The arrival of a new generation of servers based on Advanced Micro Devices Opteron processor is beginning to reposition the newcomer chip for the mainstream. The chips prospects appear upbeat, analysts say, even though it will face stiff opposition from market leader Intel.
The Opteron, which arrived a little over two years ago, had been a niche player, occupying areas such as high-performance computing clusters. But the latest version of the chip, which is beginning to arrive at businesses in new servers, has headed into the mainstream of the corporate server market.
Early adopter IBM originally positioned the chip toward high-performance computing clusters, where 64-bit capabilities—one of its main claims to fame—helped it boost performance. But the forthcoming generation of Opteron-based servers appears poised to take on tasks more often used in businesses, such as databases.
Part of the reason is a performance bump from the addition of extra processor cores—dual-core chips, such as the Opterons introduced in April, contain two distinct processor cores, allowing a single chip to do more work—in addition to 64 bits, according to the server vendors.
The 64-bit capabilities are no longer new but now are better supported by applications and operating systems, thanks to the recent release of Microsoft Corp.s 64-bit Windows Server 2003 x64 Editions.
Intel Corp.s Xeon chip continues to dominate the server space in numbers—just as Intel continues to dominate the overall x86 chip market—with more than 90 percent of the chip shipments, by most accounts.
But Opteron still has allowed AMD (Advanced Micro Devices Inc.), the perennial underdog, to make some inroads in the server space over the past two years.
For AMD, which has said publicly that it came up just short of a goal to capture 10 percent of server chip shipments in 2004, its a victory. Server chips cost hundreds of dollars more than standard desktop parts, and increasing sales to this market segment has boosted the companys financial fortunes.
“Opteron has done quite well considering AMD started out from zero and [the server space] is such a risk-averse market,” said Dean McCarron, principal analyst at Mercury Research, based in Cave Creek, Ariz.
“The trend has certainly been up, and if it continues to gain share at the same pace it did in the past year, itd be reasonable to think within a year [Opteron] would be well into [AMDs] double-digit server market share goal.”
Like others, Hewlett-Packard Co.s earliest Opteron customers were in the high-performance technical computing arena, as well as financial institutions, who were interested in number-crunching power they could utilize for market forecasting and analysis, said Colin Lacey, director of platform marketing for industry standard servers in HPs Technology Solutions Group.
Now the company sees Opteron used for Web hosting and databases, as well as ERP (enterprise resource planning) and CRM (customer relationship management) use. To that end, HP has expanded its product offerings—as have all three of the major companies that sell the systems—and Lacey said the company “will continue to see increased participation, increased share with the Opteron platforms. Right now theres a compelling value prop there, without a doubt.”
But despite having gained favor with IBM, HP and Sun Microsystems Inc., AMD must continue to move forward against Intel.
Intel commands more than 90 percent of the x86 server chip market, meaning that the overwhelming majority of servers offered use Xeon. IBM, the first brand-name maker to adopt Opteron, continues to offers Intel Xeon-based servers for a wide range of tasks, ranging from general purpose to heavy-duty processing. It pairs Intels Xeon MP, paired with its own X3 chip set for advanced four-processor servers, such as its eServer 366.
Intel also has countered by adding comparable 64-bit capabilities to its Xeon chip and has discussed plans to deliver dual-core server chips later this year. Its plan includes seeding thousands of dual-core Xeon servers into the market later this year.
“We think customer choice is good. We have[IBM] Power, Intel [Xeon] and [AMD] Opteron in different solutions for different customer needs,” said Stuart McRae, manager of IBMs eServer xSeries.
“When Opteron first came out, there were really no applications with 64-bit extensions. Thats why we came out with a very focused strategy at first, saying for these apps—the HPC area is one area where theres a lot of support—so it worked well there. For some applications, where Opteron doesnt offer any benefit, theres no reason to offer a solution.”
Still, AMD has come a long way, executives at the manufacturers agree.
“The concept of having a non-Intel branded processor in the volume server space two or three years ago was almost unthinkable. Today the question in the customers minds is, why not?” HPs Lacey said.
“We believe customers are becoming chip-nostic. Were trying to offer them a value proposition, which is great management, great deployment and great performance and reliability. Whats under the hood in order to make that all happen, at the end of the day, customers should be agnostic to … if we stand behind it and say this is a ProLiant.”
So, is Opteron poised to break out of its niche? The proof may be in the next generation of servers, which are hitting the market now. IBM and Sun both have been taking orders on dual-core-capable Opteron servers. HP recently began shipping machines with the chip inside.
Sun is taking orders on four-way, dual-core Sun Fire V40z servers now, and will begin shipping some of the first ones shortly. It also plans to begin taking orders on two-way servers soon.
IBM, for its part, will offer the new Opterons in its LS20 eServer BladeCenter and eServer 326, both of which will ship in June. Its also taking orders now. HP recently began shipping its ProLiant DL585, a four-processor server, and its BL45p blade server, based on the dual-core Opteron.
But even though AMD has gone from nearly nothing in 2003 to almost attaining its goal of capturing 10 percent of shipments in 2004, dont expect overnight results, one analyst said.
“Anecdotally, [AMD] seems to be gaining market share each quarter,” said Kelly Quinn, an analyst at IDC. It has done so because it “went to market with very targeted solutions and was able to sell into certain accounts because of that precise targeting.”
But when it comes to gaining broad acceptance for so-called mission-critical servers that handle tasks such as databases, “Im not seeing that right now” for AMD, Quinn said. “At some point much further down the road, yes.”
In addition, AMD has yet to win some potentially powerful converts. Dell Inc., for one, continues to be an Intel-only operation, even though it has hinted at times about offering AMD-based products. Dell executives have repeatedly said that Intels 64-bit Xeon chips meet its needs and that customers havent yet been asking for AMD in great numbers.
But Sun says servers based on the AMD chip are becoming a significant part of its business. So far, it has 1,800 direct Opteron customers, and it recently has landed accounts with companies including Electronic Data Systems Corp., JP Morgan & Co., Constellation NewEnergy Inc. and Yahoo Inc.
“The more value I can offer to customers, the bigger biz opportunity. Its kind of like Business 101,” said John Fowler, executive vice president of Suns Network Systems Group. But “dual-core [Opteron] will have a huge impact on the server. In same power envelope and same box for just a little bit more money, you get almost double the performance.
“This isnt rocket science,” Fowler said about choosing the chip.
“Any way you look at it, it has a very significant impact for AMD,” analyst McCarron said. “Its developed a strong server presence … and shaken any image of being something that was less than tier-one quality. What you have now is a really competitive situation between the two companies.”