The first battle in the war between AMD and Intel is nearing an end: The latter has emerged as the clear winner in the x86 server market. However, the rise of smartphones and tablets is altering the traditional market metrics, and AMD microprocessors may be better positioned to fight as the market evolves.
There is no debate: Intel has done well in the x86 server market. Gartner pegs the vendor's market share at 90% and climbing. "Intel has benefitted from the economies of scale that come with being a market leader," said Sergis Mushel, principal research analyst at Gartner.
"The large expansion of the x86 server market is due primarily to Intel's innovation in the area, particularly with its Xeon chips," said Christian Perry, senior analyst, computing practice at Technology Business Research (TBR) Inc.
In the latest releases of its Xeon line, Intel focused on scalability, energy enhancements and security. Supporting up to eight cores per processor and up to 768 Gb of system memory, the latest Intel Xeon processors increase performance by as much as 80%. The Intel systems improve energy efficiency by more than 50%, as measured by SPECpower rankings. They also feature Intel's Advanced Encryption Standard New Instruction, a microprocessor-based encryption and decryption system designed to ensure that only approved applications take advantage of embedded microprocessor security features.
Intel's immediate future in the server market looks bright. "We don't anticipate that Intel's progress or momentum in this arena will slow to any great extent any time in the foreseeable future," said Perry.
AMD, on the other hand, has struggled recently.
"AMD had a difficult time matching the performance of its Opteron chips with Intel's Xeon chips, so its value proposition is now tied more to price," said Perry. Companies that lack scale and market share often find it difficult to compete on price and, as a result, AMD has labored.
The vendor's market position peaked in 2006 with a 23% market share; Gartner has it pegged at 4%. Its revenue for 2012 was $5.42 billion, down 17 percent year-over-year from 2011 numbers. In November 2012, the vendor announced plans to cut its workforce by 1,700 (about 15% of its total number of employees). On top of those reductions, in the fall of 2011, AMD eliminated 1,400 jobs (which represented 10% of its workforce at that time).
Because it has been failing to meet competitive pressures, AMD has begun moving in new directions. While the chip supplier has not abandoned the traditional x86 server arena, AMD has shifted from direct head-to-head competition with Intel, preferring to seek leading positions in select niches.
"An area to watch with AMD is microservers, particularly since the SeaMicro acquisition," said Perry. In March 2012, AMD paid $334 million for SeaMicro, which had developed chipsets that use one quarter of the power and require only one-sixth of the space that traditional servers do.
As further evidence of its x86 pullback, AMD announced on October 29, 2012 that it would begin delivering 64-bit ARM-based processors. ARM-powered smartphones and tablets have been eroding Intel and AMD's historic foundation -- the PC market -- and have gained acceptance among many industry Goliaths. Apple Inc., Qualcomm Inc. and Samsung are delivering ARM-based products.
"Given the popularity of mobile devices, it certainly makes sense for AMD to try and move into that marketplace," said Mushel. AMD's new chips are expected to ship in 2014.
While ARM's initial emphasis has been on mobile devices, the processors can power servers, which appears to be in AMD's long-term plans. Intel joined the mobile microprocessor movement in May 2013 when it unveiled its answer to the ARM movement: The Silvermont microarchitecture. Intel claims it offers approximately three times more peak performance at approximately five times less power than the current generation of Intel Atom processors.
With mobile devices having such a significant market presence, AMD and Intel are positioning themselves to become key players there as well as in the server market. As a result, the traditional battle is shifting to new grounds, ones where they will come up against a wider array of competitors.
About the author
Paul Korzeniowski is a freelance writer who specializes in cloud computing and data-center-related topics. He is based in Sudbury, Mass., and can be reached at firstname.lastname@example.org.