AMD aims long-awaited 'Sledgehammer' at Intel
By Elinor Mills Abreu
SAN FRANCISCO, April 21 (Reuters) - Advanced Micro Devices Inc. <AMD.N> on Tuesday will unveil a new microprocessor designed for powerful and pricey corporate servers, part of a bid to crack a lucrative market dominated by its larger rival, Intel Corp. <INTC.O>.
Analysts said AMD's roll-out of its first Opteron processors was crucial to both the company's financial recovery and its effort to force the pace of innovation as both servers and desktop computers shift to faster data-processing speeds.
"For the first time, AMD will be participating in the most attractive segment Intel serves," said Dan Scovel of Needham & Co. "A lot of servers use two to eight processors per system, so this is a gravy train at Intel."
Sunnyvale, California-based AMD posted a $1.3 billion loss last year on revenue of $2.7 billion, one-tenth the annual revenue of Intel.
To compete, AMD has had to ratchet up the innovation with Opteron, which analysts say has a technological edge.
Unlike Intel's comparable Xeon server chips, AMD's new processor, code-named "Sledgehammer," will allow customers to run both the ubiquitous 32-bit applications and the newer, faster 64-bit applications.
Xeon runs only 32-bit applications. Crunching twice as many bits of data, with 64 bits, vastly improves the speed of applications, analysts say.
XEON RIVAL
Xeon dominates the server market, followed by Sparc chips from Sun Microsystems Inc. <SUNW.O>, according to market researcher International Data Corp.
Intel sells 64-bit Itanium processors aimed at more expensive servers -- $25,000 and higher -- but those are "abysmal" at running 32-bit applications, said Nathan Brookwood, an analyst at Insight 64.
AMD is scheduled to release a 64-bit Athlon processor for desktops, code-named "Clawhammer," in September. But Intel, which has about 80 percent of the PC processor market, does not have immediate plans for a competing offering.
With Opteron, AMD could increase its server market share by 2 percentage points a year, from 2 percent in 2002 to about 10 percent over four years, predicted Brookwood of Insight 64.
"That could be worth about $1 billion to AMD in revenues in 2006," he said. "That's assuming they don't get a key server supplier like Hewlett-Packard, IBM or Dell in their corner."
AMD may have one of those already. International Business Machines Corp. <IBM.N> is planning to offer Opteron-based machines to compete with Itanium-based Hewlett-Packard Co. <HPQ.N> servers, an industry source said.
Oracle Corp. <ORCL.O>, meanwhile, said it will be releasing versions of its database, application server and other software for Opteron-based servers.
But AMD has to overcome a reputation for stumbling. Its Athlon 64-bit desktop version has been delayed several times.
"If AMD can execute they could put heat on Intel," said Mark Melenovsky, server analyst at IDC.
PARTNERS KEY
AMD's goal is to be a "material player" in the server market, said Dirk Meyer, senior vice president of AMD's Computation Products Group.
"I wouldn't say this is a bet-the-company type of proposition because, at the end of the day, our success as a company is based first on how successful we are in generating volume and revenue in the highest-volume area, which is the PC side," Meyer said.
Even so, success with 64-bit technology is vital for AMD, according to analysts.
"If they don't make the 64-bit thing work on servers and desktops, then their future is somewhat in doubt in terms of the processor business," said Brookwood.
With Opteron, AMD is raising the microprocessor bar, putting pressure on Intel to boost the performance of products, analysts said.
"These chips are very fast and they will force Intel to be aggressive and to adopt higher clock frequencies in their chips," said Peter Glaskowsky, editor-in-chief of Microprocessor Report.
Opteron may even force Intel to follow AMD's architectural lead in adopting 64-bit extensions for its existing 32-bit x86 chips, analysts said. That scenario is made more likely given that Microsoft Corp. <MSFT.O> has said it does not want to have to write software for two different 64-bit architectures, they said.
"We think this may convince Intel that they need to port 64-bit to their x86 architecture," Glaskowsky said. "Intel would not like to do that, but they may not have a choice."
The new AMD chips will be priced between $283 for Opteron 240, roughly comparable to Xeon 2.6, and $794 for Opteron 244, comparable to Xeon 3.06, AMD said.
04/21/03 18:57 ET
Copyright 2003 Reuters Limited. |
