Chip wars brings cost control

Competition IS usually good for customers — less fun for those in the race. The Intel-AMD battle is a good example.

Although Intel holds a commanding lead in market share and sales ($US26.7 billion last year vs. AMD’s $US2.7 billion), AMD continues to turn out smart, interesting products that keep prices down — and Intel on its toes.

The Opteron is a good example. Whereas Intel’s Itanium took a technological leap ahead by concentrating on superior 64-bit performance, AMD’s chip took a more pragmatic — and potentially more transient — approach.

The Opteron performs respectably with native 64-bit apps. But where it really shines is when it comes to the huge installed base of legacy 32-bit and even 16-bit apps that most companies still use. The Opteron runs those at speeds comparable to today’s 32-bit processors in its Legacy Mode. The older apps still run fine in Long Mode. But now they can take advantage of the Opteron’s 64-bit memory management and disk storage, thereby potentially boosting performance.

The contrast is reminiscent of that between Intel’s Pentium and AMD’s Athlon at the low end of CPUs. The Pentium is the faster and arguably more powerful chip, but pragmatic Athlon performs just as well — in some cases better, despite lower clock speeds — at many common tasks. The risk for AMD is that the Opteron will be seen as merely providing a bridge solution during a period when 64-bit apps remain rare outside the enterprise Unix market. Intel certainly has made the bolder stride forward. But AMD would counter that its chips provide a painless upgrade path and that 64-bit performance will improve in future designs.

The competition between the companies has kept margins low (too low for AMD; the company has posted losses recently); but for buyers, it means choice and a measure of cost control.

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