AMD's Opteron chip turns 1 year old

Advanced Micro Devices has gone from an afterthought among server customers to the darling of the enterprise world in just a year.

The company’s Opteron chip, celebrating its first birthday this week, has opened doors into corporate server rooms for AMD, and many enterprises are flirting with the new kid on the block.

Intel has dominated that block for years, with more than 90 percent of the market for IA-32 servers. But Opteron has become a viable alternative to Intel on IT managers’ shopping lists.

Opteron shipments have doubled each quarter since the product was launched, according to research firm IDC. However, with just 35,000 Opteron servers shipping in 2003, Opteron still represents a tiny fraction of the entire 3.26 million-unit IA-32 server market.

By not breaking binary compatibility with the millions of existing IA-32 applications, Opteron has given customers a less painful route to 64-bit computing than the one provided by Intel's Itanium 2 processor. AMD's hardware is also uniquely positioned to take advantage of the move toward clustered applications.

Software vendors such as Oracle, IBM, and SAP have been working to make their applications work with clusters of low-cost systems.

Enterprise users are beginning to show interest in Opteron for these types of applications because of the low cost and strong I/O capability and 64-bit processing capabilities, said Dave Drigger, CEO of Verari Systems.

Drigger, whose company sells AMD and Intel cluster systems, says Opteron systems represented about 20 percent of his company's business in 2003. That number has jumped to 40 percent in the first quarter of 2004, he said. "Opteron has gained quite a bit of market share within our company," he said. "There's heavy interest for database, for file servers, and [for] traditional enterprise products."

Spam filtering company Postini purchased 32 of those Opteron systems to run database cache servers. The company's vice president of operations, Jon Prall, says the fact that a white box dual-processor Opteron was able to outperform a much more expensive four-processor Sun 480 system turned him into a believer.

"The Opteron is truly an amazing chip," he said. "It's completely changed my perception of AMD."

By the end of the year, AMD hopes to extend its toehold in the enterprise to include four-way servers. At present, most Opteron servers are one-way or two-way systems that are clustered together for greater performance.

As part of the Opteron anniversary, HP will unveil its first four-way Opteron system: the Opteron DL585. Pricing for a single processor system begins at $8,299.

The multiple Hyper transport links on each 800 series Opteron processor allows system builders to link the chips directly together, cutting down on latency caused on other interconnects, said Ben Williams, director of AMD’s server/workstation business segment.

Customers that run four-way or eight-way servers from other RISC vendors can switch to two-way or four-way Opteron servers, and not only cut their hardware costs but also reduce their software costs in per-processor pricing configurations, Williams said.

Opteron systems tend to be less expensive than their 64-bit competitors, and per-processor software licensing costs are often far lower on smaller servers than they are on big SMP systems said Postini’s Prall. "Right there is a huge motivation to use small boxes," he said.

Opteron’s most visible success story has come from AMD itself. The company has now been profitable for two straight quarters following nine straight quarters of losses.

“AMD is viewed as a credible tier-one server processor supplier, which certainly wasn’t the case a year ago,” said Dean McCarron, principal analyst at Mercury Research.