AMD's Rumoured Rejection of ATI Brand May Be the Worst Branding Decision by the Company

ATI Radeon May Transform into "AMD Radeon" - Rumours

by Anton Shilov
08/23/2010 | 10:47 PM

There are rumours floating around the Internet that Advanced Micro Devices may cease to use ATI brand for its graphics products. Even though some believe that this will strengthen the corporate "AMD" trademark, in reality this may be the worst branding decision ever made by the company.

Consumers Love Brands

 

The Sunnyvale, California-based supplier of central processing units (CPU) acquired ATI Technologies back in 2006 with a bid to start offering complete platforms consisting of core-logic sets and microprocessors as well as in order to integrate graphics processing units (GPUs) and CPUs into a single piece of silicon. As a result of the acquisition, the company decided to put its own trademark onto AMD-compatible chipsets as well as onto consumer products, such as Imageon for mobile phones and Xilleon for digital TVs (in fact, while some consumer electronics companies saw value in ATI brand, they have never put AMD logo onto their devices), but decided to keep calling graphics cards as ATI Radeon. Later on the company had to sell off mobile graphics as well as DTV business units due to poor execution and bad need for money. The rumour mill says that now AMD wants to reject the ATI brand.

Even though many say that it is not necessary to pay for well-known brands, consumers love recognizable labels and trademarks and are willing to pay for them. The reasons are pretty simple: well-known brands are associated with high quality, performance, experience and are generally recognizable. As a result, Volkswagen Group retains brands like Audi, Bugatti, Lamborghini, Seat, etc; whereas LVMH holding preserves tens of brands that ultimately compete against each other. The reasons for that are pretty obvious: loads of money are invested into creation of a brand and its support. Many consumers have either acquired or simply know from advertisements that ATI produces graphics cards, whereas Moët et Chandon makes champagne; hence, LVMH will hardly start selling something like "Louis Vuitton Moët Hennesy Brut Imprerial". It is noteworthy that when Rackable acquired SGI in 2009, it actually decided to use SGI name instead of its own due to the value of the brand.

Some History

Found in 1985, Array Technologies Inc. (ATI Technologies later on) has always been associated with graphics processors and multimedia. Moreover, throughout the larger part of its history ATI has been associated with innovations and leading edge performance. ATI introduced numerous "world's first" and thanks to 25 years  history it is recognized as a respectable supplier of graphics adapters. In fact, only in the most recent decade ATI held graphics performance crown in seven years out of ten. Besides, at present the world's most powerful graphics card is ATI Radeon 5970, which greatly attracts gamers and performance-minded users. In Q2 2010 graphics business products group (GPG) of AMD shipped over 50% of the world's discrete GPUs, a clear indicator than ATI is better known on graphics boards market than AMD on microprocessor market.

Established in 1969, Advanced Micro Devices was used to be a second source of chips developed by Intel Corp. and later a maker of inexpensive microprocessors. The situation changed significantly in late 1999 with the introduction of the Athlon chip, but the chipmaker only managed to retain performance leadership in 2000, 2001, 2004, 2005 and 2006. At present AMD is concentrating on platformization of its offerings and cannot offer CPUs that would successfully compete against Intel's top-of-the-range offerings.

All-in-all, ATI label is associated with graphics performance and leadership (both in terms of performance and market share), whereas AMD brand is associated with inexpensive chips found in 19% of today's x86-based systems.

Ramifications of ATI Brand Drop

But there are more issues than just the value of the brand for the particular market. For many years Intel used ATI Radeon graphics boards for public performance measurements, in addition, the large chipmaker helped to advertize Intel- and ATI-based personal computers. In fact, ATI was invited to Intel Developer Forums even after it was acquired by AMD. Will the world's largest chipmaker in some ways help to promote personal computers with "AMD Radeon", thus helping its arch-enemy to gain brand recognition? Will it invite AMD to take part of IDF? At present ATI commands 51.1% of discrete GPU market and 24.5% of all graphics adapters market, thus, ATI Radeon boards are installed into Intel-based systems and GPG's market performance is not limited to market share of AMD platforms. If ATI logo is dropped in favour of AMD's, so will likely market share of the graphics division.

It should be noted that with the dawn of the accelerated processing unit (APU) era it would make sense for AMD to sell them under one single trademark since AMD Fusion 2000 with ATI Radeon HD 5610 graphics core does  not sound easy for average consumers. Still, when selling chipsets AMD barely notes the class of the integrated graphics core and it hardly will in the Fusion era.

For years both AMD and Intel "borrowed" numerous technical and marketing solutions from each other. AMD went platformization route, just like Intel, whereas the latter integrated memory controller into its microprocessors and introduced point-to-point interconnection for multi-socket platforms. Intel is unlikely to drop Havok or McAfee brands despite of the fact that Intel is among the world's most known trademarks. The reason is simple: Intel is not known for cross-platform middleware or antivirus software. Will AMD, which is not known for graphics processors, dare to drop the very well known ATI trademark?

For over a quarter of a century ATI has been a renowned graphics brand, whereas AMD has been known for microprocessors. Although Bentley is owned by Volkswagen Group, the Continental GT is still Bentley Continental GT, not Volkswagen Continental GT or Volkswagen Bentley Continental GT. Rebranding "ATI Radeon" premium graphics label into anything else will require AMD to do something it has never been truly keen of: to greatly alter its advertising and marketing initiatives so that to tell the market that the heritage of ATI is still there and the Radeon GPUs are still premium computer components, not inexpensive solutions with nice price to performance ratio. Perhaps, some things should just remain as they is?

AMD did not comment on the news-story.