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AMD: Our best competitive server position in years

Gonna make it up in volume

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What seems clear, and what AMD did not say, is that by putting low-cost 2P machines in the field that scale down to 1P and low-cost 4P machines in the field that also scale down to 2P boxes, AMD does cover the market a little differently. And with a rebound in servers, provided server OEMs get some more designs out there soon, AMD could see an uptick in volumes, perhaps getting close to the high market share it enjoyed when Intel was still debating whether Xeon should be 64 bits and if it should clone HyperTransport and ditch the frontside bus.

Perhaps AMD shouldn't have goaded Intel so much. The company's Xeon chips are pretty good Opteron knockoffs - and in terms of memory scalability, the Xeon 7500s have some pretty big advantages.

None of this is to say that AMD had a bad first quarter in servers. It most certainly did not. On the call, Seifert said that server, desktop, and notebook chips all showed double-digit growth in Q1, and that server revenues and unit shipments demonstrated the strongest growth compared to the first quarter of 2009.

Of course, Q1 2009 was just awful for server and chip makers thanks to the Great Recession, so revenues were no doubt impacted by the impending announcement of the new Opteron chips. Nonetheless, six-core Opteron 2400 and 8400 processors made up about two-thirds of server chip revenues in Q1, showing that the appetite for processing capacity and the best bang for the buck or the watt was driving customer purchases.

Meyer said that demand for the Opteron 6100s was strong in the quarter, and that interest in the six-core Opteron 4100s was high. Meyer added that the Opteron 4100s were on track for their own launch by the end of the second quarter - and hopefully very soon, for AMD's sake. These boxes need to get into the field fast to compete against Xeon 5600 machines. But AMD seems to think it can use the divide Intel has between its 2P (Xeon 5600) and 4P (Xeon 7500) products to AMD's own advantage.

"We think we're going to disrupt the market, and customers who would not have thought of four sockets are now going to consider it," said Meyer in the call.

At the prices AMD is charging, the economic argument can be made. But more server makers need to get Opteron 6100 and then Opteron 4100 machines into the field - and sell them with gusto - for the AMD strategy to take off.

Companies like Oracle and IBM as well as wannabes like Cisco Systems have to feel like they cannot do without the new Opteron lineup for this volume strategy to work. Or new server vendors, like Acer and Super Micro, will fill in the gap and become players if the economics make sense, and the established players don't know how to do the math. ®

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