Market Outlook
Issue: Volume: 28 Issue: 5 (May 2005)

Market Outlook

But does this mean that the game is over? That the rest of the industry is letting Intel have the market all to itself? Maybe not, as AMD, for one, has moved into a solid position to vie for a bigger piece of the workstation pie.

Last year, AMD won respect as a genuine technological threat in the marketplace, although big sales figures haven’t yet followed. In fact, by the end of last year, AMD had only accounted for 1 percent of workstation shipments (see accompanying graph). But this is shaping up to be the year AMD could finally make a dent in Intel’s market share.

AMD has competed in the market for many years, but never had a chance to seriously threaten Intel. To be successful against Intel, a vendor must have a nearly perfect game plan, and execute it flawlessly. And for the most part, AMD didn’t and couldn’t, at least not in the workstation space.
AMD’s 2004 market share could rise significantly in 2005.

To make big OEMs and workstation buyers stand up and take notice in the nobody-ever-got-fired-for-buying-Intel world, AMD had to be significantly different. And more than that, it had to have a strong argument for technical superiority.

That argument came in 2003 in the form of Opteron, AMD’s flagship processor targeted at workstations and servers. Hailed by analysts and technology enthusiasts alike, Opteron was a broadside attack aimed at one of the few chinks in Intel’s armor-the gap between Intel’s Pentium-derived 32-bit Xeon and high-end 64-bit Itanium platforms.

Like Itanium, Opteron delivered 64-bit computing, but did so more gracefully, maintaining 32-bit x86 compatibility, in contrast to Itanium’s incompatible instruction set. And with its DirectConnect architecture introducing memory controllers integrated into the processor rather than across Intel’s front-side bus, Opteron trumped Intel’s Xeon platform.

DirectConnect not only promises lower latency, but memory bandwidth that scales by processor. That advantage can boost performance considerably in dual-processor workstation applications. And combined with high-speed HyperTransport I/O links, DirectConnect offers demanding professional users a compelling alternative to the Intel architecture.

Digital content creators for film, TV, and gaming are among today’s most bandwidth-hungry users. And Opteron workstations hold great potential by providing the highest bandwidth solution we’ve seen for Nvidia’s top-end dual-card SLI graphics targeting both professional and gaming applications. While Intel eventually humbled itself to match AMD’s 64-bit-on-x86 solution last year, DirectConnect’s memory and I/O performance advantages remained generally intact at the close of 2004.

Despite such promise, 2004 was not a watershed year for AMD. Microsoft’s 64-bit Windows slipped, leaving Linux (and later Solaris) as the only showcase for AMD’s 64-bit capabilities. And AMD needed Tier 1 OEM support.

Now, the prospects for Opteron have improved dramatically. Fujitsu-Siemens, IBM, Sun, and HP have all announced Opteron workstations, and Microsoft is finally on the cusp of releasing 64-bit Windows.

But earlier this year, Intel initiated countermeasures to allay the AMD challenge by aggressively boosting on-chip cache. The company’s newest Xeon processor contains 2mb of cache, doubling Opteron’s 1mb and clouding AMD’s arguments for supremacy in memory performance. Looking ahead, Intel has also announced that the chipset for 2006 Xeon servers and workstations will provide dual front-side buses and a faster memory interface, mitigating AMD’s argument on dual-processor bandwidth scaling.

Moreover, Intel also reportedly plans to go one step further and integrate a memory controller in Xeon and an interface to a common serial interconnect called CSI. If this does come to pass, then Intel will have truly ended the debate on AMD architectural advantages, since the company would have effectively adopted AMD’s architecture.

The next two years will be a make-or-break period for AMD in workstations. AMD and its partners are moving forward, and Opteron has gained a foothold. But Intel is moving quickly to close the gap, so AMD must be as aggressive as ever in 2005 to turn that foothold into meaningful market share. - By Alex Herrera, senior analyst, Jon Peddie Research (, publishers of the new edition of the JPR “Workstation Report-Professional Computing Markets and Technologies.”