Advanced Micro Devices
Market Positioning....

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By eachus
April 25, 2002

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There is a very interesting shot across Intel's bow that shouldn't be missed here. (Of course, to mix metaphors, demo'ing a dual-processor Sledgehammer running Windows .Net? Advanced Server? Whatever? in 64-bit mode tomorrow is at least one grand slam, perhaps two.) But the fact that AMD is positioning the Clawhammer as a desktop part, not a workstation part, is going to have a significant impact on Intel going forward.

First, I think AMD is recognizing that the old concept of needing a dual-processor system to handle workstation loads is gone, killed by Intel. But they are also implicitly recognizing that high-end gaming systems are converging with workstations in the high-end. In fact, the biggest difference is probably that the gaming market expects better sound.

But more important, by lumping Xeon and Itanium together as the Opteron's target market, they are inviting Intel into a contest they can't win. Will Intel accept the challenge? I don't expect them to. But the neat trick here is that Intel either has to accept the fact that Itanium and Xeon are competing with each other, or draw a line between the two. Obviously Xeons do not participate in the high-end/enterprise server market, so positioning Itanium there won't do much harm. It is the mid-range server market where Intel is going to have to either stop marketing (very bad choice) or choose between Xeon and Itanium.

Of course, I think that Intel should continue to promote Xeon processors in the mid-range market, but I think that it is equally clear that they will not. The newest 2.4 GHz Xeon is clearly positioned as a low-end server part. (Dual-processor only.) But which would you rather have, a dual-processor, 512k cache 2.4 GHz Xeon system, or a four-processor, 2 MByte cache Pentium !!! Xeon? (I know you want a dual-processor Hammer, but bear with me for a minute. ;-)

Once even a 700 MHz quad-processor P3 Xeon system was mid-range. But there has been no real (P4) Xeon replacement for such systems, or for eight and 16 processor boxes, and I don't think there will be. So Intel is abandoning this market, or targeting it with the Itanium, which amounts to the same thing. (Almost 500 systems sold last quarter!) AMD may be picking up a bit of the business now, but not much. It is mostly going to Sun and IBM. This is where the Opteron is aimed, and we will see how many current Xeon server manufacturers choose Hammer over Itanic.

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