AMD's financial model and structure is not tuned for this strategy. That market isn't large enough to sustain the current company unless they more than double their share in it. The last time I calculated the mix data, which was for the
Q1 Warning Analysis, server gross profit was between 35-45% of the company's overall gross profits.
If AMD is losing money right now, I'm not really sure how they'd stop losing money by halving their gross profits? Now, of course, their goal isn't to completely lose their other markets, but if you focus too much on servers you cannot expect to be as competitive as Intel in your other markets, and then your ASPs, your margins and/or your volume will be hurt.
I do agree that AMD wants to create niches for itself though. HPC isn't the only one, however, I think, although it certainly is very significant. Energy-efficient low/mid-end laptops (see: Fusion) is another market they'd like to be good in, and so are "commodity consumer desktops" where the GPU and video decoding might matter more than your CPU (but you can bundle a CPU anyway!)
I really, really hope for their own sake that they are not overestimating the size of these markets, however. It's nice to think that you can be good in some markets, but when you have high expenses because of R&D, fabs and many other things... You need to be good in many markets, and in very large volumes. That's a bit like if NVIDIA said they didn't care about anything but the $399+ market. That's great, they'll get $50M of guaranteed revenue a quarter. So, errr, how do you fund R&D with that?
AMD said they will restructure and that they have a strategy to return to profitability. I sure as hell hope for the sake of the company and of the employees that work there that their 'strategy' is not just to become small and nimble enough again to be able to remain profitable with smaller markets. I still have some faith in AMD's management, so errr, please don't **** up guys?