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IBM backs Opteron server chip

Big Blue says it will use AMD's new high-end processor in future server hardware to answer customers' requests for a modestly priced high-performance machine.

Advanced Micro Devices' new Opteron processor has received a major vote of confidence from IBM.

Big Blue on Tuesday announced its intention to use the AMD server chip in future server hardware, including a server platform and high-performance computing clusters.

IBM's decision could pave the way toward greater acceptance of AMD processors in the corporate environment, a goal that has eluded the Sunnyvale, Calif.-based chipmaker for nearly two decades. For years, AMD had difficulty landing its chips in computers for the working world because of recurring manufacturing problems, performance issues and a general reluctance among corporate buyers to try new technology.

AMD's reputation, though, is changing. IBM's decision to adopt Opteron was based on customer feedback, according to Mark Shearer, the company's vice president of eServer systems. Companies have been asking for a server that can deliver relatively high performance, including 64-bit capabilities, for a lower price, Shearer said at AMD's event here to introduce the chip to analysts and the press.

Other companies are lining up behind the chip as well. Fujitsu-Siemens has said it would come out with an Opteron workstation, and Sun Microsystems is looking into using the chip. On Tuesday,

Additionally, IBM is working with AMD on processor manufacturing technology, which analysts say could prevent the sort of manufacturing mishaps that have derailed AMD in the past.

"IBM has invested the most time," said Hector Ruiz, AMD chief executive, in an interiew. "They're all getting close to that. In the next one or two quarters, they'll make a decision on whether or not to offer an Opteron server."

But the company's earlier efforts to take on market leader Intel have often come to a grisly end. While AMD often gains market share and sees profits at the beginning of the life of a new chip, it also soon finds itself swimming in red ink because of aggressive price cuts and technology enhancements from Intel. Opteron was delayed for over a year, and the desktop version of the chip will come to market almost two years late.

In addition, customer enthusiasm for new technology has waned. Microsoft came out with a version of Windows for Digital's Alpha processor at one point, but phased it out after slow sales. IBM stopped offering AMD's Athlon chips in its NetVista desktop line in August 2001. Similarly, IBM started to resell a blade server from RLX Technologies that used chips from Transmeta, but then came out with its own blade server, signed a blade alliance with Intel and cancelled its deal with RLX.

AMD says it will overcome the challenges, particularly because the relatively small size of its processor will make it difficult for Intel to undercut the chip's price.

"The Opteron processor...will bring PC economics to even the most expensive servers," AMD Chairman Jerry Sanders said. Paraphrasing Winston Churchill, he added "never in the history of Microsoft-compatible microprocessors will so few do so much for so many."

IBM will likely offer Opteron in a new server family, alongside its existing Intel-based xSeries servers. The company, though, did not give any details about server hardware or a date of introduction. IBM is believed to be working with Newisys, a server start-up staffed by ex-IBM employees, to design these systems.

AMD has been following Intel for years, delivering its own version of the same kind of processor, based on the x86 architecture pioneered by Intel. Its latest is the Athlon XP, which has been successful in desktop and notebook PCs for consumers and is also offered in some systems for business.

But with the Opteron, and its underlying architecture, AMD has set out to chart its own course, by altering x86 to support 64-bit addressing. This twist allows the chip, and its forthcoming desktop and notebook sibling, to utilize more memory and provides some other performance enhancements. But AMD also designed the chip to support 32-bit software, the current standard for applications like Microsoft Office.

"We promise the AMD Opteron will simplify business by removing all the barriers to 64-bit computing," said Marty Seyer, senior vice president of AMD's server business. "It outperforms the highest published results from both (Intel) Xeon and Itanium,"

The Opteron 800 series will allow manufacturers to build four-processor servers priced below $10,000--a big shift downward in price, Seyer said, offering high performance to more companies. These systems are expected to hit the market later this quarter.

"We're going to play a role in establishing a new price point in four-way servers. Right now, there is a lot of distance between two-way and eight-way servers," said Rob Herb, executive vice president of sales and marketing. "AMD is going to create a new price performance category in the four-way space."