Not being a customer of any products that use Geode I see this is a necessary path forward for AMD as they try and reduce their product footprint so as to be able to operate within a viably profitable market segment.
Via had to downsize their aspirations too, and Apple has no intention of becoming a 20%+ marketshare champion (the margins for their products could never be supported by 20% of the market).
I believe AMD must reduce their market share aspirations and shrink the cost-structure (headcount and fixed assets) so that they can begin to operate within something that is profitable.
If it means abandoning the desktop CPU market and only selling opterons then so be it (not that this is what I am espousing, only AMD would know what made sense as they have the numbers needed to do the analysis justice). But clearly what they have been attempting to do for the past 20yrs is not and has not been working.