still more from Cringely on the PBS website; he's on a roll, this time about Athlon....
AUGUST 12, 1999
You Can Run But You Can't Hide
How Intel Has Lost Its Processor Leadership (for Awhile) and Why This Should Make Us Happy
By Robert X. Cringely
This week in San Jose was Linux World, the trade show that really ought to have been free, but wasn't. Big companies, including IBM, Intel, and Oracle, announced their further support for Linux. Linus Thorvalds, the father of Linux, described a development path that will take Linux even more into the face of Microsoft, making the free OS more suitable for mainstream and portable users. Linux is great, really great, but it is important to keep in mind here that the real goal for most of these parties is to make trouble for Microsoft rather than to really promote an alternative platform.
The Arabs say, "The enemy of my enemy is my friend," and this philosophy is continuously in effect in the computer business. It is carried out to such an extent that nearly every company defines itself as part of one or more continuously evolving groups of antagonists. Like gangs, they establish and defend turf. But unlike gangs, some members appear to be on both sides.
Linux bugs the heck out of Microsoft because the free OS is, well, free. Throw in the fact that as a server OS, Linux is better than Microsoft's Windows NT, and Microsoft's frustration becomes even easier to understand. But the technical superiority of Linux and its lower price isn't what attracted IBM, Intel, and Oracle. It's the installed base and, most of all, the chance to get Microsoft on the ropes and giving better deals. Microsoft will do almost ANYTHING to get IBM away from Linux, which is precisely why IBM likes Linux. Intel, on the other hand, likes Linux for an entirely different reason, though still one that has to do with Microsoft. Intel is in the pro-Linux gang because Microsoft is in the pro-AMD gang. The enemy of my enemy.
AMD is Advanced Micro Devices. If we tried to analyze why PCs have become so cheap in the last year, the real reason is AMD. The company makes Pentium-compatible microprocessors that it sells cheaper than comparable Intel parts. Intel meets this competition by lowering prices still further, and at the end of the day, we've got a $500 PC with almost any type of processor you like. But it wouldn't happen without AMD. And AMD couldn't make it happen without Microsoft, because it was Redmond that came up with the idea of declaring AMD processors to be Windows compatible. From the day when Compaq invented the IBM PC clone, the important thing to be, if you weren't IBM, was IBM-compatible. Eventually IBM faltered, and Intel took up the banner, and it was important to be Intel, or Pentium-compatible. Then Microsoft grabbed the standard a couple years ago by declaring AMD's K-5 chip to be "Windows-compatible." Intel didn't like that.
The truth is that being Windows compatible is what really counts, but Intel thought it had an unspoken deal with Microsoft to keep Intel on top and any of those little clone-makers on the bottom. But Microsoft is not to be trusted in these things because it will always put its own interests first.
Fortunately for Intel, AMD (and Cyrix and IDT and the other chip cloners) all aimed at the lower end of the processor market. They couldn't meet Intel's floating-point performance, and they had to discount for the lack of Intel's name, so each of these companies concentrated on pushing down the price of a base system. They pushed so much and so hard that they hardly make any money, too. Cyrix (National Semiconductor) is getting out of the strict Pentium clone business for just this reason. Intel responded by keeping prices high on its fastest chips, especially the ones running in servers and fast workstations. As long as Intel could keep making big bucks on the very high end chips, it could keep AMD poor.
That all ended this week. Quite separate from Linux World, AMD announced its Athlon chip, which it claims is the first AMD chip to take a clear performance lead over what Intel has to offer. And it does. At 650 MHz, Athlon (previously the K-7) is at least 35 percent faster at anything than any Intel processor. Of course, this will drive Andy Grove crazy because it puts Intel in the position of either throwing away profits by discounting to maintain market share or allowing AMD to finally become prosperous.
A prosperous AMD is scary for Intel, because it looks like it will be at least a year before Intel can regain the performance lead with its 64-bit Merced processor. That's IF Merced actually appears on time (in this case "on time" means two years later than first announced). Intel has in the past been able to count on AMD production troubles, but in the case of Athlon, IBM has stepped in to ensure high production volumes. This works to help IBM get the best prices on Intel chips. And since Athlon, while still cheaper than the Intel Xeon chips it blows away, is the most expensive (and profitable) chip in AMD history, there will be plenty of money for the company to throw at new versions. Within a year, we'll see one gigahertz Athlons and Intel will be gigahurting.
All of this comes at exactly the right time, too. The world is turning to server-side applications, and Athon will drive down the cost of those powerful servers, no matter what chip they use. Higher-end systems will start to drop in price just as the entry-level systems have before. Profits will be thinner at Intel, but in the long run, the company will make up for it in new products and higher volumes. Intel really ought to thank AMD, but of course that will never happen.
For the rest of us it means faster, cheaper computing. Just think what it will do to Quake!
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