Working hard to rebound from a US$574 million loss in fourth quarter earnings reported earlier this week, Advanced Micro Devices (AMD) has pinned its hopes for recovery in 2007 to its planned "Barcelona" quad-core Opteron server chip.
Intel's competing "Clovertown" quad-core Xeon chip has been adopted mainly for high-end research server platforms since it launched in November, hobbled in part by a lack of multi-threaded software needed to take full advantage of the new chip technology. But AMD hopes to sell its Barcelona chip to users ranging from managers of high performance computing centres to small and medium-sized businesses (SMBs).
AMD expects a bounce in revenue when it launches the processor by the middle of 2007 as it believes many customers have delayed buying new systems until it comes out. The company hopes Barcelona will allow AMD to finally break into the low-end server segment, including one-chip and two-chip computers and tower PCs as well as rack mounted servers.
"We're not yet in the SMB segment; it represents for us a great volume opportunity since we have so little market share now," says Kevin Knox, vice president of AMD's commercial business.
"Volume has not been the issue; we had a bigger challenge with ASPs," Knox said in reference to average selling prices. "You get into these things when you have products that are very close to equal performance. That is where you get squeezed on the price side, because it's your only leverage left."
Barcelona could change all that, since the new chip will perform so much better than Intel's dual-core and quad-core Xeon offerings that AMD won't need to slash prices to boost market share, AMD claims.
However, analysts warn that the market may not be ready for quad-core processors, regardless of the vendor.
"We're concerned about this whole rush to multiple-core processors, as if the technology could be the saviour of AMD or anyone else. We're concerned quad-core computing is coming up too fast," says John Enck, an analyst with Gartner. "It's basically an arms race between Intel and AMD, so we're at the point where there's more technology being offered, so they can keep up with each other, than we can actually use."
The increasing popularity of virtualization is one sign of this glut of processing power, as many enterprises try to find extra work to justify expensive servers that are often running at just 15 percent or 25 percent utilisation, Enck says.
Still, AMD sees fertile ground in the entry-level server market, and continues to pour its resources into planting seeds there. Barcelona will mark AMD's first quad-core product and its first made with a 65-nm manufacturing process. But it will gain the greatest advantage from improvements to its processor core architecture, enabling vastly better virtualization abilities and an increase from 64-bit to 128-bit computing, all without growing above the current Opteron's 68-watt and 95-watt thermal envelopes.
"They have this big engine but they can't get data to it fast enough," Knox said about Intel's chips. "This is going to be the biggest enhancement to the x86 architecture since we released Opteron. It will take the power-per-watt equation to levels people have never seen before."