Microprocessor and graphics processor chip maker AMD let slip that its new Shanghai version of the Opteron processor is actually ahead of schedule for production. Samples are available now for testing and it may begin appearing on servers as early as Q4 of this year.
AMD was doing well in its efforts to become a true rival to Intel until the Barcelona version of Opteron ran into problems. It came out over a year late. It had some merits: the four core version had all four cores on a single chip. Intel's four-core Xeon server processor actually was two two-core chips packaged together, which resulted in a variety of performance issues.
The Shanghai Opterons will also have four cores, but they will be on a 45nm process enabling them to have larger internal memories (caches) and other acclerators that were not present in the Barcelona versions, which were done with a 65nm process.
In looking at Q3 2008 results, which will be released October 16, we will be seeing the results of revenues from the current generation of Opteron processors. This generation has its merits, and may have sold well into energy conscious server customers. But if there is a surpise bump it will be from the recently reinvigorated ATI graphics unit, which came out with highly acclaimed products that may have sold very well in Q3. Notebook CPU and graphics chips, which were once a weakness for AMD, also should be showing a strengthening trend.
So if Q3 was better than expected, and Shanghai starts shipping in Q4, and the economy does not melt down, AMD investors will have something to cheer about for the first time since 2005. Given the almost vanishingly low current market capitalization for AMD, that might generate quite a pop.
Then again, I am a long-term investor in AMD, so this analysis could just be wishful thinking.
For more data see my AMD page and www.amd.com
For the technical news article on Shanghai see AMD says new 'Shanghai' chip is ready to go by Brooke Crothers at CNET.
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Showing posts with label barcelona. Show all posts
Showing posts with label barcelona. Show all posts
Tuesday, September 30, 2008
Monday, October 29, 2007
AMD Virtualization Wars
For years now AMD (AMD) and Intel (INTC) have been slugging it out in the microprocessor market. The next arena for this slugfest is virtualization, the process in which a single computer can run multiple instances of an operating system, or even entirely different operating systems (typically Linux and Microsoft).
Intel has been the dominant player in the microprocessor industry since the 1980s and still dwarfs AMD. But AMD gained a great deal of market share earlier in the new millennium with its Opteron and Athlon processors. Unfortunately it did not gain enough to prevent Intel from having a comeback in 2006 that has extended up until at least now. The main cause of AMD's insufficient gains during a period of time when it processors outperformed Intel's on any basis was human nature. Most businesses had standardized on Intel processors; many did not even consider taking advantage of the AMD proposition. I think a lot of this was influenced by the broad ownership of Intel stock among key decision makers, but I can't prove that without doing some costly research.
The question for those owning AMD stock (including me) and those rare people considering buying it should be: what will happen in Q4 2007 and in 2008. This will be highly dependent on the new quad core Opteron processors (code named Barcelona) and their virtualization features.
There are plenty of technical articles being written on virtualization and on AMD's and Intel's versions of it. The reality is, however, that until there have been a number of large-scale commercial installations that use virtualization 24 hours a day for long periods of time, we won't know if one design is superior to the other.
Virtualization seems like no big deal on a desktop or notebook computer. It is basically making possible in software what used to be done, in a clunky way, with a hard disk partitioned between two operating systems. Now using VMware or other virtualization software both operating systems can run at the same time, sharing the microprocessor, memory, and network bandwidth.
But according to Rackable Systems, making a server farm work well with virtualization is not so trivial of a task. Server farms already have issues with interconnecting all of their computers. There is an issue called load balancing: if you are, say Amazon (a Rackable client) and have thousands (or millions) of people searching your gigantic Web site all the time, and the Web site has to be coordinated with a database and a shipping system and a content management system, well, in non-tech speak it gets hairy. A virtual operating system sitting idle is just a waste of expensive equipment.
Rackable has a new line of servers ready for introduction that are engineered from the ground up for virtualized server farms. Probably IBM, Dell, Sun and HP are working on this issue too and will make their claims.
It will sure be interesting to see if this virtualization-ready line is available in only one flavor, AMD or Intel, or if it available for both.
Another area of interest in the AMD versus Intel battle is processors for notebook computers. In this area I see pundits constantly reporting that AMD cannot possibly compete. Yet it seems like every quarter AMD picks up a bit of market share in notebook computers. Partly this is because Intel started with so much market share and does have good notebook technology. Intel likes to charge its customers through the nose when it has no competition (hence accusations of monopoly pricing). Surprise, most people don't feel like they can pay $2000 for a notebook computer that will be broken on obsolete in 2 years. People really like computers to be in the $500 to $700 price range, and to make a profit in that market many notebook computer manufacturers have turned to AMD. With AMD readying a new line of notebook-optimized microprocessors, motherboard chips and graphics chips, it is possible that it may gain even more market share in 2008.
I consider investing in AMD to be a risky business. Investors should always balance the risks in their portfolios by diversification.
More data:
AMD home page
Intel home page
virtualization
My AMD page with links to summaries of AMD analyst conferences
VMware virtualization
Intel has been the dominant player in the microprocessor industry since the 1980s and still dwarfs AMD. But AMD gained a great deal of market share earlier in the new millennium with its Opteron and Athlon processors. Unfortunately it did not gain enough to prevent Intel from having a comeback in 2006 that has extended up until at least now. The main cause of AMD's insufficient gains during a period of time when it processors outperformed Intel's on any basis was human nature. Most businesses had standardized on Intel processors; many did not even consider taking advantage of the AMD proposition. I think a lot of this was influenced by the broad ownership of Intel stock among key decision makers, but I can't prove that without doing some costly research.
The question for those owning AMD stock (including me) and those rare people considering buying it should be: what will happen in Q4 2007 and in 2008. This will be highly dependent on the new quad core Opteron processors (code named Barcelona) and their virtualization features.
There are plenty of technical articles being written on virtualization and on AMD's and Intel's versions of it. The reality is, however, that until there have been a number of large-scale commercial installations that use virtualization 24 hours a day for long periods of time, we won't know if one design is superior to the other.
Virtualization seems like no big deal on a desktop or notebook computer. It is basically making possible in software what used to be done, in a clunky way, with a hard disk partitioned between two operating systems. Now using VMware or other virtualization software both operating systems can run at the same time, sharing the microprocessor, memory, and network bandwidth.
But according to Rackable Systems, making a server farm work well with virtualization is not so trivial of a task. Server farms already have issues with interconnecting all of their computers. There is an issue called load balancing: if you are, say Amazon (a Rackable client) and have thousands (or millions) of people searching your gigantic Web site all the time, and the Web site has to be coordinated with a database and a shipping system and a content management system, well, in non-tech speak it gets hairy. A virtual operating system sitting idle is just a waste of expensive equipment.
Rackable has a new line of servers ready for introduction that are engineered from the ground up for virtualized server farms. Probably IBM, Dell, Sun and HP are working on this issue too and will make their claims.
It will sure be interesting to see if this virtualization-ready line is available in only one flavor, AMD or Intel, or if it available for both.
Another area of interest in the AMD versus Intel battle is processors for notebook computers. In this area I see pundits constantly reporting that AMD cannot possibly compete. Yet it seems like every quarter AMD picks up a bit of market share in notebook computers. Partly this is because Intel started with so much market share and does have good notebook technology. Intel likes to charge its customers through the nose when it has no competition (hence accusations of monopoly pricing). Surprise, most people don't feel like they can pay $2000 for a notebook computer that will be broken on obsolete in 2 years. People really like computers to be in the $500 to $700 price range, and to make a profit in that market many notebook computer manufacturers have turned to AMD. With AMD readying a new line of notebook-optimized microprocessors, motherboard chips and graphics chips, it is possible that it may gain even more market share in 2008.
I consider investing in AMD to be a risky business. Investors should always balance the risks in their portfolios by diversification.
More data:
AMD home page
Intel home page
virtualization
My AMD page with links to summaries of AMD analyst conferences
VMware virtualization
Saturday, July 21, 2007
AMD Ambitions Still Burn
A humbler but unbowed AMD management reported Q2 2007 results to analysts on July 19 and answered questions. There is no doubt that AMD is on the ropes and Intel, just 3 years ago a complacent, fat, slumbering giant, is wide, awake, mad, and pounding the hell out of them. But that does not mean that AMD investors are out of the money in the long run. At least there is a referee now; Intel's mafia-goon tactics from the 1990's are being watched by courts and regulatory agencies around the world.
Despite Intel's bluster at its own analyst conference on Tuesday (see my detailed summary), it appears that AMD actually gained overall market share again in Q2. We'll have to wait until independent results are released to be sure.
But there was a lot of bad news at the AMD conference (see my detailed summary). Earnings were highly negative at a $600 million loss or $1.09 per share. Even if you pull out $130 million in one-time charges, they lost $470 million in the quarter on revenues of $1,380 million.
They also wrote off $30 million in obsolete processor inventory. What I believe happened is that they sold a lot more obsolete stock that went into low-end desktop and notebook computers. Given the price war between AMD and Intel, even up-to-date stock may have been sold at less than the cost of production.
So are the folk at AMD committing suicide? Maybe not, but they are taking a gamble. Intel has immense depth in resources; they are far more able to play the price war game than AMD. In 2005 that was okay, because AMD processors were acknowledged as superior in the industry. But in 2006 Intel brought out a new generation of processors that are roughly on par with AMD, so pricing became a serious issue. Intel in Q2 2007 had almost as much net income as AMD have revenue, making it seem like back in 1997 when AMD was allowed to live only so that Intel could not be accused of being a monopoly.
Now the good news for consumers and maybe even AMD investors: blood still flows in AMD veins. Management still plans to beat Intel in the long run, and it is still a credible story. You see this in three areas: the release of Barcelona processors due this quarter; the minimization of layoffs; and the coming push at the graphics market.
Intel now has a long history of spending a lot of money to convince people that its processors are wonderful, but doing inelegant engineering that does not really serve the end customers well. AMD continues to take a different approach: they are relatively quiet about their upcoming processors. Because, I believe, secrecy serves them well: if they announce what they are doing, the engineers at Intel will start copying them. Like they did with the transition to 32/64, with dual core, with energy efficient chips, and with on-chip memory controllers.
Lots of IT departments and consumers still have not bought anything with an AMD chip in it. Some people are just conservative, or own Intel stock. They did not by Opteron server processors or Athlon desktop chips when they had a clear lead on performance, performance per price, and performance per energy use. Some people are just going to stick with Intel.
But Toshiba, one of the last holdouts, is now offering computers based on AMD processors. AMD would not say exactly how much impact this had on Q2 revenues; I suspect almost none. Most Toshiba notebook and desktop pcs will still run on Intel chips, but it is still a gain for AMD and a loss for Intel.
In fact the PC makers like having two sources to play off against each other.
Intel laid off 12,000 employees in the last year; AMD has laid off some 500. Intel cut fat, which is good for everyone except the fired employees; AMD can only cut lean, so it is trying to do no cutting at all.
AMD is also in a tough fight with NVIDIA. AMD bought NVIDIA's traditional rival, ATI, which was doing poorly in many ways, and which has been a major factor contributing to AMDs recent string of losses. But again, there is reason behind this short-term madness.
AMD only made computer chips (and memory, but it divested that) in the past. There can be benefits to specialization, but we are in an era of consolidating more function into less silicon. ATI makes "chip sets" as well as graphics chips. Chips sets are the glue on computer motherboards. Intel was already making processors, chipsets, motherboards, and low end-graphic chips. Now AMD has a full set of solutions for computer assemblers. At the same time AMD has made it clear that it will keep its solutions "open" so that they will work with chips from NVIDIA and other makers. Computer manufacturers can make the best design for their customers.
If you don't own any AMD stock I would not advise buying any at this point unless you like a very high risk factor. I own AMD stock. But take a good look at Barcelona when it comes out; that is the real key to the short-term value of AMD stock.
Despite Intel's bluster at its own analyst conference on Tuesday (see my detailed summary), it appears that AMD actually gained overall market share again in Q2. We'll have to wait until independent results are released to be sure.
But there was a lot of bad news at the AMD conference (see my detailed summary). Earnings were highly negative at a $600 million loss or $1.09 per share. Even if you pull out $130 million in one-time charges, they lost $470 million in the quarter on revenues of $1,380 million.
They also wrote off $30 million in obsolete processor inventory. What I believe happened is that they sold a lot more obsolete stock that went into low-end desktop and notebook computers. Given the price war between AMD and Intel, even up-to-date stock may have been sold at less than the cost of production.
So are the folk at AMD committing suicide? Maybe not, but they are taking a gamble. Intel has immense depth in resources; they are far more able to play the price war game than AMD. In 2005 that was okay, because AMD processors were acknowledged as superior in the industry. But in 2006 Intel brought out a new generation of processors that are roughly on par with AMD, so pricing became a serious issue. Intel in Q2 2007 had almost as much net income as AMD have revenue, making it seem like back in 1997 when AMD was allowed to live only so that Intel could not be accused of being a monopoly.
Now the good news for consumers and maybe even AMD investors: blood still flows in AMD veins. Management still plans to beat Intel in the long run, and it is still a credible story. You see this in three areas: the release of Barcelona processors due this quarter; the minimization of layoffs; and the coming push at the graphics market.
Intel now has a long history of spending a lot of money to convince people that its processors are wonderful, but doing inelegant engineering that does not really serve the end customers well. AMD continues to take a different approach: they are relatively quiet about their upcoming processors. Because, I believe, secrecy serves them well: if they announce what they are doing, the engineers at Intel will start copying them. Like they did with the transition to 32/64, with dual core, with energy efficient chips, and with on-chip memory controllers.
Lots of IT departments and consumers still have not bought anything with an AMD chip in it. Some people are just conservative, or own Intel stock. They did not by Opteron server processors or Athlon desktop chips when they had a clear lead on performance, performance per price, and performance per energy use. Some people are just going to stick with Intel.
But Toshiba, one of the last holdouts, is now offering computers based on AMD processors. AMD would not say exactly how much impact this had on Q2 revenues; I suspect almost none. Most Toshiba notebook and desktop pcs will still run on Intel chips, but it is still a gain for AMD and a loss for Intel.
In fact the PC makers like having two sources to play off against each other.
Intel laid off 12,000 employees in the last year; AMD has laid off some 500. Intel cut fat, which is good for everyone except the fired employees; AMD can only cut lean, so it is trying to do no cutting at all.
AMD is also in a tough fight with NVIDIA. AMD bought NVIDIA's traditional rival, ATI, which was doing poorly in many ways, and which has been a major factor contributing to AMDs recent string of losses. But again, there is reason behind this short-term madness.
AMD only made computer chips (and memory, but it divested that) in the past. There can be benefits to specialization, but we are in an era of consolidating more function into less silicon. ATI makes "chip sets" as well as graphics chips. Chips sets are the glue on computer motherboards. Intel was already making processors, chipsets, motherboards, and low end-graphic chips. Now AMD has a full set of solutions for computer assemblers. At the same time AMD has made it clear that it will keep its solutions "open" so that they will work with chips from NVIDIA and other makers. Computer manufacturers can make the best design for their customers.
If you don't own any AMD stock I would not advise buying any at this point unless you like a very high risk factor. I own AMD stock. But take a good look at Barcelona when it comes out; that is the real key to the short-term value of AMD stock.
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