Workstation Graphics


The workstation graphics market is an interesting niche within the CPU and GPU segments when paying attention to the growth that the chipmaker market has had over the past 2-3 years. Workstation GPU’s are used for

  • Graphic design services
  • Medical Visualizations
  • Image rendering
  • On-air graphics
  • Video walls/simulators
  • CAD/CAM modeling
  • Large data set visualization
  • GIS systems
  • Gesture recognition
  • HD/3D pictures
  • Multiple display outputs

In the workstation processor market, the CPU’s and GPU’s market share is divided between total domination in the CPU market for Intel and almost similar domination for NVidia in the GPU segment.

It seems like the workstation market with CPU’s is not of interest to AMD as much as the GPU segment is lost on Intel. A combination of CPU maestro Intel with GPU king NVidia can hurt AMD in the short and long term. AMD has gotten out of the Workstation CPU market and is currently only focused on the GPU market. It is choosing its battles and trying to break the NVidia monopoly at their strongest core. AMD is also increasing the capacity of its Fusion APU‘s (CPU + GPU). It is important to note that the total workstation market is worth $8.2B (every approximately year 3.3M units are sold with each worth around $2500). This is a market worth investing in because of the very high margins. R&D costs are low due to the transferable skill sets that can convert CPU makers into GPU vendors. On an average GPU’s ship around 1.1 M per quarter – almost 900,000 workstations per quarter. The significance of GPU’s in the workstation segment can be attributed to

  • Its ability to run multiple displays
  • Its higher specifications
  • Its 3x cost when compared with gaming GPU
  • The need for driver and software optimization. Microsoft Direct X with Direct Compute and Khronos OpenGL with OpenCL form the largest groups that drive the software ecosystem around the workstation GPU’s.

This situation on the OEM side is almost a duopoly market for HP and Dell in the workstation market. HP was lagging quite a bit in this segment and it has caught up and overtaken Dell and now leads with 41% segment leadership.

Overall CPU statistics

This market is completely owned by Intel with positions that any firm would envy. AMD struggles to keep its 12-10% share – something that it seems to have a tough time holding onto. Intel’s strength in non-GPU market is quite insurmountable and hence AMD would like to focus on other market segments , possibly by taking on the GPU segment.

The lower end of the GPU segment can be called IGP ( Integrated Graphics Processors ) with AIB ( Add in Board ) vendors and the ecosystem therein which tries to release CPU+GPU cores/chipsets  though these cannot be called workstation worthy. Note how Intel kicks-ass here as well. Even though AMD possesses a presence in this segment as well, the focus now will be to shift customers to the Fusion APU’s. The strategy is to attack both the IGP market ( read Intel ) and also the discrete non-workstation market ( read NVidia ).

Discrete GPU

But Intel is quite absent from the Discrete GPU segment. It is called “Discrete” as opposed to “Integrated” solution chipsets ( separate GPU boards are to be added to the motherboard ) . AMD and NVidia rule this segment with 50-50% ratio year over year with 1% leadership tipping back and forth.

The major contribution to AMD’s GPU strength comes from the market share in the Notebook GPU segment. But there is a power-play at work here : AMD has decided to solely to go ahead with its X86 based APU’s in the handheld’s and mobile market. This could backfire since most of the successful tablets ( iPAD, Xoom etc ) are based off of ARM based Nvidia’s Tegra configuration line. If AMD loses the 62% , the discrete GPU market is as good as forgotten.

PC Market

The total PC Market is owned by HP, Acer and Dell with these three players owning approximately 40% of the unit sales. This means these are the major OEM’s for the chip makers. Supplier power here is weak with these vendors pushing for more IGP’s resulting in Intel leading the market. AMD is attempting to break that monopoly with Fusion series of APU’s which try to combine the processing power of the CPU’s with the graphics capabilities of the GPU.

AMD Situation

AMD is left with almost no choice but compete aggressively in the GPU market. Its major contributor to the stock is the Discrete Notebook GPU segment which it leads with 62% market share. The total market reach for both AMD and NVidia is almost 50-50% given by their position in the desktop GPU and notebook GPU segment. AMD got into the GPU market by acquiring ATI in 2005-2006 and had never grown to the success that NVidia has had in the workstation section though its success in other segments are notable. Recent victories include replacing Macbook Pro NVidia graphics GPU with AMD GPU’s. Another win includes Lenovo Vision ProThinkpad and winning back the Sony Vaio account.

AMD’s annual revenue rate has gone up 20% YOY with reduced debt and profit every quarter of 2010. It shipped 35M DirectX based GPU’s and debuted Llano ( GPU for the notebook and desktop ) and Bulldozer ( for servers ) . Gaming consoles like Xbox and Wii use AMD GPU’s. Net revenues are $6.5B with cash $1.8B. Revenue from the GPU segment alone is $1.7B while the CPU segment makes $4.8B. Total income comes to $509M.

AMD’s Fusion APU’s are x86 based and poised for the tablet and notebook market. But the market leader here is NVidia ( Tegra ) which is ARM based. Average selling price in both microprocessor and graphics divisions were down. Also the Fusion APU’s are not strong enough to replace the discrete GPU’s. They might replace the IGP’s which are not even good for gaming let alone daily office productivity suites.

It remains to be seen if the APU strategy will succeed leading to higher adoption in the workstation segment as well.  The notebook and desktop graphics performances will be a litmus test and could easily signal  AMD’s end-game versus the Sandybridge and Ivybridge line of processors.  If AMD succeeds with the APU’s,  one could see a workstation FirePro/Firestream type GPU slapped on top of a CPU core.


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