Jakub concludes

End-users

We, as consumers, will lose out in the short- and medium-term on this. The deal will create friction between AMD and NVIDIA, the former ATI and Intel, and possibly seriously weaken NVIDIA - both relatively and factually - unless NVIDIA manages to keep up with the extra resources available to ATI, or AMD abandons discrete graphics. AMD's acquisition of ATI has changed the market from two pairs of vicious competitors slugging it out (a relatively stable situation, all things considered) to a triumvirate - and one that is remarkably unstable at that. Intel doesn't need ATI, but it benefited from its presence. NVIDIA doesn't need AMD, but life without AMD would be tougher for the company. There is going to be friction, conflict, lawsuits, rumors of mergers, rumors of take-overs...the next few years will be very interesting.

NVIDIA especially may become a source of instability, as the smallest company in the triumvirate. It has gone from having a moderate advantage over ATI to suddenly facing a larger, stronger opponent - and one that it needs as a market. ATI let itself be acquired by AMD, the weaker of the two processor giants, but it will have a greater role in that company. NVIDIA faces the prospect of becoming Intel's snack, and NVIDIA will be a very small part of a company that is so big that it survived its Pentium 4 debacle only because it was too big to shut down Pentium IIIs in all segments. Moreover, Intel's track record with graphics is spotty at best. For the ambitious executives at NVIDIA, being reliant on Intel as they have become now is no doubt distasteful, but the prospect of being acquired may be horrifying. Consider that ATI had a market cap of $6B to AMD's $8.5B when the deal was announced (all figures approximate). NVIDIA is worth about $7B, while Intel is $102B. This gives you an idea of the disparity NVIDIA is now facing both against the combined AMD/ATI, and in any potential deals with Intel.

In the short run, things won't change much. Intel may move to deny ATI the right to create chipsets for Intel processors, but that is minor. NVIDIA will continue to produce nForce for AMD, as well as graphics cards. Where things will likely become ugly for consumers is 2-5 years from now. Will NVIDIA be an independent company, will it still exist? If so, will they continue AMD support? Will AMD continue to compete on the high-end with NVIDIA in graphics? Will Intel owners find that AMD/ATI refuses to support their graphics solutions for Intel systems? We will find our choices curtailed. It is possible that the combined AMD/ATI might fail, which would leave NVIDIA alone in the graphics market, and possibly only Intel alive for CPUs.

In the long run, this deal should help AMD to compete and survive in theory. I remember well the days when Intel charged thousands for a top-of-the-line processor that wasn't an exclusive like an Extreme Edition or FX-series. I'm sure we've all noticed that AMD processor prices have been rising steadily over the past two years, especially on the high end, so let's not hold any illusions that AMD wouldn't take advantage of a monopoly position in the market either. The worst thing that can happen to the industry is another monopoly or mid-90s like dominance such as Intel had. So in that way, we consumers do benefit from this deal, but we will likely feel some pain for a few years as things sort themselves out.

AMD is, with this purchase, a $15B company that is facing off against one hundred billion dollars worth of Intel. When you're that small and want to compete, you need to think big, be bold, be aggressive, and take risks. AMD could have gotten a chipset and Centrino-like platform by acquiring SiS, but SiS doesn’t carry the portfolio that ATI has. AMD is going to continue to compete to their utmost in both graphics and CPUs, while developing their next-generation product, a pure-AMD PC. One that is free of all the quirks and bugs current PCs have. If the best processor (or 95% as good) is AMD, and the best graphics card (or 95% as good) is AMD, and the best motherboard (or 95% as good) is AMD, and they all work flawlessly together (unlike the myriad drivers, BIOSes and other hiccups we have now), then developers will start making software and games that "work best on AMD" and eventually "only supported for 100% AMD PCs". The seductive beauty of all this is that it will be a whole line of products - from integrated low-end to flagship - all AMD.

Of course, this is grand vision is all based on AMD executing. They took a huge risk, a massive financial gamble, so no plan any less ambitious than this is worth staking the company on, and it doesn't make sense to acquire ATI for something lesser, when a SiS would do.

Brandon disagrees strongly with me on several points, and provides his commentary on the next page.