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China’s console policy should help AMD

by on12 March 2015

In the long run at least

China’s decision to lift an age old ban on the sale of game consoles is bound to benefit AMD in the long run. 

The vast Chinese market is now open to Microsoft and Sony consoles, all of which are powered by AMD silicon.

AMD’s post-PC play

As Forbes points out, one of AMD’s biggest restructuring goals was to boost revenue beyond the PC market. AMD is trying to generate 40%-50% of its revenue from non-PC makers, namely from semi-custom parts and embedded solutions. 

The Chinese console market could be AMD’s for the taking. PriceWaterhouseCoopers puts the value of the console market in China at $10 billion.

However, while it may sound like a lot, it really isn’t. The Xbox One started shipping a few months ago, but sales have been slow and there was no shortage of consumer criticism. Also, AMD’s share of the $10 billion pot is relatively small.

Is the Chinese gaming market changing?

As a result of the 14-year console ban, a generation of Chinese gamers grew up without consoles. They used PCs – and they still do.

Console revenues are still negligible, and we have yet to see whether or not they will pick up. Sony and Nintendo are about to enter the Chinese market as well. The latter will apparently do it with a new console specifically designed for China. Sony will of course rely on the PS4.

The problem is disposable income. While it’s a vast market, the average Chinese gamer simply does not have a lot of cash to throw around. Most of them would have to spend almost their entire monthly wage to buy a console, not to mention the added expense of getting games and accessories. However, slow content sales should be Sony's and Microsoft's problem, not AMD's.

Things are changing for the better and a vast new market is opening to AMD, Sony, Microsoft and Nintendo. It will take a while, but the potential upside is there – and it’s huge.

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