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
Showing posts with label quad-core. Show all posts
Showing posts with label quad-core. Show all posts
Monday, October 29, 2007
Wednesday, September 12, 2007
AMD, Quad Core Opteron, and Korea
This has been an exciting week so far for those of us following the Processor Wars. Intel announced it is making more money than it thought it would. Korea announced (See Infoworld article) that it thinks Intel used illegal methods to make its dough, joining Japan and the European Union in that allegation. AMD released its genuine quad-core Opteron processors, to be distinguished from Intels dual-dual core Xeon processors. Preliminary reviews have already started emerging for the new AMD processors; they look amazing. Since this blog is primarily for investors, I'll be converting some tech-speak to a semblance of why this matters in reality.
First, as far as I know, all AMD executives and employees are alive and well, so the boys at Intel have been too busy trying to catch up with AMD advanced technology to watch the Sopranos. Their unethical business methods will doubtless be considered by Intel investors to be mere sharp business practices. Essentially what Intel is accused of by Japan, Europe, and Korea is limiting AMD to very small markets by illegally discouraging dual sourcing of processor chips. Intel says it never did this, and if it did it stopped doing it. And my understanding is that nothing Intel did, would, in itself, be illegal. You can price your products however you want. It is the context that matters: pricing schemes can become illegal when they are designed to create a monopoly. Intel's main defense is look, we lost market share lately, we can't be a monopoly. But they lost market share after two changes: AMD introduced 64 bit x86 processors when Intel tried to force its clients to switch to Itanium processors in order to get 64 bit, and Intel was informed by regulatory agencies that it was being investigated.
In 2006 Intel was on the ropes and responded by taking advantage of its capital position. It started a pricing war that benefited computer makers (Dell, HP, etc.) and consumers but that drove AMD to the wall. In the later half of 2006 Intel released a new processor design that showed some improvement on older designs. This happened while AMD was trying to absorb its acquisition of ATI, which simply put it in position to get its ass kicked by NVidia and Intel at the same time.
Today AMD's stock price is below its 2002 level, even though it is a much larger company now. 2007 revenues look to be roughly double those in 2002. Earnings are bad, in fact negative, because of the pricing war with Intel and the cost of the ATI acquisition.
But that is the past; the future depends on industry adoption of Barcelona technology, particularly the quad core Opteron processor for servers. Unlike when Opteron was introduced (no major players joined in the introduction), IBM, Dell, and HP all are ready with quad-core Opteron servers. These processor chips can also be plugged into AMD-based servers that have been selling in 2007 because they are pin-compatible with the dual-core Opterons. I doubt many companies will be pulling out dual-cores to put in quad-cores, but it means the motherboard designs were ready to go well in advance of chip availability. So it is off to the races.
Now we will enter the benchmark propaganda wars. Intel fan boys will claim that Barcelona sucks. AMD fan boys will say it is way superior. Both will show benchmarks to prove their point. How can that be? Well, there are two big issues (and a swarm of small ones) with benchmarks. One is optimization, the other is specialization, in this case floating point versus integer. For people who actually buy servers, who actually want the best bang for the buck, who are not locked into Intel, they are going to need to run tests on both platforms to see what works.
There is agreement that AMD has really good floating point capabilities. So that means scientific applications are going to lean to AMD. But there is a claim from the Intel camp that servers mostly just serve up data; Intel's floating point capacity will do just fine. Ten years ago I would have agreed with that, but things have changed. Visual is in. Visual requires floating point. Fewer and fewer servers are being devoted to just plain accounting or data serving.
To me the new AMD architecture looks superior for a couple of reasons, but I know that superior looking architecture does not always translate to real performance. First, the AMD memory controller is still on the server chip. Intel likes to run benchmarks that go to memory infrequently enough that its off-chip memory controllers don't appear to be a bottleneck (this is not new to Barcelona, but should become more of an issue with four cores needing to be fed memory). AMD's design will be a huge advantage in high end servers with as many as 8 chips, meaning 32 cores.
While both Intel and AMD have introduced technology to make virtualization easier, and both have some merit, I suspect AMD's architecture will work better in datacenters. If you are running a bunch of virtual machines on a multiprocessor, multicore server you also want to have multiple network connections (typically 10 Gigabit Ethernet connections), one for each virtual server. AMD's new design scales out nicely; Intel's current design, the Xeon 7300, does not.
Again, I have not personally tested the new AMD or latest Intel machines. I am analyzing what specialists are publishing.
I would say that AMD investors should take heart; Barcelona looks good. It will look even better as AMD ramps up processing speed (the first out the gate quad-cores have slower clock cycles than most of us expected). However, as long as Intel is willing to undercut AMD on pricing, you have to consider AMD a long-term investment, and a risky one at that. I own the stock; I want to see what its worth when AMD market share hits the 51% tipping point. That may never come; at best it is years away.
See also my AMD page
First, as far as I know, all AMD executives and employees are alive and well, so the boys at Intel have been too busy trying to catch up with AMD advanced technology to watch the Sopranos. Their unethical business methods will doubtless be considered by Intel investors to be mere sharp business practices. Essentially what Intel is accused of by Japan, Europe, and Korea is limiting AMD to very small markets by illegally discouraging dual sourcing of processor chips. Intel says it never did this, and if it did it stopped doing it. And my understanding is that nothing Intel did, would, in itself, be illegal. You can price your products however you want. It is the context that matters: pricing schemes can become illegal when they are designed to create a monopoly. Intel's main defense is look, we lost market share lately, we can't be a monopoly. But they lost market share after two changes: AMD introduced 64 bit x86 processors when Intel tried to force its clients to switch to Itanium processors in order to get 64 bit, and Intel was informed by regulatory agencies that it was being investigated.
In 2006 Intel was on the ropes and responded by taking advantage of its capital position. It started a pricing war that benefited computer makers (Dell, HP, etc.) and consumers but that drove AMD to the wall. In the later half of 2006 Intel released a new processor design that showed some improvement on older designs. This happened while AMD was trying to absorb its acquisition of ATI, which simply put it in position to get its ass kicked by NVidia and Intel at the same time.
Today AMD's stock price is below its 2002 level, even though it is a much larger company now. 2007 revenues look to be roughly double those in 2002. Earnings are bad, in fact negative, because of the pricing war with Intel and the cost of the ATI acquisition.
But that is the past; the future depends on industry adoption of Barcelona technology, particularly the quad core Opteron processor for servers. Unlike when Opteron was introduced (no major players joined in the introduction), IBM, Dell, and HP all are ready with quad-core Opteron servers. These processor chips can also be plugged into AMD-based servers that have been selling in 2007 because they are pin-compatible with the dual-core Opterons. I doubt many companies will be pulling out dual-cores to put in quad-cores, but it means the motherboard designs were ready to go well in advance of chip availability. So it is off to the races.
Now we will enter the benchmark propaganda wars. Intel fan boys will claim that Barcelona sucks. AMD fan boys will say it is way superior. Both will show benchmarks to prove their point. How can that be? Well, there are two big issues (and a swarm of small ones) with benchmarks. One is optimization, the other is specialization, in this case floating point versus integer. For people who actually buy servers, who actually want the best bang for the buck, who are not locked into Intel, they are going to need to run tests on both platforms to see what works.
There is agreement that AMD has really good floating point capabilities. So that means scientific applications are going to lean to AMD. But there is a claim from the Intel camp that servers mostly just serve up data; Intel's floating point capacity will do just fine. Ten years ago I would have agreed with that, but things have changed. Visual is in. Visual requires floating point. Fewer and fewer servers are being devoted to just plain accounting or data serving.
To me the new AMD architecture looks superior for a couple of reasons, but I know that superior looking architecture does not always translate to real performance. First, the AMD memory controller is still on the server chip. Intel likes to run benchmarks that go to memory infrequently enough that its off-chip memory controllers don't appear to be a bottleneck (this is not new to Barcelona, but should become more of an issue with four cores needing to be fed memory). AMD's design will be a huge advantage in high end servers with as many as 8 chips, meaning 32 cores.
While both Intel and AMD have introduced technology to make virtualization easier, and both have some merit, I suspect AMD's architecture will work better in datacenters. If you are running a bunch of virtual machines on a multiprocessor, multicore server you also want to have multiple network connections (typically 10 Gigabit Ethernet connections), one for each virtual server. AMD's new design scales out nicely; Intel's current design, the Xeon 7300, does not.
Again, I have not personally tested the new AMD or latest Intel machines. I am analyzing what specialists are publishing.
I would say that AMD investors should take heart; Barcelona looks good. It will look even better as AMD ramps up processing speed (the first out the gate quad-cores have slower clock cycles than most of us expected). However, as long as Intel is willing to undercut AMD on pricing, you have to consider AMD a long-term investment, and a risky one at that. I own the stock; I want to see what its worth when AMD market share hits the 51% tipping point. That may never come; at best it is years away.
See also my AMD page
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