AMD attacks Intel domain

Integrators can profit from challenger's call for performance-based bids<@VM>AMD 64-bit chip guns for government work

The real need for speed

One major hurdle that Advanced Micro Devices, Sunnyvale, Calif., faces in competing with Intel Corp., Santa Clara, Calif., is convincing potential buyers that a processor's clock speed may not be the best way to measure performance.

Industry observers agree that, at least when comparing AMD and Intel processors, comparing clock speed is not the best approach.

A microprocessor's clock speed is the number of instruction cycles it executes in a second. For instance, a 1.8 gigahertz processor executes 1.8 billion instruction cycles every second. The higher the clock speed, the faster a computer can calculate numbers or start an application.

Perhaps because Intel itself has traditionally touted the processing performance of its chips by their clock speeds, procurement officers frequently use that metric as a performance standard for the computers they want to purchase.

AMD officials said the problem with using this approach is that AMD microprocessors, because of the way they are designed, can match the speed and performance of Intel's chips, even while operating at lower clock speeds.

"One of the things we're advocating is that it is not about the clock speed," said Kevin Knox, AMD's director of worldwide business development. "What does the end user care about? They don't care about gigahertz. They care about the overall performance of the system. The microprocessor speed is only one component of the system."

Martin Reynolds, a fellow at IT research firm Gartner Inc., Stamford, Conn., said that while clock speed is a good way to differentiate performance within a line of computer chips from one company, it is not the best way to compare performance of products between two different manufacturers.

The difference in clock speeds between the two companies' products is similar to the difference in the revolutions per minute, or RPMs, between two cars, Reynolds said. A small car with a small engine might have higher RPMs than a large car with a larger engine, even though both are going the same speed.

Intel, however, remains steadfast, using clock speed as an indicator of performance. "It is the only metric for measuring performance that is universally accepted," said Bill Kircos, a communications official for Intel.

The competitive cost of AMD chips has worked for systems builder NCS Technologies Inc., Manassas, Va. About 15 percent of its sales include boxes that have AMD installed, said An Nguyen, NCS president.

Henrik G. de Gyor

Mark Seager, a contracting officer at the Energy Department's Lawrence Livermore National Laboratory, will change the wording in the next solicitation he issues for servers. In previous purchases, Seager specified the particular make of processors to be used in the servers, often naming market leader Intel Corp., Santa Clara, Calif. But an eager challenger, Advanced Micro Devices Inc., has produced a microprocessor that could serve just as well, if not better, for the needed servers.

So when Lawrence Livermore puts out a solicitation later this year for equipment to build a 10-teraflop system for modeling nuclear blasts, it will call for servers that use microprocessors from either Intel or AMD.

"We typically are very specific about what it is that we want, and that's worked well for us," Seager said. "But that does present a problem now that AMD can bid competitively. So we will have to change that strategy."

This change is welcome news to Rick Indyke, federal business manager for Sunnyvale, Calif.-based AMD. The company is lobbying contracting officers such as Seager to amend the wording on government procurement contracts to include AMD and not just Intel.

Better yet, from AMD's point of view, government contracts should specify the performance level needed rather than a specific microprocessor to do the job -- performance-based contracting applied to hardware procurement.

For contractors competing for large hardware procurements, such changes can help them bid more competitively, Indyke said. AMD claims that its microprocessors can offer equivalent performance at lower costs, which would give integrators and resellers a way to lower bids for hardware solicitations without sacrificing quality.

Indyke has taken his case to the General Services Administration, the Office of Management and Budget and members of the federal Chief Information Officers Council, as well as to the more technically oriented program officers of the individual agencies.

Even as AMD guns for more opportunities to compete, the company faces an uphill battle to displace Intel, which holds a dominant position in the field of desktop and server computer processors.

Intel reported revenue of $26.8 billion in 2002, with earnings of $3.1 billion. In contrast, AMD had $2.7 billion in revenue for 2002, against which it lost $1.3 billion.

To wedge itself into this market, AMD has begun offering chips that can offer the equivalent or greater processing speed of Intel's chips at a lower price.

While AMD has made some inroads in the consumer markets, government customers have been a tougher sell, Indyke said. So far, systems builders have used AMD microprocessors to supply computers to the U.S. Naval Academy, the Army's Personnel Command, the Occupational Safety and Health Administration, the GSA's building management design group and the Department of Veterans Affairs' material management office, he said.

On the integrator side, Raytheon Co., Lexington, Mass., has added an AMD processor-based solution to its line of high-performance computing offerings.

For AMD, a key to gaining widespread acceptance among agencies will be gaining more acceptance among tier-one computer builders. Many government contracts specify that computers must be from tier-one providers, such as Dell Computer Corp., IBM Corp. or Hewlett-Packard Co., Indyke said.

Consequently, AMD last month scored a big coup when IBM announced it would use AMD's new 64-bit Opteron chip for a line of its servers.

The competitive cost of AMD chips has worked well for systems builder NCS Technologies Inc., Manassas, Va. About 60 percent of its sales come from the federal government, through the GSA schedule and through competitive contracts.

The privately held NCS, which does not disclose revenue, employs 62 people and sells about 24,000 in-house built computers a year. About 15 percent of NCS sales are for boxes that come with AMD inside, said An Nguyen, president of NCS.

For NCS, AMD provides a good price in comparison to equivalent chips from Intel. In several cases in the past few years, the company has won contracts to provide computers by using AMD chips to lower the cost of its bid, Nguyen said.

Responding to AMD's marketing campaign, Intel contends that microprocessor performance and cost are only one measure of its overall value. Bill Kircos, a communications official for Intel, said the company focuses considerable resources on standardizing the underlying platform to make large-scale deployments as easy as possible.

"We want to make it as easy to deploy and continue to deploy down the road. That has nothing to do with chip speed. It has more to do with stability and reliability," Kircos said.

For example, a large enterprise may have thousands of computers running at any time. A systemwide upgrade may take longer than a year. Therefore, it is important to have the same platform at the beginning of the rollout as it is at the end, when newer models are purchased and installed, he said.

When a manufacturer makes changes in chip design halfway through the roll out, "an IT manager has to retest the PC to make sure it is compatible with other stuff, such as printers or keyboards," Kircos said. "This aspect is important to an IT manager who doesn't want to spend a lot of time revalidating and rechecking to make sure everything works in unison."

Martin Reynolds, a fellow at IT research firm Gartner Inc., Stamford, Conn., agreed that platform consistency is an important consideration in purchasing for an entire organization.

"Intel maintains generally a tighter control over the overall system," Reynolds said. "AMD's message is more around performance, so whenever there is an opportunity to tweak performance, AMD and its chipset partners will take it. That means the designs may change a little more often."

And design changes can mean potential problems for IT managers. "Just little changes can cause all kinds of trouble," Reynolds said.

Nampa, Idaho-based MPC Computers LLC, formerly MicronPC, gets requests from government customers for AMD-based solutions, said Paul Petersen, vice president of development and product marketing for the company.

However, most of its sales come from its managed clients line of computers, which is Intel-based. About 50 percent of this company's revenue comes from government sales. MPC is owned by Gores Technology Group, a privately held international acquisition and management firm.

"Our position [on AMD] is that competition is a good thing. It means more aggressive pricing and higher levels of service," he said. *

Staff Writer Joab Jackson can be reached at
Advanced Micro Devices Inc. last month unveiled the Opteron processor, its first offering in the emerging market of 64-bit computing platforms.

On the government side, the company sees the chip opening new markets for high-performance computing, migration services and server consolidation, said Rick Indyke, federal business manager for AMD of Sunnyvale, Calif.

With the Opteron release, AMD is competing with chipmaker Intel Corp., Santa Clara, Calif., which last year began shipping the second generation of its 64-bit processors, called Itanium.

Thanks to the promise of better memory management capability, it's widely believed that some version of the 64-bit architecture will eventually succeed the 32-bit x86 platform on which most government servers and desktop computers are built.

AMD's initial focus in the government space will be on agencies and programs that require high-performance computation, such as the Energy Department's Lawrence Livermore National Laboratory and Pacific Northwest National Laboratory. The labs often combine or cluster multiple servers to tackle large-scale computations.

The high-performance computing market has been traditionally dominated by companies such as Hewlett-Packard Co., Palo Alto, Calif., and Sun Microsystems Inc., Santa Clara, Calif., Indyke said.

AMD offers integrators the capability to compete with these companies by using AMD-based servers as part of a high-performance computing solution. Systems integrators can shave off 25 percent or more from the price per server, the company said.

Migration services are another emerging market for the company. AMD claims the Opteron processor offers easy backward compatibility with 32-bit applications. According to Indyke, this backward compatibility opens opportunities in migration services.

Traditionally, when an agency adopts a new computing platform, the change from an old system to a new one has to be done at once, involving considerable agency resources in manpower and capital. Migration services involve upgrading systems at a more gradual, cost-efficient pace.

For agencies shifting to 64-bit platforms, Opteron offers an easy pathway. Because existing 32-bit applications can run on the Opteron platform, they can be updated whenever they become obsolete, rather than being recompiled or replaced only because the associated hardware is being changed, Indyke said.

"The value the systems integrators see in this is that they can offer migration strategies and services strategies that allow them to build up long-term relationships with their customers," Indyke said.

Server consolidation is another market Indyke identified for AMD. Here, agencies simplify server management by consolidating equipment into central locations and using fewer but more powerful servers.

"People see the ability to use an Opteron server to reduce the total number of servers they have to support," Indyke said.


About the Author

Joab Jackson is the senior technology editor for Government Computer News.

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