AMD, Intel to exchange barbs with rival strategies
Intel and Advanced Micro Devices take their long-running feud to New York City tomorrow, when Intel holds its semiannual analysts' meeting and AMD conducts a meeting for its stockholders.
High-level executives from each company will discuss both short- and long-term strategies and no doubt will take the opportunity to throw veiled barbs at each other. Intel is expected to discuss its ongoing plan to expand beyond computer processors, and AMD will talk about Thunderbird, Spitfire, Corvette and other Athlon processors coming later this year.
One of the more interesting twists in the past year has been the companies' role reversal. Intel has been on the defensive recently because of processor shortages that are expected to last through the second quarter. Analysts also have begun to question whether the company's ambitious expansion, aimed at taking it into every niche in the digital world, is distracting the company.
"We believe that the scale of Intel's financial resources has become a diversion and a drag on operational excellence," wrote Tad LaFountain, an analyst at Needham & Co.
By contrast, AMD is riding a crest of financial success and commercial acceptance. The stock was trading in the low $80s today, a stark contrast to the price of around $17 last October.
AMD's meeting, to be held at the St. Regis Hotel at 7:30 a.m. PT, is expected to provide details about upcoming generations of Athlons. In June, the company is slated to release Thunderbird, a high-performance version of the Athlon, as well as Spitfire, a version for sub-$1,000 PCs.
Toward the end of the year, the company will unveil Mustang, for multiprocessor servers, and Corvette, a mobile version of Athlon that used to be grouped in the Mustang category.
Thunderbird will contain several improvements over the current Athlon. The chip is expected to come with 256KB of secondary integrated cache, a feature the current Athlon lacks, and a system bus that will run as fast as 266 MHz. The chip is expected to debut around 1.25 GHz.
The chip will be the first AMD chip to be made with copper, rather than aluminum, circuitry. A direct comparison to the Pentium III is likely to occur. The company plans to showcase performance tests matching Thunderbird against a 1-GHz Pentium III, said Ben Anixter, AMD vice president of corporate affairs.
Spitfire will share the same basic processor core as Thunderbird but will come with a smaller cache, a slower bus and different packaging. It will be made of aluminum.
AMD may also unveil the official brand name of the processor. Like Intel, AMD has said it will market its budget line of processors under a different brand name.
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AMD also could face the same sort of shortages that Intel is experiencing.
Intel's strategy shift
By contrast, Intel's meeting, which will begin at 8 a.m. PT and will be broadcast
over the Web, will concentrate more on the Internet than on PCs. For the past two years, the company has aggressively expanded into networking processors, communications equipment, server appliances, Web hosting and other elemental blocks for the Internet.
Intel also is expected to discuss the global market. The recovery of the Asian economy turned out to be one of the highlights of the first quarter. Intel earlier this week unveiled its e-Business Network, a program that will allow the company and computer consultants in 70 countries to promote Intel-based products to small and medium-sized businesses.
Nine Intel executives representing all of the company's divisions will provide presentations.
Although few doubt the reasoning behind Intel's diversity strategy, some concern has grown regarding whether the effort is distracting the company from its core processor business.
Intel has picked up 17 companies since January 1999, spending billions in the process. The company also has created a new business division, elevated its work in the wireless area, unveiled Intel-branded products for the consumer market, and seen its venture and investing group turn into nearly an $11 billion concern.
"I don't seen the execution over the last six months as being that great," said Kevin Krewell, an analyst at MicroDesign Resources. "The networking stuff is taking a long time to gel. They're buying companies like crazy. Whether they make it into a coherent company like Cisco is the question."
Added Nathan Brookwood, principal at Insight 64: "The challenge for Intel is that Intel today is far more complicated to run. Five years ago, Intel was developing one (basic) chip and proliferating it downward."
As for processors, the big issues will be the manufacturing shortage and the release of the next-generation Willamette desktop chip, scheduled for the second half of this year.
The company said last week that higher-than-expected chip demand will keep supplies low through the quarter. More factory capacity will begin to appear in the second half, and that should alleviate the problem, according to Intel CFO Andy Bryant.
Willamette, when combined with Rambus memory, is expected to raise the bar in terms of performance for desktop PCs, according to various analysts. Intel's manufacturing capacity is in short supply, however.
If Intel unveils the chip but doesn't have the capacity to manufacture adequate volumes of it, the company risks testing the patience of PC manufacturers. Further, fanfare around the chip toward the end of the year could shrink demand for Pentium IIIs during the Christmas quarter, speculated Linley Gwennap, principal at the Linley Group. Years ago, advance press about the Pentium MMX killed a fourth quarter for PC makers.
"The longer the manufacturing shortfall goes on, the longer they will have to delay Willamette or not (heavily) promote it," Gwennap said. "My expectation is that they are going to kind of sneak it into the market and really push Pentium III this year."