We All Need a Healthy Advanced Micro Devices (AMD)

People usually are one of 2 minds regarding Advanced Micro Devices, the scrappy Sunnyvale, CA based chip maker battling 800 pound gorilla Intel, many times AMD's size. One camp considers Intel the evil empire and will stick to AMD no matter what. The other camp pooh-poohs AMD, criticizing it at every turn, and is quick to proclaim AMD's demise and point out its shortcomings.

Until the second half of last year, the former camp had a lot to crow about. Dell became the last major PC manufacturer to embrace AMD in its mainstream products. Dell had actually flirted with AMD before, occasionally selling AMD CPUs on its web site, then acquiring Alienware, a niche manufacturer of high end gaming PC rigs that had offered AMD CPUs, and then finally getting over its addiction to Intel marketing funds and choosing AMD Opteron CPUs for its server lineup.

AMD was also making hay out of Intel's apparent inattention to the CPU arena by increasing market share in servers, where AMD was a non-factor several years ago, capturing as much as 25% of the market. Key wins with Sun Microsystems and IBM's use of AMD in massive parallel computing clusters no doubt helped. AMD also won slots in the semi-annual supercomputing rankings thanks to the IBM connection.

The AMD desktop and server CPUs were significantly better architecturally than Intel's offerings. They consistently bested the Intel competitors in industry benchmarks. However, AMD failed to make a significant dent in the fastest-growing segment of the market, laptop CPUs. There, Intel reigned supreme thanks to its Centrino product set (consisting of the Pentium M mobile CPU, the 855 and follow-on chip set with or without graphics, and the 802.11x Wi-Fi chip).

However, industry veterans knew better than to write off the "Evil Empire" (Intel). Sure enough, the Empire struck back with its Core 2 Duo family of products, introduced midyear 2006. These product leapfrogged AMD's products (and Intel's own, by up to 40% in performance, at the same or lower prices) and forced AMD to slash prices as much as 55+% to stay competitive.