IBM to Use More Opteron Chips in Servers

The systems maker and AMD are expected to announce an expanded relationship shortly.

IBM was the first top-tier OEM to embrace Advanced Micro Devices Opteron processor when the chip maker unveiled its new 64-bit x86 processor in 2003.

Since then, the Armonk, N.Y., company has used Opteron chips only in a few systems and blades targeted at the high-performance computing space, while other rivals—most notably Hewlett-Packard and Sun Microsystems—have enthusiastically adopted the technology, rolling out complete lines of AMD-based servers.

The situation apparently is about to change. IBM is expected to announce at an event in New York on Aug. 1 that it is expanding the use of Opteron in its server line, according to several sources. Neither IBM nor AMD spokespeople would comment on the issue.

The move would bring closer two companies that have had an increasingly tight relationship over the past three years. Not only was IBM at the Opteron launch, but the two companies that same year entered into a chip-making partnership.

/zimages/4/28571.gifClick here to read more about AMDs latest releases in the Opteron line.

Further strengthening that relationship is a good move for both IBM and AMD, said Rob Enderle, an analyst with the Enderle Group, in San Jose, Calif. For IBM, it makes sense to use products from a company that it has such a strong partnership with.

In addition, given the competitive advantage that widespread use of Opteron has given both HP and Sun, not making more use of AMD technology earlier could have been a mistake for IBM. The company has focused much of its energies on its own technology, but predominantly has used Intel in its x86 offerings, Enderle said.

"In hindsight, particularly given as popular as AMD has been, it was weird [for IBM] to miss this," Enderle said.

Developing a full Opteron-based line of servers has helped HP, of Palo Alto, Calif., gain market share in the x86 space. At the same time, Sun, based in Santa Clara, Calif., has been able to use its Opteron systems to not only protect the market share it has, but also to begin to reach beyond its traditional SPARC customer base, he said.

For AMD, the expanded IBM relationship will be the latest in a string of successes over the past three years, during which the Sunnyvale, Calif., company has been able to chip away at rival Intels market dominance—particularly in the server space—and grab a leadership role in such areas as 64-bit computing, multicore technology in the x86 space and energy efficiency in the data center.

In May, AMD won another major coup when longtime Intel partner Dell announced it will roll out an Opteron-based server by the end of 2006. Enderle said the Round Rock, Texas, systems maker made a smart decision, despite the fact that during the second half of the year, Intel will roll out more chips that close the performance and energy-efficiency gap with AMD.

"The lesson is to pick whatever technology vendor is offering the best product at the time," he said.

Both Intel and AMD are working to push their dual-core technology. Intel is in the midst of what Pat Gelsinger, senior vice president and general manager of the companys Digital Enterprise Group, calls the "summer of servers," having already rolled out two new dual-core Xeon DP chips—including the much-touted 5100 series "Woodcrest" processor—and having unveiled on July 18 the first dual-core Itanium 2 chips, the 9000 series, formerly dubbed "Montecito."

Intel is planning to release the next dual-core Xeon MP chip, code-named Tulsa, in the third quarter. Meanwhile, AMD on Aug. 15 will launch the next-generation "Rev F" Opteron chips.

Intel reported disappointing second-quarter earnings July 19, then announced a reorganization involving several top management posts. All that came a week after the company announced it was cutting about 1,000 management jobs.

For its part, AMD on July 20 also reported a soft second quarter, hurt in part by Intel price cuts on desktop processors.

The two companies are now eyeing the quad-core space. Intel the week of July 17 announced it was moving up its schedule, expecting to release its first quad-core chips by the end of 2006. AMD officials said the company would have demonstrations of its quad-core technology by the end of the year, and would be shipping the technology in mid-2007.

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