Nathan Brookwood, an analyst with Insight64, in Saratoga, Calif., said AMD has benefited from strong execution and stumbles by Intel over the past 18 to 24 months.
AMD was first out with 64-bit x86 chips, its first Opteron and Athlon 64 processors in 2003, and was first to offer a dual-core chip in early 2005.
"As we start the year, AMD clearly is ahead in terms of performance, in terms of power, in terms of performance-per-watt," Brookwood said.
Although Intels chips have lagged in performance and power consumption, according to experts, its prepping a new line of more energy efficient dual-core processors for all three business computer categories, including desktop, notebook and server, and will roll them out during the second half.
The chip maker will add dual-core processors code-named Conroe, Merom and Woodcrest for desktops, notebooks and servers, respectively.
Woodcrest, for one, will consume a theoretical maximum of about 80 watts, about 30 less than the current Xeon line and deliver as much as a 3.5 times greater performance per watt and double the overall performance versus Intels current single core Xeons, the company said.
The ultimate quality of the new chips will determine whether it can gain back share and, if so, how much, Otellini maintained during a conference call with analysts Tuesday that the chip makers lineup will gain strength throughout the year based on the introduction of several new platforms based on dual-core processors.
Indeed, "We will be in position to gain share over the course of 2006," Otellini said on that call. However, he said Intel is "starting out in a bit more of a hole for 2006 than we thought."
Still, "Our product portfolio as we shift to dual core only gets stronger," he said. "I believe youll be able to plot the take-back—the regain or market share—along the dual-core road map of the company."
If Intel rolls out the new chips without hitches, that gap could close, he said. If that happens, AMD can expect to see fewer defections from Intel users than it saw in 2005.
"It will be much more of a horse race [in 2006] between Intel and AMD on performance and power than it was in 2005," Brookwood said.
Even Dell Inc., whose executives have waffled over whether to use AMD chips in recent years, have praised Intels future chips.
"Intels got a better road map coming up, in terms of performance and in terms of thermals in the coming year, so thats been very encouraging for us," Kevin Rollins, Dells CEO, said in an eWEEK interview published earlier this month.
"Its definitely one of those time-will-tell things. I think its safe to say Intel becomes significantly more competitive in the second half of the year. But that also means AMD has six months to prepare for that," McCarron said.
Intel has other levers it can pull, including potentially tapping its newest generation of 65-nanometer manufacturing, which works to lower its costs, to offer more competitive prices. The 65-nm manufacturing will also make possible the introduction of its next-generation architecture processors.
However, AMD, which is opening a new 65-nanometer factory in Dresden, Germany, this year, will also update its processors, shipping higher-performance chips that can take advantage of DDR2 memory at mid-year. It is also set begin the shift to 65-nanometers later this year, the company has said.
The company believes its efforts will allow it to expand to 25 to 30 percent of the overall x86 processor market by 2008 or 2009, Ruiz said.
Fourth-quarter 2005 market share estimates have not yet been published, but based on AMDs claims it appears to have moved at least somewhat closer to the 20 percent mark at the close of 2005.
The Sunnyvale, Calif., chip maker garnered 17.8 percent of x86 processor shipments during the third quarter of 2005, up from 16.2 in the second quarter and 15.9 percent in the same quarter in 2004.
Whereas Intel ended the same quarter with 80.8 percent of shipments, down from 82.3 percent in the second quarter of 2005 and 82.1 percent in the third quarter of 2004, the Mercury Research figures show.
AMDs market share low, in recent times, came in the third quarter of 2002, when it held 11.6 percent of shipments.
AMDs most recent market share high, a share of about 20 percent or more, came from the first quarter of 2001 through the third quarter of 2001, Mercury figures show.
Thus "The stage is set for a very interesting market battle between the two companies," McCarron said. "It isnt just about [chip] megahertz or gigahertz now. It involves things like power, performance and software support. Also the battle has been moved outside the consumer arena. That changes things a lot, too."