AMD's crucial Sun win boosts Opteron prospects

Last year at Comdex, industry analysts and observers were sceptical as Advanced Micro Devices president and chief executive...

Last year at Comdex, industry analysts and observers were sceptical as Advanced Micro Devices president and chief executive officer Hector Ruiz exhorted the technology industry to prepare for AMD's latest hybrid processor technology, which combined 32-bit and 64-bit capabilities.

At the time, AMD's financial picture was clouded with layoffs and financing efforts, and AMD's ability to introduce the chips on time and to generate interest among technology buyers was doubted.

However, earlier this week, Ruiz this week joined Sun Microsystems chairman, president and chief executive officer Scott McNealy on stage at Comdex to tout the company's largest victory to date for its AMD64 technology - a commitment from Sun to use Opteron in a wide range of low-end servers and to collaborate on future technology development.

The momentum behind AMD and the Opteron processor is at its strongest point as the year winds down. Executives and analysts said the combination of Sun's Solaris operating system and Opteron will give users an interesting choice when deciding what type of low-end server to buy.

Sun once dominated the server market with systems based on its Sparc processors and Solaris operating system, but has been losing ground to Dell, Hewlett-Packard and IBM. All use cheaper processors from Intel, and either Microsoft Windows or Linux.

However, many corporations are still running important back-office applications on Solaris, and the ability to run a complete Solaris environment across all their servers will be very attractive to Sun's existing customers, said Souheil Saliba, vice president of marketing and strategy for Sun's volume systems products group.

And, for customers who need an operating system on their low-end servers that goes beyond the capabilities of Windows or Linux, the option to purchase a low-cost server with an "industrial strength version of Unix" will help drive new customers to Sun, said Kevin Krewell, senior editor of the Microprocessor Report.

The first Sun Opteron servers will be two-way and four-way servers, and will appear in the first quarter of 2004, Saliba said. Sun intends to bring Opteron to a complete line of products from workstations to servers with eight or more processors, and has developed road maps covering a three to five-year span.

A full production version of Solaris for the AMD64 instruction set is expected around the middle of next year, said John Loiacono, Sun's vice president of operating platforms. Until then, Sun will offer either SuSE Linux or Red Hat's version of Linux ported to AMD64, which adds 64-bit extensions to the 32-bit x86 instruction set that runs most of AMD's and Intel's processors.

Sun's backing now gives AMD the support of two of the four major US server companies, with IBM announcing its support at the Opteron launch event last April. IBM's eServer 325 is targeting the scientific and high-performance computing community, while Sun's upcoming servers will give AMD a toehold in the large enterprise server rooms from which it has been shut out so far, said Dirk Meyer, senior vice president of AMD's computation products group.

For the moment, Sun will continue to sell its Sun Fire servers based on Intel's Xeon processors because certain customers are more familiar with Intel's technology, and a version of Windows for Opteron is not expected until next year. But if the Opteron servers can offer equal or greater performance than the Xeon servers at an equal or lower cost, Sun will have to look at standardising its x86 servers on that chip, Saliba said.

Now that AMD has secured the backing of two prominent server suppliers, the company's attention is shifting to Dell and HP. Neither company is likely to build Opteron servers any time soon, since each company would need the Opteron version of Windows to sell enough units to make their participation worthwhile, said Nathan Brookwood, analyst at Insight64.

Brookwood added that HP's situation is further confused by its strong partnership with Intel in designing and marketing the 64-bit Itanium 2 processor, and its relationship with AMD in selling Athlon 64 and Athlon XP desktop and notebooks.

Both Sun and AMD hope their partnership can right their struggling ships. Both companies are unprofitable, despite severe cost-cutting and the beginnings of a turnaround in hardware demand, and need new sources of revenue.

In many ways, Sun and AMD's partnership is an ideal coupling, Krewell said. Neither company is especially friendly with Intel, which has strong relationships with Sun's competitors and processors that compete against AMD in PCs and Sun in high-end servers.

"I'm not sure who said it, but the phrase 'the enemy of my enemy is my friend' certainly applies here," Krewell said.

Tom Krazit writes for IDG News Service

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