AMD Makes Gains Below the Radar
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AMD's gains at the expense of its much larger rival Intel have received wide coverage, but it's not all about server sales by big names like HP and Sun, or AMD's stunning surge in desktop sales at the retail level.
Smaller vendors and significant direct sales are also contributing to AMD's bottom line and market share gains. Plus, there is the Google factor.
The most dramatic indication of AMD's gains on the corporate server side have been rumors it's gained search engine giant Google as a customer. A research report by Morgan Stanley earlier this month said most of Google's near-term server purchases will use AMD Opteron processors. Other sources contacted by internetnews.com confirm the move and that, in fact, Google has been purchasing and deploying AMD-based servers for months.
Even if AMD can't shout from the rooftops that it's gained what is probably one of the top five reference clients in the world, sales to Google are an enormous win. Analysts and computer makers estimate Google has deployed at least 200,000 servers worldwide.
"The way companies are architecting applications with redundancy, distributed files systems and replication, you can deal with some unreliability in the hardware," said Lew Moorman, SVP of strategy and product development at Rackspace.
"If Google has hundreds of thousands of servers they aren't going to worry about a few failing, they're covered. And the difference in failure rate between commodity and name brand servers has shrunk dramatically."
Rackspace is another strong AMD supporter. The company started in 1998 selling AMD servers to small businesses, but has since moved up to provide mid-sized and larger businesses with managed server solutions; companies buy servers from Rackspace, which houses them at its own data centers. Rackspace sells over 500 servers a month, with about 70 percent based on AMD that it builds itself. The company also offers Intel Xeon-based servers from Dell.
But why AMD for Google? With Intel CEO Paul Otellini on its board of directors, and being a big volume customer, Google is likely to get as good a deal as any company from Intel.
"I think when you look at AMD's implementation of 64-bit extensions, power ratio and the lower noise and thermal requirements, it's not just the performance advantage, but all of these things together that pushed Google over the edge," Rahul Sood, president of PC maker VoodooPC told internetnews.com. "The bottom line is there is less cost to run and maintain AMD [servers] than Intel even if Intel offered Google a huge discount, which I don't know that they did."
In a recent blog entry, Sood said he has friends at Google that confirmed the move to AMD. "Google may have purchased another 10,000+ Dual AMD Opteron dual processor servers recently that's insane!" wrote Sood. VoodooPC sells almost all AMD-based systems.
To be sure, chip giant Intel remains the dominant supplier of processors at the desktop and server level.
But AMD cleared a significant benchmark when it reached just over 20 percent share of the overall computer market in the fourth quarter, according to Mercury Research. On the high margin server side, AMD's share jumped to 16 percent.
In sales at retail stores, AMD surpassed Intel overall by 58 to 41 percent for the first 11 weeks of 2006, according to the latest research by NPD group provided to internetnews.com. Intel actually leads in notebook sales 61 to 38 percent, but AMD more than flips the equation on the desktop side with a 78 to 21 percent edge.
The biggest desktop PC manufacturer, Dell, which uses Intel chips exclusively, is not included in the retail figures because it sells almost all of its systems direct.
"AMD continues to keep the pressure on Intel by delivering solutions the market wants, especially on the desktop," said NPD analyst Stephen Baker. "In notebooks, where the processor matters more than in the desktop, Intel has still been able to use its Centrino platform play to allow it to maintain a commanding market share lead."
"Both AMD and Intel offer credible platforms, but more of our customers are asking for Opteron," said Moorman.
"Energy and power consumption is a major issue and the AMD systems are more efficient. Intel got distracted with Itanium, but I think they are now laser focused on power consumption and performance per watt. We're biased towards AMD, but we love the competition because it gives our customers some great choices."