Intel -- The Monopoly Under Siege

It hasn't happened yet but there are now clear signs that Intel's monopoly is crumbling. It's a slow process but from what has been announced there is no reason why AMD cannot achieve this goal by the end of 2008.

Back in 1998 AMD scooped Intel by releasing the powerful 3DNow! instruction set which for the first time allowed SIMD floating point instructions on X86 processors. However, this was cold comfort to AMD since Intel simply ignored AMD's 3DNow! instruction set and released its own SSE instructions a year later. In some ways, like the ability to add numbers within the same register, Intel didn't catch up to 3DNow! until SSE3 was released nearly six years later. Intel's monopoly position was such that it could create standards even when it was trailing its competition.

In 2003 when AMD released the AMD64 64 bit extensions to the X86 instruction set Intel had planned to simply introduce its own incompatible instruction set much as it had with SSE. However, Microsoft refused to support another set of 64 bit extensions so Intel was forced to follow AMD's lead. It is significant that even four years later C2D's ability to handle AMD64 instructions is still lacking. This is a clear indication that Intel has not actually reinvented itself and is still following the old notion that it can do whatever it wants simply because it is Intel.

After all, being behind with Pentium M worked fine. Although Pentium M was actually less power efficient (even without AMD64 instructions) than AMD's Turion, the Centrino brand was labeled as being more advanced. The reason Intel was able to hide the fact that Pentium M was behind was that it produced its own mobile Centrino chipsets. These chipsets were so good that they more than made up for the higher power draw of Pentium M. AMD in contrast was left waiting and hoping for a proper mobile chipset from one of the 3rd party chipset suppliers like VIA, nVidia, or ATI. No such chipset was ever produced. However, now that AMD owns ATI this is no longer the case. AMD is fully capable of producing its own low power chipsets along with its mobile processors. In contrast, Intel's standardization of the C2D family prevented it from leaving out the AMD64 instructions from Merom and this increased power draw past Intel's original target. The mobile market is now much more competitive.

There are other signs that things are changing. Intel has tried to replace the ATX motherboard with BTX. However, ATX is still the standard and BTX is still not popular with OEM's. In contrast, AMD is introducing two new motherboard standards. For workstations, ATX is too small so AMD introduced an extended ATX standard with Quad FX. A new standard is badly needed since there is no current standard larger than ATX. And while ATX is too small for workstations it is too large for low cost desktop systems. So, AMD is also introducing the DTX standard which will allow smaller motherboards and cases. This standard seems particularly attractive for several reasons. The first is that the rise of USB as a common external port means that many ports like the parallel, serial, and even mouse and keyboard ports can be left off. This means much less competition for I/O port space at the back of the motherboard. Secondly, both Intel and AMD are talking about putting GPU's in the CPU package. With AMD's Integrated Memory Controller (IMC) this would completely eliminate the Northbridge chip which would similarly reduce competition for space on the motherboard itself. There is some indication that Intel is resisting this move for fear of losing chipset revenue. However, making the motherboard and case smaller while reducing the chip count and I/O ports will reduce costs for OEM's so DTX should become very popular.

Another big problem for Intel is server support from IBM. Intel currently enjoys good server support from IBM because IBM spent a lot of money developing its Hurricane chip for the Xeon FSB and is eager to sell as many systems with it as possible. The problem is that Intel's Nehalem processor has its own IMC and therefore no FSB which makes it incompatible with Hurricane. It would of course be possible for IBM to create another chipset to support Nehalem but this does not appear likely. The reason for this is that one of Intel's current directions is to use the same socket for both Nehalem and Itanium. This should reduce cost for Itanium development and particularly for IBM's sever competitor, HP. Apparently, in response to this, IBM is making its Power 7 family socket compatible with AMD's Opteron. So, it appears that the strong server support that Intel enjoyed because of Hurricane is now over and that IBM will strongly support Opteron instead. With Itanium on the Xeon socket and Power on the Opteron socket this leaves Sparc as the only competing server processor without leveraged support. It remains to be seen what Sun's response will be but without similar costs reductions Sparc could be pushed out of the market.

Other problem areas have included compilers and DIMMs. With its IMC AMD's K8 processors benefit from low latency. AMD would have therefore benefited from DDR speeds of 466 and 500MHz. However, Intel was able to push the development of DDR2 so DDR standard speeds stopped prematurely at only 400MHz. There is no doubt that this helped Intel while hurting AMD. However, there is currently some suggestion that AMD will be able to get DDR2 extended from 800MHz to 1066MHz. If this is true then it would be a real benefit for AMD. Coming with lackluster support for Intel's FBDIMM this would indicate genuine shift in influence. Likewise Intel enjoyed optimal code speed from its compiler while AMD without its own compiler often saw its full processor power unused. Now, however, the Portland Group has a compiler that produces good code for both Intel and AMD processors. This would appear to be the logical choice for software developers who want the maximum possible market for their products. However, increasing use of this compiler by developers is reducing another of Intel's artificial advantages. It isn't an overnight change but all of these things should steadily erode Intel's monopoly standards position and allow AMD to create its own standards independently of Intel.

If AMD does indeed succeed in breaking the Intel monopoly by late 2008 then IBM's increased server support will simply strengthen AMD's position. I've heard a lot of talk about Intel's lead in process technology. However, this too is changing. AMD will reduce Intel's lead at 45nm to just 6 months. But, Intel will continue with a 24 month cycle to 32nm while AMD is pursuing an 18 month schedule. This should mean that AMD will introduce 32nm at basically the same time as Intel in late 2009 or early 2010, a difference of perhaps a few weeks instead of months. It also appears that Intel's Simultaneous Multi-Threading strategy is going to be ineffective for some time. This should be a maximum benefit on dual cores but a decreasing benefit on quad cores or quad cores on dual sockets. This is true because both Vista and Linux would be hard pressed to produce the 8 or 16 threads necessary to fully occupy these chips. This really only competes with the limited market currently being pursued by Sun's T1 chip. All in all, SMT is a good thing for processors and it is commendable if Intel can release a good version. However it is ironic that this advance would put Intel in the same boat that AMD has been in since 2003 with its advanced 64 bit K8 hardware underutilized.

I think that Intel will eventually realize that it still needs a few philosophy changes. Essentially I think that Intel's current strategy of low prices is going to fall flat in 2008 when faced with Fusion, chipsets without Northbridges, and DTX since this is exactly the platform that can flourish with severe pricing pressure. In contrast, Intel seems to be holding out by continuing to use the old FSB on single socket Nehalems and these will not fare so well with low prices. I would say that Intel is heading for another round of reorganization in late 2008 or early 2009. I also think Intel will end up scaling back some 45nm and 32nm FAB upgrades. I'm not sure if AMD will actually pursue the NY FAB option. If AMD is still pressed for cash it may resort to some type of expansion in Dresden perhaps as it did with FAB 30 back in 2004. So, we should continue to see AMD and Intel moving closer together into 2010.