Within the server market, Intel looks to gain at AMD's expense.
Intel is poised to regain some of its long-lost market share in the first
part of 2008, thanks to its line of microprocessors for servers and with
Advanced Micro Devices still stumbling to regain its footing with its quad-core
Intel detailed its 2008 first-quarter financial earnings April 15,
giant's overall numbers were in line with Wall Street expectations, while the
company showed that the demand for its servers and notebooks remained strong
despite growing concerns about the U.S.
In a call with analysts, CEO Paul
Otellini declined to discuss specific market share numbers compared with AMD
but noted that there was "good news" in relation to the company's
processors, especially its line of 45-nanometer chips and its
"Caneland" platform for multiprocessor systems.
Otellini also said Intel had reaped benefits from selling chips to companies
such as Google and Amazon.com that are building large server farms or delving
into cloud computing.
While specific reports on market share have not been released just yet-Intel
controlled about 76 percent of unit shipments in the fourth quarter of 2007,
while AMD held about 23 percent, according
to IDC-analysts said they believe that Intel
is benefiting from several factors. The most obvious is that its main
competitor, AMD, has continued to struggle
financially after acquiring ATI Technologies
(Intel's finances have remained upbeat).
With this already heavy burden, AMD then
did not bring its quad-core Opteron chip to market on time in late 2007 due to
a technical glitch. The
result is that AMD is expected to post poor first-quarter numbers on April 17,
with some Wall Street estimates calling for a net loss of $263 million or 42
cents a share.
The one place the Opteron chip was expected to compete head-to-head with
Intel's Xeon processor was within the multiprocessor server space. This was the
area Otellini highlighted during his call with analysts.
"AMD is addressing this, but when
they had the ATI acquisition they had a lot
to digest and I think they are recognizing that and are starting to come
back," said Leslie Fiering, an analyst with Gartner. "It will be
interesting to see what happens through the rest of the year, but at the moment
the product lineup favors Intel."
For several years, AMD has successfully
argued that the chip technology used for its Opteron processors was
superior to Intel's offerings. This helped the smaller chip maker gain
market share within enterprise data centers, which benefited the company's entire
To counter this, Intel pushed quad-core Xeon processors into the market
first and then made the jump to 45-nanometer manufacturing, which gave its
chips an additional performance boost. Later in 2008, when Intel introduces its
"Nehalem" microarchitecture, the company will offer an integrated
memory controller for the first time, erasing another technological advantage
Mike Feibus, founder of TechKnowledge Strategies, said the server market is
slow to turn around, but it now seems that Intel is starting to reap the
benefits of its new designs and products. AMD,
on the other hand, is
only now bringing its quad-core Opteron to the marketplace.
"Technology wins in the server market," Feibus said. "That's
how AMD broke into the server market-because
they offered such an advantage when they came out with [the original] Opteron
that companies that stuck with Intel for too long really got burned. So, those
days are over. It drives home the point that the decisions made [in the
server market] are driven by performance and Intel has addressed its
It will take some time for AMD to
gain back market share and show that its Opteron chips can still compete with
what Intel has to offer, Feibus said. After AMD
gets past its first-quarter financial problems, it will have a chance to show
off some new technology when it switches to its own 45-nanometer process later