October 31, 2005
It's hard to believe a company that controls more than three-quarters of perhaps the most profitable segment of the electronics industry can simultaneously look vulnerable and weak even while posting "banner" operational results. But Intel, in reshuffling its processor roadmap this week has ensured that the momentum rival Advanced Micro Devices Inc. has built over the past year will continue for at least another year.Analyst Nathan Brookwood of Insight 64 this week borrowed a phrase from former New York Mets manager Casey Stengel. As that team stumbled to a 40-120 record in 1962, Stengel asked, "Can't anybody here play this game?" Executives at Intel must be asking the same question as well.
Over the past two years, AMD has embarrassed Intel by beating the larger competitor to the punch in bringing out first 64-bit x86 processors, and then in getting its dual-core server processors to the market more than six months in advance of Intel. Many felt, however, that Intel, with its much larger ability to invest in R&D and capital expenditures, as well as its long-established ability to provide leading-edge technology, would bring its processor technology back into parity with AMD during the course of 2006. It would now appear that with the latest shifts in its roadmap that Intel may continue to walk in its smaller rival's technological shadow for at least another year, if not longer. Intel's maintains it is scrapping its original plans for a new Xeon processor for multi-processor servers in 2006 in favor a different platform will enable it to bring a higher performance product to market faster than originally scheduled. That may prove true, but its customers must be wondering exactly what is going to happen over the next few months before that new processor is delivered. Will Intel meet its new delivery schedule, and will it actually deliver improved performance? The company is also delaying its next generation Itanium processor by about six months. That comes as the Itanium has struggled with a market perception that it is a processor in search of a home as Dell and IBM have pulled back support, and only Hewlett-Packard remains to bolster the architecture among the largest system vendors. In the past Intel has proven virtually invincible and has demonstrated an ability to quickly over come any temporary setbacks, while AMD was simply a pesky little gnat that provided Intel with a competitor to point to whenever someone tired to cry monopoly. AMD is no longer a lapdog happily licking up any crumbs left around by Intel. AMD has steadily grown its market share over the past year, and in the third quarter controlled nearly 18% of the total x86 microprocessor market. On Monday, InformationWeek will look at what AMD has been doing to prepare itself to move into its next stage of growth. AMD now justifiably believes it can gain as much as 30% of the market within the next two years. As early as the beginning of this year, a 30% market share by AMD would have seemed a pipe dream, but given Intel's continued struggles, and AMD's growing acceptance by enterprise customers, this could instead be a developing nightmare for Intel.
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