Electronic Business, another Reed Business Information publication, recently published a story on the transformation of AMD from an x86-processor follower to a leader (Electronic Business 7/1/04, "For Once, AMD Goes Its Own Way," www.reed-electronics.com/eb-mag/article/CA430682?industryid=2116). The change in the perception of AMD has largely been tied to the success of the company's 64-bit extensions to the x86 architecture and to the Opteron and Athlon 64 processors, which eschew clock frequency as the primary indicator of relative performance.
AMD originally referred to its 64-bit architecture as x86-64 but later renamed it AMD64. (See MPR 3/29/04-01, "AMD and Intel Harmonize on 64.") Just as Intel had officially abandoned the "x86" label in favor of IA-32 (IA=Intel Architecture), AMD decided that the name of the 64-bit architecture should credit the inventors. Intel has lately been coerced by market forces to adopt the AMD extensions and forced by the limits of physics and thermodynamics to deemphasize clock frequency.
Despite all the praise heaped on the present AMD management, however, some past contributions may be underappreciated.
For one, AMD would be unable to deliver competitive processor systems without the help of third-party chip-set suppliers. During platform transitions, AMD itself has delivered chip sets that provide little more than basic functions. Of the third-party chip-set vendors, VIA and Nvidia have probably been the most influential in the success of the K6, Athlon, and Opteron processors. VIA has supported AMD with chip sets for many years; Nvidia was the right partner to help AMD break into the corporate PC market.
The present AMD management can also thank ex-CEO Jerry Sanders for his willingness to jettison almost every other product line in the company (excluding the profitable flash memory division) to keep his PC processor dreams alive. AMD sacrificed major market positions in networking components, communications chips, programmable logic, and embedded processors for the sake of the PC processor business. To the credit of Sanders, AMD has been the only x86 vendor to sustain more than single-digit market share against Intel over time.
Another company that has helped AMD is Microsoft. AMD really began to engage with Microsoft when AMD introduced the 3DNow SIMD extensions in the K6-2 processor. For AMD to be competitive in computer-game performance, AMD needed Microsoft to use 3DNow instruction optimizations in the Direct3D API. More recently, it was Microsoft's endorsement of AMD64—and the private statements indicating Microsoft would support only one 64-bit x86 architecture—that eventually forced Intel to swallow the big, bitter pill that was AMD64. (For easier digestion, Intel has coated the pill with an Intel marketing name: EM64T.)
The final party that deserves thanks for AMD's metamorphosis is...Intel. That's right, AMD's archrival has done much to create the new, more independent AMD. The turning point for AMD was successfully negotiating in 199495 for a patent cross license and the right to use the MMX logo. It was at that critical juncture that AMD gave up socket compatibility (beyond the Pentium socket) in the negotiations with Intel.
For Intel, socket independence meant that AMD would no longer be able to drop x86 processors into Intel sockets by underselling Intel's prices, a practice popularly called "socket stealing." It was Intel's annoyance with socket stealing that prompted then-CEO Andy Grove to famously dismiss AMD as the "Milli Vanilli of the semiconductor industry" (a reference to a discredited singing duo of the 1980s that was found to be lip-synching to recordings made by other singers). Lacking socket compatibility, AMD could no longer count on the Intel infrastructure and would lose an important safety net. Intel probably didn't believe AMD could marshal the resources necessary to create its own platform infrastructure, including a new processor-system bus, chip sets, motherboard designs, BIOS support, and system-software support from Microsoft.
Although it was a struggle, AMD extended the life of the Pentium socket (Socket 7 became Super7) and ultimately created its own bus by adapting DEC's Alpha EV6 server/ workstation bus for use in PCs. AMD evolved the EV6 bus from a design that required about 20 layers in the motherboard to a more economical six-layer design—and eventually to four-layer mass-market PC motherboards. The original Athlon (K7) processor with the EV6 bus marked AMD's complete infrastructure independence from Intel.
Taiwan-based vendors VIA, ALi, and SiS eventually provided the dedicated chip-set support AMD needed. And they embraced AMD after Intel fought hard against them to bring chip-set sales in house. Later, Nvidia jumped on the AMD bandwagon after it was rumored that negotiations for a bus license with Intel had reached an impasse. Here, again, Intel's positioning helped AMD. By holding out for too much from Nvidia, Intel pushed the company into an alliance with AMD. Although Taiwanese chip-set manufacturers had a mixed reputation with corporate buyers, the highly visible and respected Nvidia was considered a premium silicon supplier. Using an Nvidia chip set made it easier for AMD to break into the corporate PC market.
Finally, if Intel had not focused on a marketing strategy that equated Xeon with 32-bit processing and Itanium with 64-bit processing, the company could have responded to the AMD64 challenge much earlier—or even led the development. So when Intel tried to convince the industry to adopt the Itanium architecture for 64-bit processing, many saw the AMD64 alternative as more appealing and cost-effective.
Although Intel's IA-64 Itanium architecture has many advantages (and more than a few of us thought it would eventually replace the x86), it's not a panacea for all that's wrong with IA-32. In addition, IA-64 hasn't hit mainstream price points, its new features require all-new software, and it does a lousy job of running IA-32 code. Intel thought it had a well-integrated strategy for Xeon and Itanium, but the company actually left a critical gap between its two product lines—and AMD drove the Opteron processor into that gap like a wedge. The slow ramp of Itanium volumes provided another incentive for Microsoft to back the more evolutionary, and potentially higher-volume, 64-bit alternative from AMD.
To be sure, AMD still faces many challenges. Intel has an edge in fabrication technology and manufacturing capacity that AMD has been unable to match, even by partnering with companies like IBM and Motorola. Trends in power consumption and performance requirements have spurred Intel to create distinct x86 microarchitectures for desktop and mobile PC processors, but AMD is still tweaking the same basic microarchitecture to address both of those key markets. Intel has also been more aggressive at bringing new technologies like Hyper-Threading to PCs. And despite AMD's recent victories, Intel still commands over 80% market share for PC processors.
Nevertheless, AMD is a good example of the axiom that whatever doesn't kill you will make you stronger. AMD has learned from friend and foe alike how to be more independent and has gained confidence. Fighting and surviving against Intel has certainly become part of AMD's corporate DNA—and some swagger is still left from the Jerry Sanders reign.
So, if AMD CEO Hector Ruiz ever runs into Intel CEO Craig Barrett, perhaps Ruiz should say, "Thanks for making us stronger, more independent." But I doubt he will.
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