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Hot and cold: Server market chills, microprocessors on fire

Posted: 08 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:computer server market? microprocessor business? quad-core servers?

The computer server market is in a lullif not at the 'crossroads'but the business is heating up on the microprocessor front.

AMD, IBM, Intel and Sun are separately readying new processors for the workstation/server arena. This market, however, is projected to experience a slowdown over the next few years, due in part to the emergence of virtualization and multicore technologies, according to IDC.

Still AMD is sampling its first quad-core processor for servers, but Intel is expected to pre-empt the official launch with a series of price cuts for its own quad-core lines, according to a report from Friedman, Billings, Ramsey Group Inc. (FBR).

AMD's quad-core processor is called Barcelona, which is officially due out in mid-2007. Intel's quad-core processor is called Clovertown, a product that has been shipping for some time. Both devices are 65nm designs.

''Intel's projections indicate that quad-core servers (Clovertown) will represent 60 percent of total servers in 3Q and 75 percent in 4Q, up from 25 percent in 2Q 2007,'' said Chris Caso, an analyst with FBR, in a report issued last week (May 4).

''We believe this is in large part driven by significant price cuts planned by Intel for Clovertown processors in July,'' Caso said. ''We expect this to create substantial pressure on AMD in 2H 2007 and make for a difficult environment for the upcoming AMD Barcelona launch.''

Randy Allen, corporate VP for the server and workstation division at AMD, dismissed those claims, saying that Barcelona has a competitive advantage over Clovertown. Barcelona, which will be sold under the Opteron brand name, is based on 65nm technology, featuring a 128-bit floating point unit.

Last week, AMD revealed its upcoming quad-core Opteron will exceed the integer performance of Intel's high-end four-core CPU by 20 percent. ''When we talk about a 20 percent advantage, that's extremely compelling,'' Allen said.

On track for delivery
Allen claimed that Clovertown has not exactly been a smashing success in the market. In total, Intel's 65nm, quad-core processor represented 10 percent of its server sales in Q1, up from 5-to-7 percent in Q4.

Allen also said AMD is on track for the launch of Barcelona by mid-2007. The device is sampling to key customers, he said. However, at the same time, Intel is pushing hard to develop and ship processors based on 45nm technology. Intel claims to have a one-year lead in the 45nm race.

Going forward, though, AMD still has strong prospects. ''AMD expects to regain share in Q2,'' analyst Doug Freedman of American Technology Research. ''We expect share gains to remain limited to the low-end of the market until Barcelona launches, with its server products picking up some share in the back half of the year.''

It could be a moot pointat least in the sluggish server arena. "The server market is at a crossroads and customer buying behavior is increasingly driven by the strategic business benefit of the IT investment rather than a singular focus on cost containment," said Matt Eastwood, program VP for IDC's Enterprise Platforms Group, in a report.

Year-on-year growth of worldwide spending on server technology in 2007 is projected to grow a mere 2.3 percent to $57.1 billion, according to IDC. It expects the market in Q1 to grow 1.9 percent to $12.9 billion.

According to another IDC report, multicore and virtualization will cost the x86 market more than 4.5 million shipments and $2.4 billion in customer spending between 2006-to-2010. Overall, x86 shipments that were once projected to increase 61 percent by 2010 are now facing just 39 percent growth during that same period, according to the firm.

''The use of multicore technology in conjunction with server virtualization tools has a compounding impact on server configurations, and accelerates the ability of IT organizations to exploit the benefits of multi-core technology," said Michelle Bailey, research VP for IDC's Enterprise Platforms and Datacenter Trends, in a recent report.

"Unlike other previous multicore introductions that took time to become mainstream as customers changed their application code, virtualization allows customers to fully exploit the improvements in x86 processors immediately, accelerating business benefits and thereby increasing adoption rates,'' the analyst said.

Looking forward, IDC believes the server and component vendors will optimize around quad-core technology before moving ahead to octi-core technology.

- Mark Lapedus
EE Times

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