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IBM warms to AMD Opteron servers

Opteron advantages, plus HP and Sun successes with the chip, could mean a stronger commitment from IBM.

IBM's top server executive is warming to Advanced Micro Devices' Opteron, eyeing the processor's business advantages and the successes Hewlett-Packard and Sun Microsystems have had with it.

Bill Zeitler, senior vice president of IBM's systems and technology group, wouldn't comment on whether Big Blue plans to offer mainstream Opteron chips, but he indicated in an interview this week that the move would make sense.

"I don't want to speculate when and if we would expand our activities here, but there's no question HP and Sun have benefited by having a broader Opteron portfolio than we've had," Zeitler said. "There are a whole bunch of business considerations that would say we would have done better had we had a four-(processor) Opteron product."

Big Blue was the first of the four top-tier server makers to sell Opteron servers, but its models were geared only for the technical-computing niche. Later, it added blade servers that are better-suited to mainstream business computing. Zeitler said IBM was surprised by the demand for those products in the fourth quarter of 2005 but then had "very robust sales" of the blades in the first quarter of 2006.

IBM's warmer attitude puts more pressure on Dell, the lone top-tier server maker selling only Intel-based x86 servers. "Opteron's a great horse to ride. Sun and HP have done very well with it, and it's gotten the attention of IBM," said TechKnowledge Strategies analyst Mike Feibus. "You've got to wonder how long Dell can stay on the sidelines and watch."

Zeitler's warmth toward Opteron contrasts with the view espoused just three months ago by Susan Whitney, who leads the x86 server group. She said in January that customers aren't asking for mainstream Opteron servers and that IBM is happy with its X3 chipset for multiprocessor Xeon servers.

Since the Opteron introduction in 2003, AMD's Opteron has steadily gained share against Intel's Xeon, which previously had the vast x86 server market to itself. Intel is working to become more competitive, though, and it still dominates the server market.

Opteron's advantages include a built-in memory controller that reduces the time it takes to write and read information from memory. It also has high-speed HyperTransport links that make it less expensive to build multiprocessor servers. And AMD got the jump on Intel with lower power consumption and dual-core designs, despite Intel's more advanced chip-manufacturing abilities.

For server makers, Opteron systems simply bring in more money, Zeitler said.

"If you look at HP's results over the last few wasn't their unit growth that was causing them to improve, it was their average unit revenue, and the average unit was improving because they had more AMD content than they had had previously," Zeitler said.

IBM has seen the same phenomenon with its own Opteron blades, he added. "In our own case, the average unit revenues on an AMD blade are much higher than the same kind of Intel blade because the performance is better. And because the performance is better, people put more I/O (input-output components) and more memory and other things on them," he said.

One change at IBM that could give Opterons a place at the main table has been in branding. Previously, Intel servers sported the xSeries brand, but Opteron machines were relegated to the less- emphasized eServer category. Now IBM has moved both under the System X brand, similar to how HP sells both Opteron and Xeon models under the ProLiant brand.

"They all are now part of System X," Zeitler said.

IBM is happy with its Xeon products, in particular the X3 models that span a range from four-processor systems to 32-processor systems, and its market-leading BladeCenter machines. "We have a good technical position," Zeitler said, "but you have to do what the market wants you to do."