Disclaimer: This article is based almost entirely on speculation and forward-looking statements released by the companies in mention. The thoughts, opinions, and conclusions presented in this article do not necessarily represent the Gotfrag Hardware organization or uphold the values of reality. But hey, it's ZeGermans, right?

So AMD has bought ATI. We’ve all been hearing the rumors for the last month and now it’s been confirmed. In a deal worth 5.4 Billion dollars, AMD has brought the Canadian manufacturer down to America, at least management-wise. As gamers, our computers rely on two basic computer parts more than anything else: processors and graphics cards. These two add up to the “big 4” of gaming equipment: AMD and Intel (processors) and ATI and NVIDIA (graphics cards). So what happens when one of the two processor manufacturers buys one of the two graphics card manufacturers? We hope to examine some of the implications of this deal in this article. We’ll look at how this merger affects each of the big 4 companies, as well as give a bit of a prediction of the future.

AMD
Starting in alphabetical order, we’ll look at the guys who propagated this entire deal, Advanced Micro Devices. Their motivations for this are twofold. The obvious one is to expand their own market share, especially among gamers who might be swayed by the new, superior core 2 chips from Intel. The other is to try to undercut Intel itself. Since the first solid benchmarks of Core 2 at the spring Intel Developer Forum (IDF), AMD knew they were in trouble. They had enjoyed the top of the performance charts for two years, but it seemed like it was about to come crashing down. With their K8L designs delayed until late 2007, their only real choice was to cut the price of their processors to make them competitive again. ATI has, in recent years, been a manufacturer of solid, low-end chipsets for Intel with fairly good integrated graphics. Also, any look at the mid-range systems from a major manufacturer that stocks AMD chips, like HP or eMachine, will tell you that NVIDIA is raking in the money with their GeForce 6100 chipset and its integrated graphics. Given this information, and AMD’s decision to remain the budget processor for the time being, AMD will have the ability to manufacturer their own chipsets with good integrated graphics to compete with the GeFroce 6100. With ATI’s graphical know-how, AMD chipset-based boards will make them quite a bit of money. Chipset sales hovered around $7 billion last year, with AMD having almost no presence in the desktop market. If they could corner the majority of the chipset market for their own chips, they’d potentially be able to pay off their ATI investment in 2-3 years.

Though it’s not nearly as lucrative as the low-end IGP market, the enthusiast market has always interested AMD. Unfortunately, they no longer have the best chip on the market, nor the best over clocker. But now they have what Intel doesn’t have: their own in-house graphics card manufacturer. With their new graphics division, AMD is capable of creating entire computer platforms for enthusiasts, optimized to work with their graphics cards. Everything works better when it’s all designed in-house, so we’d expect such an enthusiast platform to outperform a similar setup with an NVIDIA card.

ATI
Well, ATI is no more. Well, at least, not on paper. We have no idea if they’ll continue the name, or if we’re going to be buying an AMD R600. But what will the canuck graphics guys be doing with their new boss? Making very powerful new GPUs in every price range. Fanboy or not, it’s hard not to admit that ATI has been fighting a bit of a losing battle against NVIDIA this year. Nvidia’s mid-range and budget cards mop the floor with ATI’s, their high ends are cheaper, and ATI doesn’t have anything close to the power of the 7950GX2. Additionally, their multi-card solution is way behind SLI. AMD, according to Yahoo Finance, is worth just over $7 billion dollars. AMD brings a lot of assets and knowhow with chipsets to the table. With these advantages, ATI can hope to regain the graphics crown and get a decisive victory over their archrival, NVIDIA.

As far as the low end, integrated graphics go, ATI does well for itself. However, the GeForce 6100 outperforms it. The real money is in the low end market, because that’s all that the major manufacturers care about. If they see two motherboards, same price, but one performs better, they’ll go with that one. That’s why you hardly see any XPRESS 200-based AMD computers sold by the big boys. The same idea applies as above. With much stronger financial backing, ATi will have the ability to leapfrog NVIDIA in this segment and get money from the real cash cow.