AMD leaps back into the game with Puma

Watch out, Intel: Advanced Micro Devices has a laptop with turbo power.

In essence that's what the chipmaker has created in its Puma chip platform, which it plans to unveil Wednesday. On regular settings, a Puma-powered laptop conserves battery life and does a so-so job handling complex graphics. Switch to turbo and it's a powerhouse that effortlessly renders 3D games and plays HD video.

It's a neat trick that AMD (AMD) hopes will remind us of its potential, and take our focus off of its recent screw-ups. The mistakes were big. Last year, in an effort to leapfrog rivals Intel (INTC) and Nvidia (NVDA), AMD gambled on ambitious chip designs and then blew its deadlines for delivering the goods. Profits evaporated and the stock plummeted. Now AMD is eager to show it can handle the basics: Regaining profitability, keeping its promises and churning out smart ideas like Puma.

What's so special about Puma? It mixes two technologies that have never been combined this way before: Integrated and discrete graphics. Integrated graphics, the lower-power and lower-cost method, shoves mediocre graphics functions onto main computer chip. Discrete graphics chips provide high-end graphics performance. Normally a laptop uses one method or the other, but because AMD owns graphics chipmaker ATI, it was able to blend the two. So in turbo mode, Puma laptops turn on integrated and discrete graphics at the same time for an extra performance boost.

Based on early signs, Puma should be a success. Major laptop makers including Hewlett-Packard (HPQ), Dell (DELL), Acer and Toshiba have already agreed to use it, and analysts like the design. "It's the first time AMD has really gone out of its way to optimize a product for the mobile environment," notes chip analyst Nathan Brookwood of Insight 64. "The new chip uses less power, and in mobile that means improved battery life and in many cases improved performance. What's not to like?"

Is that praise for the downtrodden AMD? Yep. Despite the hand-wringing on Wall Street over the stock's fall, the company itself is far from dead. (My colleague David Kirkpatrick pointed this out in an April column.) In fact, conditions are ripe for AMD to make a comeback – as long as management avoids a repeat of last year's fiascos.

And of course, that's what they are promising to do. Executives note that the late Barcelona chip that ruined 2007 is now shipping to server makers such as IBM (IBM), HP and Dell, which seem happy so far. Graphics unit ATI has recovered from last year's setbacks, and is delivering products that match up to Nvidia's. And now there's Puma. Looking ahead to 2009, executives say AMD will offer chips that bring more of its graphics expertise into everyday computers, resulting in more Puma-like products that competitors can't match.

Meanwhile, AMD is quietly gloating over Intel's recent mistakes. Intel's own next-generation laptop chip, code-named Montevina, should be arriving soon but is late because of problems with its graphics and wireless features. If the delays drag into the back-to-school buying season, AMD could benefit by picking up orders Intel can't fill. (Also, AMD is arguing in various countries that Intel has illegally used its dominance to bully customers out of buying from rivals. If regulators order Intel to pay damages and change its behavior, that could give AMD's fortunes a boost.)

But don't expect a quick turnaround. Even if everything lines up for AMD, it won't soon regain the Wall Street clout it enjoyed a couple of years ago. Intel is better at marketing than AMD, and has more money to do it – so even if AMD's new products are good, there's no guarantee that the company will be able to quickly lure away Intel customers.

That's why it's good to see that AMD is preparing for the long haul. Employees I've spoken with seem genuinely confident in the company's strategy, and CEO-in-waiting Dirk Meyer has brought in new leadership and refocused the company's attention on getting projects completed on time.

So even though AMD's struggling, Intel had better watch its back – AMD could switch into turbo mode at any moment.