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But the real hit for Intel is in the Xeon line. It makes a lot of money from these and each sold allows the firm to sell cheaper Celerons. A $3,000 large cache Xeon MP will make up for a lot of $89 Celerons, and give Intel a lot of wiggle room to hit AMD with the pricing hammer.
AMD's Opteron is a faster more scalable chip that is ramping in clock speeds. Intel's Xeon MP - a chip wih a large cache, low bus speeds, and a big price tag finds itself against a much lower price part than AMD with the Opteron 8xx line, but that's generally perceived as lacking the credibility to compete in the high end server market.
Building Reputation, not System Building
AMD has spent the last two years building its reputation in the server market, inch by inch. Anecdotal evidence suggests this is finally starting to pay off, and it is being asked to tender against Intel, even it if doesn't end up winning very often.
Intel has a hotter, slower chip, so will have to do one of two things, either price accordingly, or sell into markets where power is not a problem.
Intel has a strong server reputation and can ride this out for some time. But Potomac, an MP version due in Q1 2005, is already rumoured to have vastly underwhelming performance, reputation alone may not carry Intel for that long.
Abandoning dense racks and power conscious markets isn't an option either. So it will have to compete on price and cache size. Price reductions lower revenues, and in turn lowering profits, but can boost sales and marketshare. Bigger cache sizes increase performance to a point.
While Intel will probably take the extra cache route, that may not be enough to keep performance competitive past the middle of next year.
Server Jewels in the Crown
Again, AMD has a more compelling dual core product with higher performance and taking less power. Until Intel's Dempsey/Blackford, there is little hope for Xeons, but the RAS features that these bring could be a strong differentiator.
There are two backup plans Intel has, based on the Itanium and the Pentium M. Itanium is in severe retrenchment mode right now. The cancellation of the Bayshore chipset was a knife in the heart of Itanium ambitions until the next major revision to the architecture, called Tukwila, in 2007.
Intel has repeatedly signalled that the Itanium is not ready for mainstream use, or even low end server use. Software is sparse, and even Microsoft has stopped making desktop OSes for the chip. Some software vendors have ended supporting the chips, and its wider adoption is a very long shot. The wagons are circled here, and each shot in the press release war seems to decrease the radius.
This leaves the Pentium M. Ironically, the cancellation of Bayshore was a choice between unspecified Pentium M based projects and Bayshore. Intel put the money and people on the Pentium M and that's the right decision. But what about the desktop?
Buyers have been clamoring for desktop PM boards for years, and Intel has steadfastly refused. Now it has no choice, and the mainstream user will benefit. For a corporate desktop, the Pentium M is a wonderful chip with fast integer performance, low power, quiet and cool.
Home users see the same thing as corporate users, good enough performance with no fan whine. Gamers will likely not like it much, as certain aspects of the chip, most notably floating point (FP) performance are not up to par, especially compared to the Opteron.
Also, the chip lacks hyperthreading, a highly touted feature by Intel, but one most users would not miss one bit. The lack of 64-bit functionality will become a sales problem in the near future. When Win64 arrives, however, this may be a very real sore point.
Floating point is also a major selling point for servers, but its absence is not as big a problem as the lack of 64-bit support. Large memory spaces are what servers thrive on, and the Pentium M line won't be there until Merom arrives. It's due to tape out in Q2 or Q3 2005. Until then, the Pentium M line is down on raw computational ability, and lacks any semblance of multi-processing capability.
For 2005 and 2006, the future is Opteron and Xeon just can not play in the same league any more. The impact will be minimal for Intel, a little lower profit and slightly decreased margins. But if Wall Street catches on, the effects will punish to Intel stock. By then, Merom will have taped out, and if all goes well, will ship in Q3 2006. Between now and there, there is rather a vast empty desert with nary a cricket to chirp out soothing melodies for Intel. It may well be a very long two years for the company.
Every cloud has a silver lining. The first is that AMD could commit a self-inflicted wound, something it has a long track record in. The major pitfalls for AMD are the dual core introduction, the 90nm move and the introduction of technology at 65 nanometres. The dual core move should bring little danger, it's been long in the planning. AMD seems to be moving to 90 nanometres reasonably smoothly.
However, the move to 65 nanometres is more difficult. On the up side, AMD is working closely with IBM. On the down side, this is a far harder move than the shrink to 90 nanometres.
Even if everything goes perfectly for AMD during this time, Intel is far from dead. AMD can provide about 30% of the market demand for X86 CPUs, so even if Intel came out with nothing from now to Merom, AMD would only double its market share. At the far ends of the relevant period, Fab 36 is set to come on line with a 65nm process. Then, and only then, will AMD have a chance to take more than half of the market.
But by then, everything will have changed. Up until late 2006, there is little Intel can do. 2006/2007 brings us Merom/Conroe, 65nm, CSI and the K10. We'll be starting from square one then. An Intel with something to prove versus a resurgent AMD should be great fun to watch.
Source:
The INQ!
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