Opteron customers show AMD in new light

Advanced Micro Devices Inc. (AMD) has gone from an after thought among server customers to the darling of the enterprise world in just a year. The company's Opteron chip has opened doors of corporate server rooms for AMD, and many enterprises are flirting with the new kid on the block.

Intel Corp. has dominated that block for years, with over 90 percent of the market for IA-32 servers. But Opteron has become an alternative to Intel on IT managers' shopping lists.

Opteron shipments have doubled each quarter since the product was launched, according to research firm IDC. However, with just 35,000 Opteron servers shipping in 2003, Opteron still represents a tiny fraction of the entire 3.26 million-unit IA-32 server market.

By not breaking binary compatibility with the millions of existing IA-32 applications, Opteron has given customers a less painful route to 64-bit computing than the one provided by Intel's Itanium 2 processor. AMD's hardware is also uniquely positioned to take advantage of the move toward clustered applications.

Software vendors like Oracle Corp., IBM Corp. and SAP AG have been working to make their applications work with clusters of low-cost systems.

Enterprise users are beginning to show interest in Opteron for these types of applications because of its low cost as well as its strong I/O capability and 64-bit processing capabilities, said Dave Driggers, chief executive officer of Verari Systems Inc. in San Diego.

Driggers, whose company sells AMD and Intel cluster systems, says Opteron systems represented about 20 percent of his company's business in 2003. That number has jumped to 40 percent in the first quarter of 2004, he said. "Opteron has gained quite a bit of market share within our company," he said. "There's heavy interest for database, for file servers and (for) traditional enterprise products," he said.

Spam filtering company Postini Inc. in Redwood City, California, purchased 32 of those Opteron systems to run database cache servers. The company's vice president of operations, Jon Prall, says the fact that a white box dual-processor Opteron was able to outperform a much more expensive four-processor Sun Microsystems Inc. 480 system turned him into a believer.

"The Opteron is truly an amazing chip," he said. "It's completely changed my perception of AMD."

Changing the perception of customers like Prall is what AMD must do if Opteron is to become a serious competitor to Intel's Xeon.

"I think the biggest challenge for Opteron is getting into the mindset of the enterprise that they are an enterprise player," said Verari's Driggers. "They've always been considered the generic Intel product."

By the end of the year, AMD hopes to extend its toehold in the enterprise to include four-way servers. Currently, most Opteron servers are one-way or two-way systems clustered together for greater performance.

As part of the Opteron anniversary, Hewlett-Packard Co. will unveil its first four-way Opteron system: the Opteron DL585, which will be priced starting at US$8,299.

The multiple Hypertransport links on each 800 series Opteron processor allows system builders to link the chips directly together, cutting down on latency caused on other interconnects, said Ben Williams, director of AMD's server/workstation business segment.

Customers running four-way or eight-way servers from other RISC (reduced instruction set computing) vendors can switch to two-way or four-way Opteron servers, and not only cut their hardware costs but reduce their software costs in per-processor pricing configurations, Williams said.

"The price per processor (on an 8-processor machine) is four to five times that of the price on four-way," said Postini's Prall. "So right there is a huge motivation to use small boxes," he said.

Weather.com Vice President of Technology Dan Agronow did just that when he purchased eight two-way servers from IBM in the fourth quarter of 2003 to replace five four-way IBM servers with Intel's 900MHz Xeon MP processor.

Agronow only needs six of the Opteron servers to replace the four-way servers, keeping two Opteron servers as a backup. He has seen a 25 percent increase in the number of concurrent queries his database can handle without any impact on performance, he said. Weather.com is the online site for The Weather Channel, based in Atlanta.

"(Opteron's) price/performance made a huge difference. The price point for the two-ways are just fantastic," he said. "They've been rock solid."

Opteron's most visible success story has come from AMD itself. The company has now been profitable for two straight quarters following nine straight quarters of losses.

"AMD is viewed as a credible tier one server processor supplier, which certainly wasn't the case a year ago," said Dean McCarron, principal analyst with Mercury Research Inc. in Cave Creek, Arizona.

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