State of Technology: AMD Making Innovative Inroads

Although Intel has long been considered "the name" in server-based chips, the field is by no means clear of competitors. In fact, some say AMD, with its dual-core chips, will begin to pull ahead in the server-chips horse race.

Although far from being neck and neck with Intel in terms of market share, AMD is challenging its rival in innovation and technical advancement, analysts say.

"Intel has pretty much dominated the computing environment, but it made some decisions that cramped its progress," says Martin Reynolds, a fellow at research firm Gartner. "It hasn't been able to handle the needed performance increases."

Currently, AMD's biggest advantage is its ability to deliver dual-core technology.

"Up until mid-2004, Intel was still charging down the line of high-performance, single-core technologies, but they ran up against the physics brick wall," says In-Stat principal analyst Jim McGregor, adding that AMD introduced its dual-core technology last April. "Intel is still behind the curve a little and won't have a compelling solution until [later in] 2006."

Rival AMD's chips are designed for speed. "AMD's Opteron platform, which provides an integrated memory controller and a tight link with sister processors, lends itself to I/O and memory-intensive tasks," says Shane Rau, program manager of PC semiconductors at research firm IDC.

Currently, AMD and Intel have staked out separate strategies. Intel's is a two-pronged one, McGregor says. "They have aimed the Itanium at the high-performance computing market and x86 at volume sales. Meanwhile, AMD hasn't gone after the high-end market, which is typically dominated by RISC processors, and has targeted volume servers instead."

Despite compelling technology on both sides, most integrators say they remain loyal to Intel. "All of the solutions we recommend for the Windows environment are Intel-based," says Reza Zarafshar, president and CEO of Advanced Computer Concepts in Arlington, Va.

In fact, nearly three-quarters of integrators say they're planning to sell Intel-based, entry-level servers, according to VARBusiness' State of Technology report. Sixty percent plan to push midrange Intel-based servers, 42 percent say they have plans to sell entry-level AMD-based servers, and 38 percent will sell AMD midrange servers.

"There are enough things changing that if you have something that works, you stay with it," says Robert Green, president of Crossroads Business Solutions, an Indianapolis-based systems integrator. "For a standard infrastructure server, there just isn't that great a demand on the processor."

But AMD is gaining ground in some areas. VAR respondents to our survey said entry-level Intel-based servers accounted for 42 percent of their 2005 revenue. By comparison, they expect that figure to drop by 4 percent in 2006, on the average.

Intel will hold its ground in high-end server products, accounting for roughly 8 percent of server revenue and 19 percent of midrange-product revenue.

In part, server makers are tipping the odds in favor of their favorite processor platforms, analysts say. "It's pretty clear that among the OEMs, Sun Microsystems and Hewlett-Packard are driving Opteron volume [for AMD]," Rau says. "There are significant Opteron [volumes] going into the channel."

One saving grace for Intel is its exclusive relationship with Dell, which few expect to reach an agreement with AMD. "Dell doesn't sell AMD," Reynolds says. "If they were going to flip to AMD, it would have happened a year ago."