddite as you seem to imply, the way to correct this problem is not to tax Mr. Buffett up to dissuading him to invest in the stock market] thanks in part to weapons I've mentioned. The Imus uproar is just the tip of the iceberg.

Although I agree with many of your techology evaluations, on this one I'm afraid we will continue to be at loggerheads [being an engineer and/or scientist, I had the luxury of being raised intellectually in disciplines with objective criteria for truth and falsehood, I mean, I learned very early to accept that I made a mistake in a calculation, just the same I leaped to understand that I may be wrong with my opinions. Then, I learned that sometimes you only have approximations to the objective truth, and then that the same thing may be looked at from different models or frameworks that may lead to different conclusions and yet equally "right". Your opposition to even reconsider your opinions on this subject not just give me a higher moral ground, but cause you harm because those opinions are not what I call "operative". If you are concerned about how the options and other financial instruments induce volatility, you should be eager to learn everything about them, because like it or not, they exist. If you ever want to further these opinions into political action, you should be eager to know everything about the opposing arguments, because to "preach to the choir" would lead you nowhere. And finally, there is always the horrible possibility that one is plainly wrong. In that sense, I sincerely thank you, because your arguments provided me with good material to reflect about subjects of my interest and the effort to respond to them led me to improve my understanding].

Regards, Ron

Big Merger == Bad Merger

2007-04-29T17:55:00.000-05:00

At least mergers of companies of about the same size.

You can google about statistics relating big mergers, you will find that most of the time they end up destroying the bidder value and enriching the companies management. There is this old article from "Business Week" to begin with, and "Owners Lose and Bosses Win in Bad Mergers" from "The New York Times".

If the odds are against mergers, one wonders why they at all happen. One reason is that the bidding company becomes larger and thus its management tends to receive greater compensation, in line with the increased size; thus creating an incentive for management to merge regardless of the merits of every merging. Beyond that, Wall Street also benefits. The Investment Banking business of a big merger may leave literally hundreds of billion of dollars in gains for Wall Street's operators; this is a great incentive for Wall Street to persuade the management of companies thinking about the possibility of a merger to go forward, and also an incentive to use their leverage in the financial press and media to give good publicity to them, so that public opinion eases the process.

There are other incentives as well, for instance, it is rumored that Carly Fiorina at certain point wanted to make use of her celebrity status to further political aspirations, and the chance to get lots of media exposition was something like the Compaq merger. While I do not necessarily agree with this rumor, I mention it here because it is rather easy to imagine that things like that may happen.

What is important is that once the merger has completed, Wall Street's pirañas have got their money and the true value of the combined entity is allowed to emerge, destroying the shareholder value.

Of course that I am writing this in relation to AMD's ATI acquisition, the day the talks were announced that Monday after the presentation of Q2 '06 results, I couldn't help but think that all the talk about the synergies was empty, and all of those words of keeping working closely together with nVidia as outright lies. What was true was that Intel was going to cut businesses with ATI and that the merger was going to have high costs for AMD.

I explained to my satisfaction (at least for the time being) why I criticize this merger. I just want to hypothesize about why it happened: AMD's management is gullible because they have an inferiority complex (a subject I have been writing about) and anything that may upset Intel gets their interest. ATI's management knew the very poor condition of the company (yes, this is my gut feeling, I don't have evidence) and tricked their AMD's peers to bite the bait. Then, Wall Street's pirañas made sure it got through with good publicity and stock price manipulation... from less than $17 per share it got to over $27!, but now, it is becoming increasingly clear that AMD paid premium for a nest of lice.

Nevertheless, I have repeatedly stated it, there are projects that can really display AMD/ATI synergies, like torrenza 3D coprocessors. Sadly, for these few projects, AMD sees them from either the perspective of AMD or ATI but not the combined company's: To use ATI's expertise to develop physics torrenza coprocessors?: NO! they would "cannibalize" existing AMD processors businesses. 3D Graphics torrenza socket coprocessors?: Even worse! they would cannibalize the very lucrative —and absurd— "graphics supercomputer in a PCIe expansion card" businesses. Intel stubbornly insisted in the "Front Side Bus" approach to memory interfacing to defend chipset businesses. Did that insistence lead to anything good for Intel?. AMD neither learns from its failures nor its successes; just like the integrated memory controller was the right technical way to go, the torrenza socket graphics coprocessor is the right way to go; to not pursue this ATI acquisition synergy is just to give chances to Intel and nVidia to do it first. Fusion? DON'T GET ME STARTED!

The ATI acquisition, for the record

2007-04-29T10:53:00.000-05:00

I have written in other posts about the ATI acquisition, but not compiled a definitive opinion on that subject, thus this post.

Vertical Integration is an attractive strategic objective for AMD:

AMD processors may have unique features that could benefit from chipsets that fully make use of them, chipsets and processors have synergies.
To develop chipsets next to the processors should lead to shorter "times to market", another important thing
The chipset business opens up opportunities for AMD to use its Fab capacity in chipsets, or to use the foundry capacity contracted by ATI, depending on the integrated company needs, which increases flexibility and in principle AMD readiness to tackle market opportunities.
As it has been profusely written about in this blog, there are specific computation loads such as 3D graphics acceleration that can be better served by specific coprocessors; thus, the future of the processors are as much "multicored" as "multicoprocessored", thus very tight collaboration with coprocessor companies was necessary for AMD.
From the point of view of the customer, tight development of chipsets and processors ensure compatibility
Access to other markets, through ATI, Consumer Electronics, for instance.

At the moment AMD acquired ATI, there was a conjunction of market conditions that aligned AMD's interests with the interests of the major players in the industry. Why? because Intel, especially in conjunction with a mono-supplied Dell, was as much a vertically integrated monopoly as an horizontal monopoly; then, every AMD processor sold instead of an Intel meant a whole chain of complementary products and services opportunities for all the other companies: nVidia and ATI for the chipset and the integrated graphics card, Sun, HP, or others for the computer itself; Broadcom or Marvell for the ethernet phy or the wireless chipset, and so on. In summary, the whole industry had only one enemy: The Intel-Dell axis.

This used to be a successful stage of the "Virtual Gorilla" strategy that AMD pursued to try to close the economies of scale gap to Intel. Remember that AMD's greatest problem is the economies of scale, the Silicon research and development costs can be viewed as essential (due to the restrictions the x86 license places on the number of processors that can be outsourced, AMD seems forced to fab itself a significant fraction of its designs), and they have a "fixed" nature, thus, the greater the number of units to spread the fixed cost, the better the margin. Furthermore, the Silicon fab process is increasing its scale with every node transition, meaning that the investments grow in size at the ever higher scales of integration. In any case, for the broadest markets both nVidia and ATI were providing excellent chipsets for AMD processors and had adopted technologies of interest for AMD like hypertransport. For supercomputers and specific market niches, Broadcom, Sun, Cray and others were doing an excellent work in making use of AMD's processor features. In summary, right before the acquisition, it can not be said that the market was lacking in support of AMD technologies or initiatives.

AMD thus had every chance to concentrate in Silicon research and development and capacity expansion. Continuing the partnership with IBM for R&D, there only remained the issue of capacity expansion itself that AMD was attending to by securing an excellent offer by the State of New York to build a fab there which included more than 1 giga dollars in bonuses.

With a rising market share, for both ATI and nVidia there wasn't a better long term strategical plan than to increase collaboration with AMD while competing among each other; this ensured that the market of products complementary to AMD processors, due to this competition, was going to evolve faster than Intel lines. To further speed up the development of complementary products, AMD may had enthused the industry with more open specifications like Hypertransport, or even get more directly involved with Joint Ventures with nVidia and ATI simultaneously.

AMD not just had credibility for all of this, AMD wouldn't become a competitor in the chipsets or coprocessors businesses for nVidia or any other industry player that chose to associate tightly with AMD because AMD only had money for one major initiative, if that was to pursue capacity expansion, the opportunity cost paid there would left AMD without the money to turn into a treacherous competitor the way Intel did.

Then, the benefits of Vertical Integration mentioned at the heading of this article were present in the Ecosystem of partners to a large degree. nVidia, for instance, had the nVidia Business Platform, which is still defined around an AMD processor. An aside note, when I first noticed the NBP around early April '06, it surprised me how nVidia addressed a very important concern of the business market, that of platform instability, with a very compelling proposition and yet wasn't promoting it heavily: In hindsight, I think nVidia knew AMD was about to acquire ATI, perhaps what Rahul Sood says is true, that nVidia was the first merger candidate tried and nVidia was already weary of AMD by that time. With nVidia pushing initiatives like this, ATI would have to follow suit.

Since the Vertical Integration was ensured by market circumstances around the time of the acquisition, comparatively the acquisition wouldn't have brought that many benefits. I mean, if If live in a place with excellent public transportation and my house badly needs a larger kitchen, I can defer the acquisition of a car to remodel the kitchen.

The criticism about the ATI acquisition is not a matter of principles, it is a matter of benefit/cost analysis. There were little and few true benefits to the acquisition, as it has been explained, but the costs have been terrible. Like it was explained in "long year", ATI was valued at certain price X by the market because it also had very good access to Intel product cycles, once inside AMD, it lost that access, and just by that fact, ATI, being exactly the same business, necessarily has to be worth much less, unless inside AMD it can participate in business with synergies to compensate. But so far what has been the synergies AMD has announced? A cut of redundant personnel? Fusion? has I have stated multiple times, the development schedule for Fusion is every bit as slow as it would have been in a Joint Venture; it is very clear that for the time being there haven't been any synergies which could justify the loss of value of ATI due to the difficulties to deal with Intel. This is important because Intel-based computers used to be over half of ATI's market.

Thus, AMD paid X plus an acquisition premium of about 20% for a business that is worth much less now that it is inside AMD. But this is not the real problem, the real problem is that AMD paid a dearly high opportunity cost.

While AMD needed its cash and future cash flows to keep expanding production capacity, it distracted both to acquire ATI. This problem gets worsened because:

The timing was particularly bad: At the same time AMD's management understood that its declining product competitiveness will hurt AMD's capacity to pull this transaction off, ATI was depreciating even faster because of its own lack of competitiveness, spotty execution and profitabilities. Since Intel already had declined to acquire ATI, AMD may very well have waited for a cheaper opportunity (this is the same argument that dispels the rumor of AMD's leveraged buy-out, why now that the price is becoming cheaper so fast?)
Furthermore, AMD needed lots of cash to cover for a "Perfect Storm" that could happen, and happened, forcing it to loans that put a burden of about $1 per share per year just in interests.
AMD lost credibility among partners, I see it very hard for the ecosystem to risk any significant investment in AMD-based products if AMD demonstrated that it is not interested in the ecosystem but in imitating Intel's vertical integration model up to its treacherousness
nVidia, despite what Rahul Sood and AMD's management says, is not only alienated, but has become AMD's greatest enemy and probably its nemesis.
There are no resources for projects that can display ATI-AMD synergies like torrenza coprocessors (no money and no market credibility). Furthermore, AMD is very content with the current model of "graphics supercomputer in an expansion card" model that I demonstrated why it is obsolete. I dare to say that the ATI acquisition, far from easing the adoption of unique features of AMD processors, like their "coprocessability", the prostrated AMD posture is eliminating chances for those product advantages to become competitive advantages and profit drivers. That is, AMD has gotten the opposite it wanted from the deal.
The financial damage is extreme: We are talking here of, according to my estimations, of a depreciation of ATI's value of at least 1 giga dollars, plus the 1 giga dollars of acquisition premium paid, plus several million dollars in the commissions and interests of the Morgan Stanley initial loan, plus the commissions, interests and transaction losses due to this recent convertibles issuing, some more hundreds of million dollars in increased risks and credit rating downgrades to be paid the next time AMD goes to financial markets, the financial shackles the Morgan Stanley loan imposed (AMD is forced to dedicate a significant portion of almost any financial activity to repay that loan)

The greatest damage of all I think it was to have destroyed a pro-AMD/anti-InHell alignment of business interests of all the major industry players to commit self-financial-mutilation and to become the primary business enemy of one of the greatest emerging new companies, nVidia.

Trusted Computing

2007-04-21T22:37:00.000-05:00

There are many initiatives that promote security and reliability addressed under the generic term of "Trusted Computing". Nevertheless, this term does not mean what the non-initiated think it means, and this ignorance has been used to sugar-coat mechanisms for intrusions of privacy and weakening of consumer rights. Since I have been posting about Vista and DRM that implement some "Trusted Computing" concepts, I thought appropriate to complement the discussion of those subjects with this topic.

Trusted Computing is not "trustworthy" computing. The word "trust" in this context has a meaning closer to its opposite, it comes from the Cold War era when the Department of Defense was the largest commissioner of technology projects and imprinted their military view on language, "trust" in this case means "risk". When an organization in the military gives you credentials to access the weapons in a depot, it is trusting you, because you may misuse the permissions and cause harm, that is, you are trusted not because you are trustworthy but because you have become a risk. When approaching "Trusted Computing" one must be very careful to understand what point of view is assumed.

There is a "Trusted Computing Group" founded by the usual suspects: AMD, Intel, Microsoft, IBM, Hewlett Packard, Sun Microsystems and Infineon that strives to develop technologies to make computing predictable, and consequently, more secure and reliable. AMD in particular, in relation to Virtualization has brought SVM, the Secure and Virtual Machine specification, what was known as "Pacífica/Presidio".

The goal of "Trusted Computing" is to make computing devices to behave in predictable ways, exactly as the designer and manufacturer expected. This is an attractive selling point because it is a manufacturer warranty that the devices are going to do what they are supposed to do. A computer infected with virus or malware would be a counterexample. When you have a TV set, if you push the power button and nothing happens, you exercise the warranty. Unless you opened it and messed with the circuits, the seller or manufacturer will quickly admit its fault; trusted computing tries to replicate that dynamics to computing devices.

But that warranty comes at a price: For the device to be "trusted", it can only do what the manufacturer has deemed appropriate and nothing else; and this is the problem, computing devices are generally better the more flexible but the "trusting" limits them to very specific things. This imposes limitations far beyond the usual restraint of not messing with the circuits of a TV set to not void the warranty or not touching a configuration of your Cisco router done by the the consultants so that they don't have an excuse to say "we left your network working, your people must have made a change that broke it"; trusting computing works because the devices are guaranteed to enforce the manufacturer's policies, they may be designed to ignore the requests of their lawful owners, or even worse, to report to authorities, including the manufacturer, attemts at breaking the mechanisms that guarantee the enforcement of policies as tampering. "Trusted Platforms" among other positive things mean platforms designed to disobey the user to guarantee the enforcement of the policies coded by the manufacturer, as very aptly Richard Stallman put it.

In connection with my previous discussions about Vista and DRM, for example, the limit in the number of times you may change the "zone" of a DVD is an example of "trusted computing": The DVD consortium imposes policies regarding which players may play which DVDs that the devices enforce, even against the express wishes of their lawful owners and users. The DMCA criminalizes the circumvention of "protection" mechanisms, that is, it is criminal to interfere with the enforcement of the policies coded into the devices. Observe that just like one must be careful to notice what is the point of view about "Trust", in this context it is equally important to notice the point of view of the words "Copyright" (1), "Security", "Protection".

Microsoft sells Vista as an O.S. with improved security, but in reality that is a marketing claim with little support. It is true that Vista keeps asking you for permission to do things that require administrative privileges, but since it is so annoying, you end up clicking "yes" without thinking the same way you pretty much ignore the internet browser warnings on "secured" or "unsecured" transactions, or never take a look at the warnings regarding the validity of cryptographic certificates(2); then in practice this annoyance barely improves security; or this other thing of bitlocker; it is nice to have the Operating System to check the validity of BIOS and the hard disk partition where the O.S. resides, but in the end, this is just a tool to block users to boot Linux after installing Vista: The Linux tools regarding bootstrap that worked magnificently to correct problems with Windows 2000 and Windows XP boot can't work with Vista booting and the user is locked to use the very defficient Microsoft tools, deteriorating boot security in your systems!. Anyway, all the colander of holes in Windows security are just the same in Vista.

So, the "Trusted Computing" may mean improved security in the sense that the computing devices will not do something harmful to the interests of the manufacturer although the user may experience more problems. Just as it is easier to infect Vista with a virus causing harm to the user/licensee/owner than it is to correct a Vista booting problem with Linux tools, Microsoft's interests are better preserved with Vista, in that sense it is more secure, at least from Microsoft's point of view, although not the user/licensee/owner's. My advise would be to not pay Microsoft extra money to protect its interests hurting yours.

When the devices guarantee the enforcement of policies, you can put DRM on top. With DRM the media companies may feel "secure" to publish their content for that DRM; the problem for the user/licensee/owner is that she has to waive her privacy and consumer rights.

For AMD, the "Trusted Computing" thing is harmful, because AMD/ATI does not have the critical mass to impose its "Trusted Computing" mechanisms as de facto standards while it needs innovation to take market and mind share from Intel but the emphasis in predictability intrinsic in "Trusted Computing" hurts innovation, as has been explained in detail in my previous posts.

On a personal level, you can construct your own "Trusted Computing" experience: I wrote about how thanks to Virtualization you can work around the severe Windows security problems [this points to the fragment that details how], if you read that other post, you will see that distrusting both the host Operating System and the Guest Operating Systems, breaking on purpose insecurity vectors like the Internet Explorer, and denying privileges to Guest Operating Systems you get more predictability, security and reliability.

If you own businesses, I would advise you to cease using Microsoft Office, to institute a policy of working memos, letters and internal messaging in html whenever possible rather than proprietary formats and tools, and running Linux hosts with virtualization Windows Guests. You would be applying "Trusted Computing" principles to increase productivity:

Microsoft Office is so complex that among other things it is prone to security vulnerabilities, to crash, and all kinds of hard to predict behaviours; then, if there is a problem, you don't know what's wrong, you have to scramble to provide a solution to your idled employee, your employee needs more time to learn a complex tool rather than your business needs, you encourage your secretaries to distract "fixing the margins on the page" rather than the real writing. A substitution for HTML will help in many ways, including predictability to your business productivity.
Linux gives you incredible flexibility, in this context, I am advising Linux as a platform where you can easily construct your own standard configuration where you minimize the number of applications and services in the interests of simplicity, predictability and security; since you may have needs that can only be satisfied with Windows, you can sandbox the Windows problems inside virtual machines; see that in this case you limit and control what can happen inside a Windows machine from the host that is an Operating System much easier to administer.
This is not advocating to distrust the employee, although the techniques work very well for that purpose. Rather than using trusting computing principles in an employee-hostile way, you can use the benefits derived from the implementation of employee-friendly trusted computing principles to further improve job satisfaction. For example, a computer fully equiped to comfortably run Linux, Gnome or KDE, with normal tools and even a Windows 2000 virtual machine costs as little as $250 without monitor instead of the ~$800 a Windows Vista with Microsoft Office licenses would cost; with the $550 difference you may buy a gigantic LCD screen and lots of RAM (that *will* be fully made use by Linux) for a very responsive, reliable and pleasant system to use [beyond Microsoft Office, after all those computers would not have the "printer driver" bloatware that comes with any Epson, HP, Dell, Lexmark, Cannon or whatever firm, it won't have Norton antivirus, firewall, anti-adware, it won't have the many "trialwares" that in reality are "adware" your OEM forced you to accept, it won't have the Yahoo messenger nor the MSN; nor any of the productivity zapping junk most Windows computers have, but their well-thought of substitutes]

Notes:
(1) I don't like the word "Copyright" because whoever has the copyright in reality may or may not exercise the right to copy but always imposes a prohibition to copy in all other entities, thus, what is really "owned" is the universal prohibition of copies. To clarify: Copyright is not the right to copy but the faculty to prohibit others to copy. An example: Apple has to pay to the copyright holders for the right to copy (and sell) songs in iTunes. But is Apple the owner of the copyright?, no, it is just a licensee. What is owned by the Music companies, then? a right or the faculty to impose a prohibition?. I propose copyprohibition as a better word. Furthermore, the "ownership" of copyrights imposes a burden on the rest of the society, to enforce the copy prohibition. It worries me that this form of artificial property requires not only the burden of enforcement to exist, but that its enforcement is harmful to liberties essential to prevent tyrannies. Since it costs nothing to allow people to copy, but it costs to prohibit to copy "copyrighted" works, "copyright" seems a particularly bad word for the concept.

(2) I laugh at the many inconsistencies at hotmail.com and msn.com regarding Microsoft's web certificates; they are assigned to one Microsoft domain but used at another, sometimes they are expired, etc. I understand that the certificates management is hard to do; for instance, you can not just copy a web site to another domain, you must update the certificates code; the web master must be very attentive to their validity, etc.; but if something this delicate, the only way the browsers can be sure that, for instance, "Windows Update" is the real thing and not a spoof copy to seed malware, can not be done by the largest technology company exposing hundreds of millions of computers to several internet attacks; there is very little hope for smaller firms...

The Old Man and the Sea

2007-04-21T02:41:00.000-05:00

AMD is like Santiago, the perennial loser who went to sea one time and after an epic battle against all odds manages to fish the greatest Marlin of all times; all for nothing because the sharks eat the fish and when he goes back home his peers mistake the skeleton for that of a shark.

AMD breaks ground with innovation, beats Intel routinely at design, but always has to endure the shame of severe losses 'cos it doesn't turn competitive advantages into profits.

The ATI acquisition is this giant Marlin. AMD may fish it, but not make use of it.

How AMD misses opportunities due to DRM

2007-04-20T19:11:00.000-05:00

[article finished]

Tom Yager (a very good articulist) wrote about AMD's plans to block the frame buffer access to unauthorized software. This means that the computer owner potentially will not be able to, for instance, take a screenshot of the screen to save it into a file.

This is something to be expected now that Microsoft Vista has been launched. I have written before about Vista (index), but I want to focus on AMD's insistence in becoming the closest Microsoft partner regarding it and how that "lacay" attitude harms AMD.

This is the key argument (taken from "Vista & DAT") to be treated in this article:

[T]he real problem for Microsoft and the Media companies is that while they can insist on control, and thus force their initiatives to be devoid of innovation, the rest of the world is still free to innovate, the innovation will still show up and be superior to what Microsoft and associates offer.

All Digital Rights Management(*) techniques are doomed to fail because of a very simple reason: For the customer to actually pay for the content and player, obviously she must be able to enjoy them, and to enjoy the content, it has to be unlocked to actually play it. This is where the problem lies: The content is unlocked at a point where the customer has control, whether it be a computer or a Blue Ray player or an iPod, and thus the customer may, depending on the laws, either legally or ilegally bypass the devices' DRM.

To close this loophole, the Media companies have succeeded to contractually force hardware manufacturers and software vendors to include DRM in the players, and lobbied very hard to make it illegal to modify them and to erode the law's protection of consumer privacy and personal freedoms. This success is causing harm, because the enforcement requires a "Police State": The only way a government may enforce laws against common people to "mod" their players is to have such powers of supervision of the people that they can detect the occurence of these activities. I think it should be a great "heads up" what is happening right now with the RIAA virtual racketeering against college students, single mothers, grandparents and children under the excuse of illegal file sharing; where the legal system gets inverted because it forces the accused to demonstrate their innocence while they only have the means of normal people against accusations financed with the billions of dollars of the recording industry.

Furthermore, the United States in particular enacted the Digital Millennium Copyright Act, which made it not just illegal but also criminal to even discuss vulnerabilities of DRM techniques. There is the famous case of Dmitry Sklyarov, who was arrested while briefly visiting the U.S. for work reasons and imprisoned for months just because he freely discussed the Adobe eBooks DRM vulnerabilities while working in Russia for a Russian company to illustrate the harmful extremes the enactment of laws that criminalize discussion of DRM techniques lead to. More off-topic, but very importantly, DRM harms by obfustating the invasion of customer privacy, DRM-infected products may be perfect trojan horses: They do whatever the provider wants them to do, and nobody knows what that is, furthermore, the government prohibits, through legislation like the DCMA, to even *discuss* what they may be doing(1).

Obviously, a country that denies to itself the possibility of digital content related innovation will lose competitiveness to the rest of the world, even if the country is by far the greatest content producer; because while every country can outlaw innovation within its borders, none can outlaw it in the whole world. For its own good, the greatest content producer country in the world should leverage that leadership into leadership of content players, its insistence in blocking innovation only postpones the inevitable and increases the costs of what will happen anyway.

Exactly the same thing happens with AMD and DRM, let us look at that in more detail:

Although the strategy of infecting content with DRM is ultimately doomed to fail, it is, using Mark Shuttleworth's words "attractive enough to some people that they are doomed to be tried again and again" too. The attractiveness is more or less this: Content owners won't distribute in "unsecured" (what an euphemism for "uncontrolled") channels, therefore some customers may accept prohibitions, to relinquish ownership rights and sacrifice privacy to enjoy the content not available without DRM infection. For Hardware and Software providers, this may mean that they have a chance to become monopolies of content distribution if they get the right DRM compromise, like Macrovision that receives royalties for every DRM infected DVD or Apple with iTunes DRM'ed tracks; part of the attractiveness is that companies may *own* some DRM infection mechanisms, thus, the larger the "adoption" (that is, infection), the larger the monopoly.

Shuttleworth: "it only takes one crack" in the scheme to make all the opportunity costs in development and adoption delays, development costs, unreliability, customer insatisfaction, stiffened competition and etc. an empty expense, damaging the very companies that insisted in the DRM infections. For further confirmation, look at the strong initiative spearhearded by Apple to disinfect music tracks, they seem to understand that DRM blocks their progress more than what it enables competitors to arise, anyway, their real competition is the free-of-DRM MP3. If you look at today's DRM infected players, you will see that the greatest contributor to their complexity is the DRM management; it can't be any other way because they strive to do the impossible: To prohibit the content to be used freely while allowing the content to be used; the same thing makes it easy to crack the players(2).

Shuttleworth gets to the gist of the whole thing when he says (original emphasis):

Someone will find a business model that doesn’t depend on the old way of thinking, and if it is not you, then they will eat you alive. You will probably sue them, but this will be nothing but a defensive action as the industry reforms around their new business model, without you. And by the industry I don’t mean your competitors - they will likely be in the same hole - but your suppliers and your customers. The distributors of content are the ones at risk here, not the creators or the consumers.

Mr. Shuttleworth, having become a zillionaire of the kind who literally enjoyed a vacation in outer space, selling Free and Open Source Linux, has every credential about how to make money in new paradigms: "The truth is that survival in any market depends on your ability to keep up with what is possible", "[t]he truth is also that, as the landscape changes, different business models come and go in their viability. Those folks who try to impose analog rules on digital content will find themselves on the wrong side of the tidal wave [...] It’s necessary to innovate [to] stay ahead of the curve, perhaps even being willing to cannibalize your own existing business". "The content owners need to [think] how they turn this networked world to their advantage, not fight the tide, and also how to restructure the costs inherent in their own businesses to make them more in line with the sorts of revenues that are possible in a totally digital world".How does this apply to AMD?:

It has been demonstrated how DRM infections only temporarily benefit the companies that gain adoption fastest, until they become monopolies due to the excellent powers to contain the competition that DRM gives them. Thus, at the same time, the infections are very harmful for those blocked medium and especially small companies. ATI is important and large enough to have a chance at becoming one of those DRM sanctioned monopolies in computerized media distribution; but this is in shocking opposition to everything AMD has preached since time immemorial about fair competition and more importantly, opposed to standalone ATI, the combined AMD/ATI entity is a company that strives to grow that is at a great disadvantage to Intel in its chances to become king of DRM. Furthermore, the only instrument left for AMD's growth is innovation.

Just like Shuttleworth advises, AMD should try to partner with organizations interested in innovation. Again, I recommend Linux in particular. Imagine what would happen if AMD decided, rather than providing less than mediocre support for Linux, as exemplified here, to help Linux become the platform of choice for everything digital video (Linux already runs in multitude of consumer electronics devices with video capabilities and of course, all kinds of computers from PCs to Mega Clusters). It may happen that doing this AMD may unleash all the possibilities that new technologies have, to its great fortune.

Some examples off the top of my head, "I don't understand" why I can not use Wi-Fi to broadcast TV from my TV Tuner card in my desktop to all of my laptops if the tuner provides me with the video data, I should be able to plug that video data to, for instance, the VLC player to broadcast it through 802.11g wireless to be played in other VLCs. I should be able to log-in to my home desktop from my office at work and stream through the internet the video I decode there. I should be able to stream the video to my file server, that is not the same as my desktop. I should be able to time shift the tuning and recording of programs with my application of choice, not the very mediocre application that comes with the tuner. I should be able to have multiple tuners in multiple computers to watch several channels at once in any of my computers. It should be possible to program my graphics accelerator to do video transcoding and audio processing of the feeds I get from the tuner.

Instead of innovating, AMD insists in riding an old horse, the Windows Operating System, where it failed to even convert the excellent AMD64 instruction set architecture into competitive advantages for the very same reasons: lack of critical mass, small size.

Ratifying my point of view, Microsoft is force-feeding the market with Vista, it is killing XP early because it prefers to annoy partners and customers if that helps Vista deployments to gain the critical mass it needs to become the monopoly of content distribution. This is a shift of strategy on the part of Microsoft, that of de-emphasizing the Operating System dominance to try to transform it into a content distribution monopoly, that speaks volumes of how important that is, athough this was treated already in "Vista $ DAT"; the important thing for AMD here is that Microsoft is leaving a big opportunity for Linux to become the platform for freedom in multimedia and AMD could become the perfect ally.

The point not to be forgotten is that Microsoft has many other partners of comparable size with better positioning than ATI/AMD to ride the DRM infection; but because of precisely that better positioning to infect the market with DRM they are handicapped to participate in the uprising digital video revolution. If AMD insists in handicapping its parcitipation in the said revolution to give it a try at what it is not particularly good at, monopoly development, I fear it will end up empty-handed, as usual.

DRM should be called more properly Digital Restriction Mechanisms

Tom Yager wrote an excellent explanation why Windows is so pathetically vulnerable to malware here; other articles of him are very worthy to be googled and read.

(1)Only very stupid countries may accept DRM products developed outside their borders because of this, nevertheless, it happens!

(2) In the case of software players, it only takes something as simple as a memory snapshot to domestically retrieve the keys that unlock the content (provided that the player stores the keys in memory without some sort of obfuscation), since the cryptography scheme is known, you only have to try every memory location as a potential key until you get it. In the case of hardware players, anyway, one wonders how long the secret of the keys can be kept, if there are multiple companies in multiple countries implementing players, each with thousands of engineers with access to them. Also, potentially, to mitigate the problem mentioned in (1), some countries may demand to know the keys, augmenting the number of entities who have access to them with entire countries and their bureocracies.