AMD in 2005: Coming Out of Intel’s Shadow?

Abstract

Hector Ruiz, Chief Executive Officer of Advanced Micro Devices (AMD) has strong reason to believe that AMD will give Intel a run for its money in the 64-bit microprocessor market. Itanium I, Intel's first 64-bit microprocessor has failed. Itanium II has also elicited a lukewarm response from the market. But Opteron, AMD's 64-bit microprocessor, released in mid-2003 is receiving strong performance reviews. Many companies that shied away from AMD's products in the past such as Hewlett Packard, Sun, IBM have started using Opteron. AMD has grabbed 7% of the low-end server market, up from almost nothing a few years back. Is AMD finally ready to catch up with Intel? The case covers the leadership of Ruiz, market response and features of Opteron and the battle between AMD and Intel.

Intel underestimated us and their arrogance didn't allow them to take hold of what they were doing.

- Benjamin J. Williams, AMD

In 2004, Hector Ruiz (Ruiz), CEO of Advanced Micro Devices (AMD), was reflecting on how his company was faring in its battle with Intel in the 64-bit microprocessor market. Itanium I, Intel's first 64-bit microprocessor had failed. Itanium II had also elicited a lukewarm response from the market. But Opteron, AMD's 64-bit microprocessor, released in mid-2003 was still receiving strong performance reviews. By 2004, many companies such as Microsoft, IBM and HP, which had been staunch supporters of Intel, had started using Opteron.

Even Sun Microsystems (Sun), a company that traditionally used its own SPARC chips, had started using Opteron. These companies saw AMD as a means to increase their market share by offering high-quality but low-priced products. As a result, by 2004, AMD had become a major supplier of microprocessors in the server market. Historically, AMD had ranked a distant second in PC microprocessors with a market share of about 15%, compared to Intel, which had about 80%. In the past, AMD had made inroads into Intel's market share only to see Intel strike back with steep price cuts and faster introduction of new models. As 2004 got underway, analysts wondered whether AMD was finally ready to come out of Intel's shadow.

Opteron

Designed to run existing 32-bit applications and offer customers a smooth transition to 64-bit computing, Opteron promised a dramatic improvement in performance. It also reduced the total cost of ownership (TCO) . Opteron came in three versions: the 100 series (1-way), the 200 series (1 to 2-way), and the 800 series (up to 8-way).

AMD had positioned Opteron as a microprocessor with a scalable architecture designed to meet current and future business needs. Opteron was designed to scale from one to eight processors. This aided system designers by reducing the cost and complexity of building servers and workstations. It also reduced cost and increased server scalability.

One of the most important features of Opteron was HyperTransport Technology, which aimed at removing I/O bottlenecks , increased bandwidth/speed, and reduced latency . For workstation users, this meant increased graphics throughput (up to 8x AGP), quicker loading of applications and large data sets, better multi-tasking, and smoother transition across applications.

HyperTransport technology was useful for any application where high speed, low latency and scalability were necessary. This technology reduced the number of buses while providing a high-performance link for PCs, workstation and servers, as well as numerous embedded applications and highly scalable multiprocessing systems.

AMD had designed the new microprocessor to allow customers to migrate to 64-bit computing without any significant sacrifice of the existing code base. The technology aimed at providing full speed support for x86 code base, offering high performance levels for existing 32-bit applications. It provided a large memory, which was useful for computationally intensive applications, such as databases, ERP, decision support, scientific and technical modeling, etc. It also helped lower TCO and network management complexity through a unified architecture for desktop, notebook, workstation and server, and platform flexibility.

Opteron's target segments included companies that required faster database transactions, customers needing quick graphics response such as in the CAD industry, which had computationally intensive tasks for modeling and scientific applications.

More...

        Case Code   BSTA001
   Case Length    17 Pages
              Period    1990s to 2005
 Organization     AMD (Advanced Micro Devices); Intel
        Pub Date     2005
Teaching Note    Not Available
     Countries    Global
      Industry    Semiconductors

Issues

Leadership of Ruiz, market response and features of Opteron and the battle between AMD and Intel

AMD (Advanced Micro Devices); Intel; Itanium; Opteron; 64-bit computing; Strategy; Strategy in information technology (IT) business