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Analysis AMD's Opteron processor has enjoyed more success in one year than most thought possible, but any notion of a guaranteed, glorious future should be dismissed.

It's easy to be impressed by the gains AMD has made in the server market over the past 52 weeks. This time last year, AMD was a vague afterthought in the minds of server customers. Some used Athlon processors in low-end boxes, but that's where AMD's traction stopped.

Opteron changed everything in the enterprise market for AMD. IBM was the first big name to pick up the chip with a server aimed at high performance computing, and then HP and Sun outdid their rival by announcing entire Opteron server lines. The backing of major vendors has helped AMD make a quick move from the niche technical computing server market where new chips often languish into real-life data centers.

This is no small achievement for an unknown quantity - just ask those responsible for hawking Intel's Itanium processor.

AMD even managed to line up several large software makers behind Opteron. CA, IBM, Microsoft, Oracle, Red Hat, SuSE, Sun and smaller guys such as VMware are on board.

And at the bottom line, where things matter most, AMD recently pumped out a quarterly profit for the second time in a row. Opteron sales helped push AMD's average processor price higher, which clearly fattened total revenue.

Overall, AMD shattered industry expectations for Opteron's first year. The fact that the company's product is even discussed as a serious Intel alternative in the server market is a major accomplishment. But a huge question remains as to how much of the server market AMD can hold onto as Intel rolls out its own Extended Memory 64 Technology (EM64T) Xeon processor in the very near future.

The truth is that as awesome as AMD's one year gains are, they are not enough to knock Intel off its pedestal anytime soon.

We have a pool and a pond. The pond is probably best for you.

From the hardware vendors' perspective, Opteron is still a second class chip.

After one year, IBM continues to relegate Opteron to a high performance technical computing box that fills a small void in Big Blue's overall server line. IBM's main priority remains its own Power processors - a line the company hopes to promote in 2004 as a better than ever choice for low-end servers and blade systems. This is Opteron's prime stomping ground. In addition, IBM must also back a vast Xeon franchise and nudge Itanic where needed.

HP has its own existing businesses to protect. The company owns the majority of the Xeon server market and always has its huge commitment to Itanium in mind. True, HP has rolled out an impressive Opteron lineup, including the introduction of a four-way box this week, but these point products hardly rival the completeness of HP's Intel-based product line. This may change over time, but then again maybe not. HP has been a big backer of AMD on the PC, but Intel-based sales still make up the vast majority of its personal computer business.

Sun's case is a bit less complex. Sun appears more than happy to back AMD over Intel in the x86 market and plans to roll out workstations, a four-way box and an eight-way box to complement an existing two processor system. Sadly for AMD, Sun's place in the x86 market defines the word niche.

And then there is Dell. Can AMD be considered a major threat in the x86 server segment without Dell's backing? Not really.

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