Intel is launching its new Core architecture, set to substantially increase performance per watt and attack a spot in the market where it has been vulnerable from its primary competitor, AMD. It appears that Intel has done a masterful job with its new products, increasing performance up to 40% and decreasing power requirements by nearly the same figure. This will extend the Intel Centrino advantage, which it has long enjoyed in mobile devices, to desktops, and even servers where it has been losing market share in the past 2 years to AMD’s superior performance and lower power requirements. Indeed, power consumption is becoming one of the single biggest IT expense items in data centers (after labor) where many servers are installed and run continuously.
This new architecture, with dual and quad cores (and even more in the next 1-2 years), is based on the massive redesign of the i86 architecture Intel undertook when it launched the notebook-centric Pentium M some 3 years ago. By extending and enhancing this architecture into the full line of Intel chips, it has “leaped ahead” of the competition. Indeed, if preliminary test measurements hold up, Intel will have a significant advantage in high performance systems, a space that AMD has held for the past few years with its Opteron, the first true high performance 64 bit chip, with which it “leap frogged” Intel.
The chip market has changed from 5 years ago when Intel held a near monopoly position in the marketplace. With its intense competition at the high end on performance, and at the low end on price, AMD has “tweaked” Intel into examining its architectures and accelerating a redesign. Now, its Intel’s turn to do the same to AMD. We believe that Moore’s Law is morphing. It states that chip capabilities double every 2 years. We believe that Moore’s Law is not dead. It’s just that there is now a corollary. With real competition in the market (a healthy situation for both consumer and producer alike), we expect redesigns and new architectures to come into the market at an accelerated pace and leapfrog the established leader every 3-4 years. And this “Law of Leap Frogs” is likely to continue, as the technological pace accelerates.
Bottom Line: Now that it appears Intel has regained the lead, we expect AMD to fire the next shot. Within the next 2 years, we would expect AMD to release its next generation of chips that will likely move ahead, at least in certain areas, of the Intel devices. This means that users who buy machines should keep a close eye on the competition between these two vendors, and we expect users to be less likely to lock into any one vendor for the long term. We see this increasingly being the case in the server market where AMD has gained a large share of the market, and we expect to see the same in the desktop space, with new generations of chips causing a “see saw” effect in market share. Overall, the competition will provide increasing levels of performance at lower power requirements, and importantly, keep prices stable or even lower. The “Leap Frog” effect is ultimately good for the marketplace.
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