Advanced Micro Devices bid to acquire Canadian based ATI Technologies is a risky strategy because both companies are facing the same issue: big, pricey, client-side chips in PCs and other devices are becoming less important than server-side chips.

Wyse Technology, for example, maker of thin computing systems, has demonstrated an inexpensive six-core ARM processor with graphics, video, sound capabilities capable of handling 32-video streams simultaneously. A chip like that can be embedded inside a monitor, a keyboard, anywhere.

And with thin computing systems, you don't need local hard drives, DRAM or Flash memory. It becomes a highly sophisticated computing platform with very inexpensive clients.

This is the trend in today's world, where there is less and less need for a big general purpose X86 microprocessor plus a highly sophisticated graphics co-processor, sitting inside a PC. Wyse's solution is much, much, cheaper and can provide the same user experience as a fully loaded Windows XP PC. The applications are run on a server and the client device renders the graphics, video, and sound.

And as we move inexorably closer to an always-connected world, the thin computing model that Wyse and others advocate, becomes more practical and more cost effective. In addition, a thin computing architecture provides much more protection against viruses, spyware, and other nastyware, because the user experience is completely controlled from a central location.

Intel (an SVW sponsor) has already begun moving away from the client side of devices with its recent sale of part of its communications chip business. Intel knows that the money is in the server, that's the sweet spot. And yes, the PC market won't change overnight into a thin computing model but that is definitely where the world is heading, especially in fast growing developing regions.

And as for Nvidia, ATI's largest competitor, staying independent might be the best strategy. Nvidia can move into the thin computing markets without the need for a microprocessor partner because client-side thin computing doesn't require an X86 processor.

The AMD/ATI merger doesn't do much to address this trend towards thin computing, it is more to do with two companies facing the same issue while neither has a clear solution.