Intel Strikes Back

The computer-chip titan pulls back the curtain on a battery of tests it says demonstrate its chips outperform those of rival AMD

Computer-chip maker Intel (INTC) has taken a drubbing in recent weeks, much of it at the hands of arch rival AMD (AMD). The most recent blow came May 18, with the announcement that Intel's largest customer, Dell (DELL), will start using AMD's server chips. That's after reports showing market share gains by AMD.

Each time, Intel's response has been the same: Just wait till the second half of the year, when we'll unveil a slew of chips that will wow customers and leave AMD in the dust.


  Intel is embarking on its second-half comeback trail a few days early. On May 23, Intel unveiled the results of tests that measure the performance of its new chips against older Intel models, as well as some of AMD's finest. The tests were performed by the likes of Dell, Hewlett-Packard (HPQ), and IBM (IBM).

According to Intel, the tests show Intel's Woodcrest, a sever chip due to start shipping in June, outperformed the others in 13 of 15 tasks. In each, Woodcrest finished 10% to 80% ahead of the competition, says Intel, which launched a site,, to tout the results. The site announces that Intel's "performance moves into the fast lane." The site also quotes critical acclaim of the new Intel chips from customers, Dell foremost.

It's an early and significant hurdle for Woodcrest, the first processor based on Intel's so-called core microarchitecture -- effectively, a complete redesign of how a processor is built. All of Intel's new chips coming out in the next few months will be based on the same design, which the company has vowed to change every two years.


  There's a lot riding on Woodcrest, a server chip. AMD gained momentum several years ago by introducing its own revolutionary server chip, the Opteron, which has since helped it gain PC processor customers as well. Dell is slaking its thirst for AMD chips first with Opteron. The two companies are in talks about having Dell start using other AMD chips, a source has told BusinessWeek Online (see BW Online, 5/19/06, "AMD Inside").

Intel, in its efforts, hopes to gain more speed with Woodcrest, as well as with a new desktop chip in July and a new notebook processor in August. All of these processors are expected to offer significant improvements in performance and power efficiency (see BW Online, 4/28/06, "Intel on the Offensive").

And analysts believe these new chips could make a big difference. As the chips trickle out, "it'll definitely stem the tide," says Jim McGregor, principal analyst with consultancy In-Stat. "It's creating more of a two-horse race again." The high-performing Woodcrest chips could help stem Intel's sever share losses by mid-2007, he figures.


  Intel's share plummeted as AMD's portion of PC, server, and workstation processor shipments rose from 16.4% in the fourth quarter, to 22.4% in the first quarter of 2006, according to consultancy Mercury Research.

Intel's particular emphasis on performance-per-watt, or energy efficiency of running an application, will play a key role. States like California and New York could soon mandate that all computers and other electronic devices use less power when sitting idle, for example. IT departments have long asked for greater power efficiency as a means to save thousands of dollars on electric bills. Since Intel's chips were designed for power efficiency from the ground up, "it could [at least] slow down AMD's growth," says Richard Doherty, director of consultancy the Envisioneering Group.

Already, Intel's internal tests indicate that Woodcrest chips, consuming a maximum of 65 watts, would enjoy 1.42 times the performance per watt of an Opteron. For Intel, that's a huge achievement, considering energy efficiency has long served as one of AMD's selling points. The benchmarks didn't compare Woodcrest's performance with AMD's upcoming products (see BW Online, 5/3/06, "AMD Sticks It to Intel Again").


  The new chip also seems to excel in raw performance. On May 22, Intel execs gave a dozen industry analysts a sneak peak into an Oregon lab that showcases several machines running on the first Woodcrest chips ever produced. And an HP server with Woodcrest completed a SunGard credit- risk application task in 24.3 seconds -- vs. 34.94 seconds for a neighboring Opteron-based machine. Independent benchmarks released on May 23 indicate a similar performance gap.

That said, Intel's biggest challenge remains convincing customers that its lead is substantial enough and will last long enough to make sticking with Intel worth while. For now, AMD is still gaining customers and steam.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE