IBM, AMD to deepen Opteron ties

Top execs expected to go public with effort to boost Big Blue's servers with AMD's chips, CNET has learned.

IBM and Advanced Micro Devices are expected to announce an alliance that will lead to mainstream IBM servers based on the Opteron processor, CNET has learned. It's a further boost to chipmaker AMD and a new blow to rival Intel's server business.

The companies are expected to tout the partnership Aug. 1 at a New York event featuring Hector Ruiz, AMD's chief executive, and Susan Whitney, head of IBM's x86 server group, sources familiar with the event said.

IBM and AMD are already partners--indeed, IBM was the first of the big four server makers to endorse the Opteron processor. In addition, the two companies share chip-manufacturing technology.

However, there's room for improvement. While rivals Hewlett-Packard and Sun Microsystems have given Opteron first-class-citizen status, and even longtime holdout Dell has announced Opteron server plans, IBM's Opteron servers were geared for high-performance computing rather than for the mainstream business market.

"IBM was the first company to jump into the pool with AMD's Opteron, but they've always stayed at the shallow end," said Insight64 analyst Nathan Brookwood.

AMD declined to comment for this story. IBM representatives didn't respond to several requests for comment.

Opteron's successes haven't gone unnoticed at Big Blue. Bill Zeitler, head of IBM's server group, said in April that HP and Sun gained at IBM's expense because of their Opteron products. AMD-based products, including IBM's own blades, generate more revenue because their higher performance means customers buy them with more memory and other add-ons, Zeitler said.

A tighter AMD partnership would make sense, said Envisioneering Group analyst Richard Doherty.

"It's something that we've heard customers wanting IBM to explore for some time now," Doherty said. IBM may have forborne tightening ties with AMD until now because "they may have been afraid of injuring the Intel relationship," he added.

Intel has suffered market share losses to AMD because of Opteron (though its more-powerful Xeon 5100 "Woodcrest" chips are now coming to market). And it has suffered financially: Its Digital Enterprise Group, which sells server chips, saw its revenue decline 23 percent from $6 billion in the second quarter of 2005 to $4.6 billion in the second quarter of 2006.

August is a good time to buddy up with AMD. The chipmaker is expected to debut its new dual-core "Rev F" Opteron products on Aug. 15. The new processor generation will include virtualization features and will be easy to upgrade to quad-core models in 2007. Sun, by far the most enthusiastic Opteron partner, plans to announce new Rev F-based servers soon.

A deeper partnership between IBM and AMD could take several forms, ranging from joint technology development to work on mainstream dual-processor servers. It might even cover the creation of more-powerful multiprocessor machines that could rival IBM's current Intel-based 32-processor, the System x3950, formerly called the x460.

In the April interview, Zeitler specifically pointed to four-processor servers as an area where AMD could have helped IBM. Although Intel has improved performance with its dual-processor Xeon 5100 models, its forthcoming "Tulsa" chip for four-processor machines is still based on the power-hungry and discredited NetBurst lineage.

Dell's Opteron embrace thus far is limited to four-processor servers.

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