AMD investors look for a Shanghai surprise
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| Despite the downturn, AMD is hopeful that it can sell its higher-performance server chips; and the early reviews are positive. Image: AMD |
Sun Microsystems sells a lot of servers to the financial services industry, which has been hard-hit by the credit crunch. So when Sun CEO Jonathan Schwartz recently asked a banking executive how he was doing, he probably wasn't surprised at the response: "I'm curled up in the fetal position."
Investors can relate. Last week Sun (JAVA) warned that it would report a huge loss for the summer quarter, news that sent shares skidding 17%. But despite the doom and gloom, Sun expects to keep getting server orders from banks and other customers. After all, with all those Wall Street traders dumping stocks, somebody's still got to process the transactions. And that's part of the reason why Advanced Micro Devices (AMD) is optimistic that its new server chip, code-named Shanghai, will do well despite the downturn.
Over dinner Monday night at Zibibbo in Palo Alto, Sun Executive Vice President John Fowler predicted that he wouldn't have trouble selling new servers equipped with the updated Opteron processor from fellow underdog AMD. Sun's tests of Shanghai have gone swimmingly, he said, it has already begun shipping, and should appear in products in a few weeks. The new chip is designed to plug into the same equipment that used its predecessor, code-named Barcelona. Since Shanghai won't suck more power than Barcelona and it will be priced to sell, it should be a no-brainer for customers who need to buy now. (Fowler's pro-Shanghai feelings are echoed by several analysts, who say other server makers plan to build it into their products.)
Of course, we've all heard enough of these promises to take them with a grain of salt. After all, last year Barcelona was supposed to be a big hit — but when AMD released the chip later than expected and it ran at slower speeds, enthusiasm dimmed considerably, and some customers defected to Intel (INTC).
The message from AMD and friends continues to be that Barcelona's mistakes cannot –Â will not –Â happen again. Sitting across the table from Fowler as he predicted smooth sailing for Shanghai was AMD's Randy Allen, a senior VP who leads the processor business. Allen told me he realizes that AMD needs a trouble-free Shanghai launch, not only to put the ghosts of Barcelona to rest, but also to reassure customers like Sun about designing future products around AMD chips. (AMD's next major chip overhaul that would require such redesigns is due in 2010.)
So what should investors make of all this?
It certainly does appear that things are looking up for AMD. In just the past couple of weeks, the company has reported gains in the graphics business and announced a huge cash infusion from Middle East investors that should allow it to spin off the manufacturing of its chips and keep those operations from dragging so much on earnings. It also restructured its executive lineup recently, installing new CEO Dirk Meyer and bringing in new engineering executives to make sure its chip blueprints work as advertised. After the Barcelona fiasco of 2007, it was clear that 2008 would be a rebuilding year. So far, AMD seems to have made good use of its time.
But the real test will come in 2009. That's when those rebuilding efforts need to translate into sustained profitability and market share gains. In the first quarter, AMD should have a version of Shanghai for desktop computers. In 2009 AMD has also promised a laptop chip that will offer both low power and graphics performance for a price that blows Intel out of the water.
And if all that's on track, we can also reasonably expect to hear more about AMD's plans for ultra-portable devices. Allen confirmed to me that his team is working on a chip that will compete with Intel's tiny, low-power Atom processor — but with a key difference: Intel plans for Atom to eventually make its way into GPS devices and smartphones, while AMD will aim its chips at the low-cost mini-laptops and simple desktops that industry insiders are calling "netbooks" and "nettops."
The biggest driver of profitability for AMD, though, must be servers — and that means these Shanghai promises have to pan out in a tough economy. To gauge whether that's happening, it's a good idea to watch customers like Sun. If their server customers keep buying? Good sign. If more executives wind up in the fetal position? Bad. (NVDA) (MSFT) (D
One more thing if I may add. Yes Intel does perform better. But as in better you do mean AMD is right behind Intel?? If you where to put both system together for comparsion you'd notice they AMD is slower but will deliever a result not to far behind from Intel. Example : Its not like you have to wait 10 hours after intel give you a result for AMD to give you its result for the same application. Its a matter of seconds.
To Mr. Ruiz like I said in my last post to *each his own*. You have your opinion I have mine. Fact is People don't believe the hype and the PR and whatever you'd like to call it the believe the company that has value and is compatitive. I myself owned several Intel chips and several AMD's for a wide varity of applications to games. Plus I run two servers. You want to lay down hard fact well here they are intel server chips did run hotter while the AMD chips did run cooler. AMD chips have the virtualization feature which allowed me to make great use of Intel also has a virtualization feature but didn't work quit as well as the AMD did. And Speed wise both chips where comptitive with Intel being on top on several instances But I wasn't really looking for speed. I was looking for low power consumption, virtualization features, low heat, and a well rounded CPU that could run my two servers comfortably. Well guess what AMD covered all bases by a long haul. I'll give credit for intel having speed but in server environment sometimes that alone will not cut it. As for my work stations. I went AMD as well for the simple fact that the are a good well rounded CPU and are bottel-neck free in performance. I don't need speed in my personal world.
wow i cant believe how many people buy into the AMD PR. facts are fact and test scores are test scores. there are many comparo test out there intel vs AMD and they all say the same thing – intel offers better performance and lower power usage. o know there are a lot of die hard AMD fans that can never seem to realize the reality. AMD every 5 or 10 years come out with one good product. the rest of the time and the rest of their products are under performers and late to market. AMD will always be second to intel because intel delivers better products on time and executes a better business model.
AMD has always been ahead in servers, even with the Barcelona core fiasco. That is because AMD decided a long time ago when they were designing the Opteron CPU that the future was 64-bit and multi-core. Intel finally caught up to AMD's mutli-core technology and other server benefits with the new Core i7. AMD's problem was perception. The Barcelona core tainted their perception as a cheaper better Intel rival.
Early reports about the Shanghai core indicate that it may (MAY) put AMD back on top in performance per watt. Some sources are saying the new Shanghai core will run faster than Intel rivals and still use less energy. If true (and we won't know until it comes out), then AMD will once again be a viable alternative to Intel. AMD will also regain the coveted gamers market.
The ATI merger hurt AMD short term. But both sides knew this. The ATI merger was designed to re-invent the CPU and graphics market. You are starting to see some benefits already as the AMD engineers have greatly helped the ATI engineers make a better video card. AMD is also trying to merge a graphics adapter and CPU, which would lower costs significantly for computer makers.
AMD has great plans. They just have to implement them.
For the most part I am a firm believer AMD will come and offer competitive CPU's. Don't believe the hype the numbers you see thrown around the internet as these test results may very well be bias an made up. I wouldn't be surprise to learn it was just one single Intel supporter giving his bias review against AMD on all these sites. But again thats my point of view. To each his own. If AMD doesn't blow Intel out the water right off the bat that doesn't mean they will go under that simply means they made a better product that just needs a little more improvement. I have faith in the new years they will be competitive against Intel.
Well I am glad AMD is making a turn around, its been awhile but I have always had faith in them much like their products. Hopefully 2009 shows they can enhance profits with their server technology.
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A few Intel trolls here…must be worried about new AMD chip. Nehalem is rolling out as a boring desktop chip (ooh, my frames per second on this game went from 150 to 155!!!) and won't compete with Shanghai. Shanghai is the real deal and Intel is underestimating AMD based on the employee posts here.
AMD is not the only one. Financial services is a huge buyer of business technology whether it's enterprise software, servers, what have you.
I think we can expect lackluster revenues across the board for enterprise tech, because one of their most key customer bases aren't exactly in the mood to buy anything right now…
Since AMD no longer has control of its manufacturing expect slow times to market of new products, poor yields and performance for many years to come. until AMD like other CPU design house that used the AMD’s new asset light strategy goes under.
AMD is big on talk, small on performance. The current intel offerings out perform AMD's Shanghai and intel has a new chip Nehalem that will far out perform anything intel offers today. Nehalem will be availible by the end of the year. Basically AMD is still in the same position it is always in – underperformer.
I am an AMD investor, I am not in a fetal position, I am back to the egg, just being f–ed up, that is.
The 5400 Xeon still outperforms Shanghai in most testing. Nehalem is supposed to be 2x in performance of the 5400, if you do the rough math that makes the transition and alliance pretty simple.
AMD does not have parity on 45nm. Intel is using HI-K gate and Hafenium process in 45nm and AMD is not. That means at higher clock freq that power consumption yields much higher Perf per Watt in the data center
I am sure AMD will come back big. Now, that they have parity with Intel on the FAB 45nm process, their upcoming server and PC processors should be very competitive to Intel's offering.
It's clearly a no brainer for existing Barcelona systems to be upgraded to Shanghai. But, isn't Intel's next chip called Nehalem the better one for comparison – particularly systems using new motherboards? Would SUN want to use Nehalem as a second (or even first) source? For example, like Cray.
AMD has a history of overpromising and under delivering. Check the past 6 quarters of financial results.. they ALWAYS must expectations. Therefore they are difficult to trust.