AMD, IBM Expand Server Relationship
By Suzanne Deffree -- EDN, August 1, 2006
IBM announced today the use of AMD chips in five incremental servers for mainstream business applications.
The news came from a New York event, where AMD CEO Hector Ruiz appeared to support IBM’s use of Opteron processor in the servers.
IBM did not disclose which Opteron processors it would be using in the five new servers, just noting that they are next-generation Opterons to be available in coming weeks.
“We suspect this will be Rev F, which is an upgrade to AMD's existing Opteron server platform,” Tim Luke, a managing director at Lehman Brothers, said in a research note this morning.
IBM said it is extending its line of AMD Opteron processor-based servers in response to customer demand for greater choice in the x86 segment, of which blade servers lead. As with other IBM-AMD server launches, today’s systems target energy efficiency, while keeping high performance computing in mind. IBM noted that its current line of AMD Opteron processor-based systems targeted for high-performance computing can deliver up to 21 percent greater performance within the same power envelope as previous generations.
The new systems leverage IBM’s Enterprise X-Architecture and include the industry’s first “snap-in” scalable blade server that allows customers to snap in an additional two socket AMD blade to the first in mere seconds, doubling the processing capacity. Also included is a patent-pending function called IBM Xcelerated Memory Technology to remove bottlenecks and to speed access to memory up to 15 percent faster than any vendor in the market, Big Blue said. The servers further use HyperTransport.
The servers include: BladeCenter LS41, an enterprise class scalable 2-way to 4-way blade; BladeCenter LS21, an enterprise class 2-way blade optimized for performance computing; System x3755 for mid-market, large enterprise customers; System x3655, a business performance server; and System x3455, a high performance compute node.
“Today’s announcement marks an exciting milestone in the IBM-AMD relationship, ever focused on delivering innovative solutions in response to customer requirements,” said Ruiz. “With a solid relationship on both the research and development and product innovation fronts, IBM and AMD are teaming to deliver unparalleled enterprise solutions that leverage open standards.”
Dell’s Domain
Lehman Brothers further believes that today’s deal may lead to more than IBM server share for AMD. The Wall Street analysis firm noted possible extensions of the chipmaker’s dealings with Dell.
“Separately, our checks also suggest that Dell may also be weighing an expansion of its relationship with AMD beyond 4-way server and into the desktop arena in time for the holiday season with an announcement possible in the next several weeks,” Luke said.
Any Dell announcement would come on the heels of the PC giant’s May move to adopt Opteron in the 4-way high-end market. The May announcement was especially significant in that it further broke Intel’s hold of Dell. Dell had previously only used Intel chips in its PCs, but earlier this year acquired a specialty PC maker, Alienware, which is processor-agnostic, using both Intel and AMD chips and marking AMD’s first entrance into the PC maker’s seemingly impenetrable fort.
The top three server makers, IBM, Dell and HP, also plan to use Intel's Woodcrest chip primarily in the 2-way low-end server market.
“For AMD, in 2H06 we believe key targets for expansion of OEM relationships include IBM (in servers), Dell (in desktop and notebooks), and Toshiba (in desktop and notebooks),” Luke said. “Thus, given IBM's announcement today, we suspect that the potential expansion of Dell into desktops and notebooks will follow shortly for AMD, with Toshiba in notebooks likely in the 3rd or 4th quarters, which could represent growth catalysts for the company.”
Luke went on to say that the firm views this constructively for AMD as Intel positions its Woodcrest optimized for performance-per-watt on the company's new Core architecture.
“We note that IBM was the first major company to adopt AMD's Opteron microprocessor, introduced in April 2003. However, at present our estimates for AMD are unchanged at $1.16 for [calendar year 2006] and $1.32 for [calendar year 2007] and we maintain our 2EW rating on both AMD and Intel given the fierce competitive environment and excess inventory levels weighing on 3Q outlook, with Vista delay and slowing macro environment potentially restraining seasonal uplift of back to school and holiday season,” Luke concluded.
Approximately 20 percent of AMD’s Q2 revenue came from the server market.
Product availability and pricing of the five servers will be announced with the availability of the next-generation AMD Opteron processors, planned for Q3.
