With the release this week of a new family of Xeon dual core processors, Intel and its OEM and system builder resellers hope to reverse market share losses suffered in the last 12 months to rival AMD Inc. and its cooler Opteron chips.
“We’re positioned in the second half of the year with the best product line we’ve had in a very long time,” said Intel Canada manager Doug Cooper. “We have breakthrough technology both from the standpoint of the ability to deliver performance . . . as well as energy-efficient performance.”
The new CPU, formerly dubbed Woodcrest, is the Xeon 5100 series for workstations and servers with up to two processors and uses second-generation Core 2 Duo microarchitecture. Original equipment manufacturers are expected to release products within 30 days.
Cooper said this period represents “an important break” from Intel’s usual reliance on its manufacturing technology to give performance improvements. “We’re launching a brand new architecture not with a five per cent improvement advantage over our competitor but with a substantial double-digit advantage in all categories – server, notebook and desktop.”
Coming later this summer are the Conroe CPUs for desktops, and Merom CPUs for laptops, all using the Core 2 platform.
“This is an innovative, revolutionary change, not an evolution in our product line,” said Cooper, who expects their strongest pickup will be in servers and desktop PCs.
To perk up resellers, Intel Canada just finished a five-city roadtrip to teach the channel how to enthuse customers about upcoming products.
Industry analysts agree that the next six months will not only be vital for Intel, but also an exciting time for resellers who will have an abundance of choices for customers.
“In terms of the server and desktop lines they are hugely significant,” said Nathan Brookwood, a California-based microprocessor analyst with Insight 64. “Intel’s old architecture, the Netburst, which drove the Pentium 4 and the Xeon until recently, had run out of steam. It was Intel’s lack of competitiveness in server and desktop markets that gave AMD entry into those segments in a way they hadn’t before.”
“What Intel needed to do is demonstrate that it had products that were competitive, and now at least in uni-processor and dual-processor area its done that. So Intel customers who might have been wavering if Intel can get it together or did they need to talk to AMD, now can go to sleep at night being reasonably confident Intel’s act is coming together.”
Woodcrest “addresses a lot of areas where Intel has shown some weakness in terms of power and performance,” agreed Dean McCarron, principal of Mercury Research, a Cave Creek, Arizona microprocessor analyst. “It goes a long way to making Intel more competitive.”
As enterprises push consolidation, servers are becoming denser, while at the same time organizations’ demand for more storage is soaring. The result are hotter, energy-demanding data centres. Opterons use less power than comparable Xeon chips running the Pentium 4-based Netburst architecture, leading to an increased demand for Opteron-powered servers. At the same time demand for its AMD’s Athlon64 chips for desktops has eaten into Intel’s P4 market.
McCarron calculates AMD’s server market share was up to 20 per cent in the x86 by the first quarter of this year, and the sales inertia – after years of being on the side of Intel — is in its favour.
By switching to the Pentium M-based Core Duo architecture –- which essentially lets the processor do more work per clock cycle than P4 chips at less speed — Intel says two of its 5100-series chips delivered 135 per cent better performance over a Fujitsu server with twin dual core Xeon 2.8 GHz CPUs in identically-configured servers. It also claims a 40 per cent reduction in power between a 5100 chip and a Xenon 2.8GHz chip.
“These new products are going to be very important for Intel’s positioning in the future,” said McCarron. But, he cautioned, it may be several quarters before the manufacturer sees a significant shift in market share.
Meanwhile AMD isn’t standing still. It will be shifting its CPUs from handling DDR memory to faster DDR2 in the rest of the year, as well as preparing for the release next year of quad-core chips.
Things are going so well that this month it announced plans to begin construction 12 months from now of a US$2.6 billion semiconductor manufacturing plant in New York state, which would begin cranking out chips in 2013.
However, resellers should note that Brookwood observed that Intel is positioning the 5100-series chips –- at least initially — for OEMs selling to enterprise-sized clients. Small and mid-sized customers are being advised to buy Netburst-based lines of Xeon servers.
Looking ahead, he also noted that the CPU battle is about to shift from megahertz and power consumption to which chip performs better in virtualized environments. Intel has already added extentions to its chipsets to take advantage of virtualization software from companies such as VMware and Xen, while AMD is about to do the same.
As for whether Intel can regain ground lost to AMD, Brookwood believes it’s more likely the new products will only slow AMD’s momentum. “Whether they can take back that some of that market share is still an open question. Many customers who went to AMD have discovered their products are pretty good.
“What will happen for sure is that Intel will be able to get better prices for the chips that are going into these enterprise markets because their performance is now competitive, whereas before their performance was so weak Intel was forced to do a lot of discounting. So even if its unit share doesn’t increase much its dollar share will likely improve.”