AMD cracks server market milestone at Intel’s expense

Advanced Micro Devices Inc.’s Opteron processor garnered more than 10 percent of last quarter’s server processor shipments, a sharp increase compared to the first quarter and a remarkable climb from AMD’s minuscule share of the server market several years ago.

According to data from Mercury Research Inc., Opteron shipments made up 11.2 percent of the total number of server processors using the x86 instruction set shipped during the second quarter, said Dean McCarron, principal analyst with Mercury Research in Cave Creek, Arizona.

Mercury Research measures market share by the number of processors shipped by vendors such as AMD and Intel Corp., not the percentage of servers that use AMD’s chips as measured by companies like IDC and Gartner Inc., he said.

“The market has gotten a little more competitive. The share reflects a very significant uptick in [Opteron] shipments during the quarter,” McCarron said. AMD shipped 7.4 percent of x86 processors for servers during the first quarter.

For several years, Intel had the x86 server market almost exclusively to itself. The company’s Xeon processors changed the way corporations deployed servers in the late 1990s, as the combination of relatively low-cost Xeon chips with operating systems such as Linux or Microsoft Corp.’s Windows led many IT departments to move many applications off expensive RISC (reduced instruction set computing) servers from companies like Sun Microsystems Inc. and IBM Corp.

However, in 2003 AMD introduced Opteron, which combined an integrated memory controller with 64-bit extensions to the x86 instruction set used by Windows and Linux. The integrated memory controller dramatically improved the performance of memory-intensive applications, and the 64-bit extensions allowed IT managers to run both 32-bit and 64-bit applications on the same server. Intel, which had promoted its Itanium 2 processor as the best route to 64-bit computing, was forced to introduce its own x86-64 chip in 2004 to compete with Opteron, which can be found in servers from Hewlett-Packard Co., Sun, and IBM.

AMD Chairman, President, and Chief Executive Officer Hector Ruiz had high hopes for the Opteron chip last year, but the company fell a little short of its market share target, he said in an interview earlier this year. Ruiz had hoped Opteron would show up in 10 percent of all x86 servers by the end of 2004, but it had only reached 5.7 percent of all servers as of the first quarter of this year, according to research from Gartner. Ruiz has set a target of 12 percent market share for 2005.

AMD reported that revenue from Opteron sales doubled from the first quarter to the second during its recent earnings conference call, boosted by the introduction of a dual-core version of Opteron in April. With Intel not scheduled to start early shipments of dual-core processors for low-end servers until late this year, AMD will have had around six months to itself as the undisputed performance leader among chips for x86 servers.

Mercury Research’s data does not measure shipments of chips such as Itanium 2 or IBM’s Power 5, which dominate the high end of the server market, but make up a very small portion of the overall server processor shipments.

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