AMD in 2005: Coming Out of Intel's Shadow?
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David vs Goliath Contd...
The microprocessor market was characterized by
short product life cycles and migration to ever-higher performance
microprocessors. To compete successfully against Intel, AMD realized the
need to make the transition to new process technologies at a rapid pace
and offer higher-performance microprocessors in significantly greater
volumes. |
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Till then, Intel had relied on what was termed the x-86 architecture. These
chips processed data in chunks of 32-bits of information. Itanium would process
the data in chunks of 64-bits at a time. Intel believed that this new
architecture would be a groundbreaking innovation and pave the way for Intel's
domination. But Intel's folly, according to many analysts, was to create Itanium
in such a way that software that ran using the new chip had to be re-written.
While Itanium promised much faster processing prowess than existing chips, the
difficulties associated with software-migration put-off many potential
customers.
AMD, which won a lengthy legal dispute with Intel in the 1990s to make
microprocessors in the x-86 mode, realized that if Intel moved into a new
architecture, it would effectively create a new industry and eventually dominate
it. AMD moved quickly to create its own 64-bit microprocessor in 1998. AMD
realized that the need of the hour was to build a better microprocessor than
Intel had (Itanium) and one that did not require software upgradation. Founder
Sanders made it clear to his senior managers that AMD's very future depended on
Opteron.
New Optimism
AMD believed that Opteron's USP was not requiring any software upgrades when
moving from 32-bit to 64-bit architectures. This feature would make Opteron much
more user-friendly than its rival Itanium, which required users to re-write
existing 32-bit software code during migration.
By 2004, Opteron was receiving favorable reviews from manufacturers. The company
grabbed 7% of the low-end server market, up from almost nothing a few years
back. It accounted for 50% of the US retail store sales for desktop PCs in
August 2004. Even as Intel announced lower than expected sales for 2004 due to
decreasing demand, AMD did not see any indication of a slowdown. Many companies
seemed to have realized the benefit of not having to re-write their code.
Microsoft had committed itself to making a version of its Windows Server and
Windows XP desktop software for the new AMD chips, though the software giant had
not indicated a release date. Microsoft believed that many of its customers were
interested in the AMD implementation. When Microsoft ran applications written
for 32-bit chips on an Opteron server loaded with the new Windows 64-bit
operating system, the programs performed considerably better than on 32-bit
Windows. Microsoft was not willing to place all its bets just on Itanium 2.
Besides, AMD had been much faster in launching the consumer version of Opteron
chips than Intel.
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