AMD’s brimming with quad-core confidence

January 25, 2007, 11:06 AM UTC
Fortune

Amd_1

AMD (AMD) remains confident that the quad-core Barcelona chip for enterprise servers, due at the middle of this year, will deliver a 40 percent performance boost over what’s available today – an advantage Intel (INTC) won’t be able to match.

I had lunch on Tuesday with Randy Allen, AMD’s corporate vice president for servers and workstations, and had a wide-ranging talk about the status of AMD’s server business and competition with Intel. Undeterred by the disappointing financial results AMD announced that day, Allen made some bold statements about the company’s upcoming quad-core server chip. Here are some key points from our conversation:

  • AMD will begin shopping the Barcelona chip around to customers in the April-June time frame (so, in about three months).
  • Allen thinks Barcelona’s advances in virtualization and power management (and other technologies) are so significant that to compete, Intel will have to significantly change its front side bus or micro-architecture – no simple task.
  • AMD decided two years ago to pursue the current Barcelona strategy, even though it would take six months longer than other options and Intel would almost surely come to market with a quad-core product first. (Intel did, with Clovertown.) AMD believes its quad-core Barcelona design is far more efficient, and that customers will notice.
  • AMD is hopeful that customers are holding off on purchasing Intel’s quad-core product, released in November, based on the fact that Intel didn’t say much about it in its most recent earnings call. Yesterday, however, CNET quoted a Mercury Research analyst saying Intel’s Clovertown chip is already contributing a meaningful amount of business to Intel.
  • Allen said Q4 2007 will be when the first real impact of Barcelona comes through in AMD’s financial statements. I noted that if the chip does well, it will provide very flattering comparable sales figures to the Q4 results AMD announced this week, which were short of Wall Street’s expectations.
  • Barcelona will have healthy margins, Allen predicted – AMD seems confident that because it will provide such a performance advantage over Intel, price competition won’t be as intense.
  • While he doesn’t expect customer uptake to be as quick as the shift from single- to dual-core, Allen said because AMD has made it easy for customers to drop the quad-core solution into their existing equipment, customer acceptance will be rapid and broad-based.
  • Allen downplayed the significance of Intel’s partnership announcement with Sun Microsystems (SUNW) on Monday. Though he admitted that AMD liked being Sun’s exclusive provider of x86 chips, he said it seemed to him that the partnership was more about getting Intel to back Solaris than it was about selling a whole lot of servers. He also said this doesn’t mean AMD won’t still see Sun as a great customer.

My take: Chip makers are, without exception, confident about their upcoming products – so I take everything Allen said with a grain of salt. Still, Allen laid down some very specific claims and projections, particularly the 40 percent performance boost. (When I pressed him on what exactly that 40 percent includes, it was slightly less clear; he mentioned a number of metrics, including performance per watt.)

Also, it is obviously in AMD’s interest to drum up customer curiosity about Barcelona, in hopes that some will hold off on purchasing Intel’s quad-core offering, and at least do an Intel/AMD bake-off later this year.

Is Allen’s confidence in Barcelona warranted, or is it an attempt to spread anti-Intel FUD (fear, uncertainty and doubt)? Time will tell.