Chip analyst Linley Gwennap of the Linley Group thinks AMD is wasting its time. Already, the leading server makers have committed to Itanium. That means they're spending millions to design Itanium-based systems and compatible software. The first-generation Itanium hasn't been a hit with end users, but at least Intel has a finished product to offer. The first Hammer chip is over a year away.
"It's about two or three years too late" for Hammer, says Gwennap. "The game's over."
As for Clawhammer, Intel's Otellini says it's a solution to a problem nobody's got.
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December 17, 2001 08:23
Advanced Micro Devices-Intel Rivalry Gets Ferocious as Chip Business Recovers
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By Hiawatha Bray, The Boston Globe
Dec. 17--CUPERTINO, Calif.--The headquarters of Intel Corp. and Advanced Micro Devices Inc. are practically next-door neighbors, close enough to drop by and borrow a cup of silicon.
Or arsenic, for that matter. There's no love lost between these titans of technology. They're ferocious competitors in one of the world's most ferociously competitive markets. A yearlong slump in the computer business has only stoked the flames.
Now there are hints of recovery in the air. Sales of cheap PCs remain unexpectedly strong, leading both companies to boost their sales and revenue forecasts. But for these two leading chipmakers, a few rays of economic sunshine merely signal fair weather for battle.
Shuttling between Intel in Santa Clara and AMD in Sunnyvale is like passing through a portal between two parallel universes. In the land of AMD, you find a company that's steadily gaining market share with its powerful Athlon processors. Indeed, Ben Anixter, AMD's vice president of external affairs, points to new data from Gartner Dataquest showing that 27 percent of desktop PCs sold in the United States in the third quarter contained Athlon chips. Meanwhile, AMD is preparing a new line of chips, the Hammer series, to challenge Intel's nascent Itanium processors.
Both Hammer and Itanium are designed to process data 64 bits at a time, compared to today's 32-bit processors. The result is an ability to handle vastly larger databases. But the Itanium won't be able to run today's 32-bit software without special emulation programs that slow down performance. Hammer will run 32-bit programs directly, as well as 64-bit software.
Anixter is convinced his firm has Intel directly in its crosshairs. "AMD's their worst nightmare," he says.
But for a man having bad dreams, Paul Otellini seems unusually well-rested. Otellini, general manager of Intel's Architecture Group, brushes aside AMD's assertions. The latest Pentium 4 chips run at higher speeds than the fastest Athlons, he notes, forcing AMD to adopt a new chip numbering scheme in an effort to claim its chips are as good as Pentiums.
Otellini flatly rejects AMD's market share claims, insisting that Intel has actually gained share over AMD this year. Gartner Dataquest says that Intel went from 82 percent of the PC processor market a year ago to 75 percent today, but Otellini doesn't buy it.
"Our overall share has begun with an 8 for a long time, and it still begins with an 8," he says.
As for Hammer, Otellini thinks AMD's plan to run 32-bit and 64-bit code on the same chip is a waste of time and silicon. There are no consumer or business desktop programs using 64-bit code, so backward compatibility with 32-bit software isn't that important. Itanium, he says, is a pure 64-bit product aimed at the stratosphere of high-end computing, and he expects it to dominate the field.
Meanwhile, the Pentium series will continue to ramp up. Intel thinks it can squeeze out speeds of up to 10 gigahertz using its current architecture.
Not that Intel hasn't had its share of problems. Even Otellini admits the company blundered early on in the development of the Pentium 4. The new chip required a new motherboard design for computers that would use it. Intel decided that Pentium 4 motherboards would work only with a new kind of memory chip called RDRAM, invented by a firm called Rambus.
"RDRAM was a catastrophe for them," says AMD's Anixter.
Too strong a word, perhaps, but Intel definitely came to regret its decision. RDRAM was much more expensive than standard memory, and computer makers, faced with brutal price competition, demanded a way to use cheaper standard RAM chips. AMD was ready; its Athlons use the standard RAM and a more advanced chip called DDR RAM. Intel has been forced to play catchup, designing motherboards that let Pentium 4s work with cheaper RAM.
Otellini concedes that Intel was blindsided by the high cost of RDRAM, but adds, "What this business is all about is adapting to the market: ... Did we react and take advantage of where the market was going? Absolutely." Indeed, Pentium 4 machines with lower-end memory chips are plentiful now, and priced below $700.
Meanwhile, the Pentium 4 chips just keep getting faster, with clock speeds of up to two gigahertz. It's sweet revenge for Intel, which had to watch helplessly last year as AMD was the first to offer a one-gigahertz PC processor. Now AMD lags behind Intel.
No matter, says Anixter. His company says that differences in the basic design of the Athlon mean that it computes as fast or faster as any Pentium, even at a slower clock speed. The company has launched a new marketing campaign and even a new chip numbering scheme to convince consumers of this. For instance, the Athlon XP 1800+ is actually running at 1.5 gigahertz. But AMD insists that the 1800+ far outperforms the 1.8-gigahertz Pentium 4. He points to reviews from independent experts, like the respected technology Web site Tom's Hardware Guide, which have indeed found that Athlons usually outperform Pentiums.
"We really have truth in advertising on our side," says Anixter. And he says consumers are buying AMD's argument and its chips. "Our sales are going through the roof."
More important, AMD isn't being forced to cut its chip prices to keep the product moving. Earlier this year, Intel unleashed savage price cuts in an effort to take back market share from AMD. But in recent weeks, microprocessor pricing has stabilized, as unit sales have been stronger than expected.
With its faster Pentiums already priced relatively low, one might expect that AMD would have to keep cutting the price of its "slower" Athlons. It's not happening, according to chip industry analyst Nathan Brookwood of Insight 64 in Saratoga, Calif.
"Pricing has stabilized," says Brookwood, who notes that AMD is selling its 1.5-gigahertz Athlon XP 1800+ for $223, only slightly less than Intel's "true" 1.8-gigahertz chip. That suggests to Brookwood that consumers are buying into AMD's speed rating scheme. It also helps explain why AMD recently notified investors that revenues and unit sales will exceed its earlier estimates for the fourth quarter.
Still, AMD suffers from a crucial weakness. Its chipmaking plant in Dresden, Germany, is state-of-the-art, capable of producing up to 50 million Athlons a year. But this is the only Athlon factory on earth. Meanwhile, Intel has a global network of chip plants to provide an ample supply of Pentiums to every computer maker on the planet.
At $2 billion apiece for new chip factories, AMD can't afford to match Intel's production capacity. So when the Dresden plant hits full capacity, the company will start farming out production to "foundries," chipmakers for hire that will produce silicon to AMD's specifications.
"It gives us another degree of freedom," says Anixter. "This is our fire insurance."
In the meantime, AMD is betting its future on the Hammer architecture, due for a 2003 rollout. There'll be a consumer version called Clawhammer, capable of running 64-bit code. Anixter says it'll also run today's 32-bit programs faster than anything now available.
Another version, Sledgehammer, will be aimed directly at the same high-end server markets as Intel's.
Brookwood has studied preliminary design data on the Hammer series, and thinks it'll live up to AMD's claims.
"They can take the X86 [32-bit] code and run it on Hammer, and it'll run like a bat out of hell," he says.
But Brookwood concedes that AMD faces an uphill fight trying to find a major server vendor willing to use the processor in its high-end machines.
"Last time I looked, most of those companies, with the exception of Sun, were pretty well locked up in the Intel camp," he says. And Sun makes its own 64-bit chips. So AMD will have to fight its way into the 64-bit arena before it can even start to compete.
Chip analyst Linley Gwennap of the Linley Group thinks AMD is wasting its time. Already, the leading server makers have committed to Itanium. That means they're spending millions to design Itanium-based systems and compatible software. The first-generation Itanium hasn't been a hit with end users, but at least Intel has a finished product to offer. The first Hammer chip is over a year away.
"It's about two or three years too late" for Hammer, says Gwennap. "The game's over."
As for Clawhammer, Intel's Otellini says it's a solution to a problem nobody's got.
"We do not see the need for 64 bits on the desktop." But Anixter says that computer makers, fearful of being at Intel's mercy, are eager for a 64-bit alternative.
"People don't like to deal with monopolies. Customers don't like dealing with Intel," Anixter says. "Customers love to work with us."
AMD is betting hundreds of millions that it can keep gaining on Intel, which is spending billions to fend off its rival. All that cash and geek machismo make the headquarters of AMD and Intel the roughest neighborhood in Silicon Valley.
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(c) 2001, The Boston Globe. Distributed by Knight Ridder/Tribune Business News. INTC, AMD, SUNW, |
