Analysis: IBM Takes the Opteron Plunge -- ADTmag

Analysis: IBM Takes the Opteron Plunge

With Intel finally righting itself after years of floundering in AMD’s wake, why did IBM pick now to take the Opteron plunge?

By Stephen Swoyer
August 8, 2006

The new Opteron-powered servers that IBM Corp. announced last week might not have been a shot out of the blue, but they certainly were a long time coming.

As Gordon Haff, a senior analyst with consultancy Illuminata, notes, IBM was the tier-one vendor on hand at Advanced Micro Devices’ (AMD) original Opteron launch. “[Big Blue’s] presence could well have tipped the scales in favor of Opteron’s market success. At any rate, it certainly accelerated [Opteron’s] adoption by enterprises.”

Notwithstanding its position in the Opteron avant-garde, IBM has steadfastly positioned the AMD chip as more of a niche play—e.g., for computational grids or high-performance technical computing (HTPC)—than as a powerhouse processor for bread-and-butter servers.

Until now.

At last week’s gala launch event in New York, AMD chief Hector Ruiz joined with Bill Zeitler—who heads IBM’s server group—to officially kick off Big Blue’s new line of Opteron-powered servers, which IBM expects to ship in the next three months. Mainstream Opteron servers are a big deal for Armonk. No longer must IBM execs hem and haw when confronted with the issue of Big Blue’s Opteron ambivalence—IBM currently markets Opteron-powered HTPC systems, along with a dual-processor Opteron-based blade server—now that IBM plans to deliver a full line of Opteron servers, including four-processor systems for both rack and blade-center configurations.

It’s been a long time coming, says Haff. “Opteron’s been a bit of a sideshow at IBM,” he concedes, noting that Big Blue’s Opteron-based eServer 325—a two-way box designed specifically for HPTC environments—isn’t officially a part of its System x (nee xSeries) line. That changed a bit when IBM introduced a two-way Opteron blade (the LS20), but Big Blue was still a mostly Intel play. “The addition of the… LS20 blade2 began to bridge IBM’s Opteron-based products from [HPTC] into financial-sector early adopters, but AMD still occupied a relative niche within IBM’s product lines. By contrast, Sun and HP announced broad Opteron-based lines,” Haff points out.

Veteran semiconductor analyst Nathan Brookwood, a principal with microprocessor Insight64, frames the issue even more starkly. “No other top-tier server supplier appeared at Opteron's coming-out party [three years ago], but IBM's endorsement went a long way toward dispelling … concerns [about AMD’s ability to execute in the server market],” he writes. “IBM may have been the first top-tier supplier to jump into the Opteron pool, but it stayed at the shallow end while others moved to deeper water.”

Just why they did so is a good question, industry watchers concede. One possible reason, suggests Haff, is that IBM’s Intel server business has been a consistent source of innovation in a mostly commodity-market segment. This innovation—which is responsible for X3, the industry’s most scalable Intel server chipset—has also increased IBM’s commitment (in terms of financial and technical resources) to Intel’s Xeon chips. “[Big Blue’s] large (and expensive) Intel-based chipset development program… ameliorated some of the four-socket Intel processor issues—while also locking its high-end systems to Intel to a certain degree.”

In any event, IBM’s ambivalence seems to be a thing of the past. Going forward, argues Insight64’s Brookwood, Big Blue appears to be deeply committed to Opteron. “Unlike IBM's earlier Opteron-based eServers that relied on fairly generic components, these new Systems x bear the unmistakable imprint of Tom Bradicich's technology development organization,” he points out. “All the rack-mount configurations include a feature IBM calls 'Memory Technology' that allows each CPU in the system to control up to eight DDR2 DIMMS [two channels, each with four modules]. This allows dual-processor systems to support up to [16] 667MHz DIMMs, and quad-CPU systems to accommodate up to 32 full-speed DIMMs. It's incredibly difficult to get even two DIMMS running at 667MHz on a single channel, but IBM gets four operating at this speed. Other Opteron suppliers lower memory speed to 533 MHz if there are more than two modules on a channel; IBM's ability to run at this higher speed improves its performance on memory-intensive applications by up to ten percent.”

As a result, Brookwood points out, IBM could become AMD’s go-to vendor for benchmarking purposes—just as it now is for Intel. “Just as Intel often cites the multiprocessor performance of IBM's X3-based systems because of IBM's superior memory subsystem performance, … AMD may emphasize benchmarks run on IBM systems to bolster its own performance claims.”

Industry veteran Charles King, a principal with Pund-IT Inc., sees IBM’s come-to-Opteron moment not so much as a about-face but as another example of Big Blue’s historically close partnership with AMD. IBM stood alone among tier-one vendors at the Opteron launch, King points out, and Big Blue’s eServer 325 has been a hot seller on the HTPC circuit. “IBM and AMD’s work together does not begin and end with Opteron. They collaborate across a range of commercial efforts that leverage the x86 architecture value chain, including R&D, design, and process technology agreements, such as a joint development alliance focusing on 65 nanometer chip development,” King points out.

Opteron Rising

Opteron is winning server market share at Intel’s expense, industry watchers say. Just last week, Mercury Research reported that AMD now controlled more than one-quarter (25.9 percent) of the x86 server market, while Intel’s share of the overall x86 market had declined to 78 percent (down from 79 percent in Q1 of this year and 82 percent in the same quarter last year). Intel recently struck back, announcing next-gen desktop- and server-oriented chips (Conroe and Woodcrest, respectively) that—by all accounts—outperform AMD’s Opteron and Athlon64 chips. Brookwood thinks both launches might be too little, too late for Intel—at least in the near-term.

“AMD should see a significant increase in Opteron shipments by IBM … and Sun, which greatly expanded its Opteron line-up last [month],” he comments, noting that Dell Computer Corp. has also announced plans to start shipping Opteron-based systems. “The timing and magnitude of Dell's Opteron launch remain unknown, but … [industry] rumors suggest the expanded relationship [between Dell and AMD] will include [dual processor] servers and desktop systems, along with the already-announced [multiprocessor] systems. In short, we believe AMD's expanded range of OEM SKUs will likely offset any gains Intel might rack up based on the enhanced performance of its Xeon 5100 line.”

Illuminata’s Haff identifies another suddenly salient question: Just why did IBM take the Opteron plunge now, just as Intel appears to have corrected most of the shortcomings of its own server chip architecture? “Intel is doing a lot of things right with readjusting and redefining its microprocessor designs. However, Woodcrest is just starting to roll out and Tulsa [its successor], although expected fairly soon, has still not been announced, much less delivered. AMD still has the product to beat today; Intel is just getting back into the ring. With Opteron-based products from HP and Sun going strong, waiting for Intel to land a knockout punch isn’t the most attractive option for vendors with all-Intel or even mostly-Intel product lines who want more sales now,” he suggests.

Finally, Haff says, there’s the obvious. AMD has arrived. “AMD has established itself as a legitimate contender. Intel’s frankly poor decisions of the past few years didn’t take it out of the running for good. I have no doubt that Intel will recover from its too-long fixation on ‘performance=frequency’ and will successfully provide processors that are designed and built less for frequency and more for multiple cores and conservative power usage. However, as they stumbled, they allowed AMD to rise from its position as a budget seller of mostly consumer-oriented x86 chips to a full-fledged, innovative enterprise microprocessor supplier. AMD fundamentally shifted its brand, and, barring missteps, that won’t change anytime soon.”

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