The AMD Barcelona back story

Posted by Rob Enderle, Principal Analyst, Enderle Group

I was one of a number of analysts who attended the AMD Barcelona launch at the Presidio in San Francisco.  One of the problems with any new technology is assessing whether it is competitive. Trusting vendor sourced benchmarks is not wise at the best of times and taking the traditional shortcut to the recommendation that buyers should “take a look at Barcelona” is kind of pointless. I can’t imagine anyone that might be in the market for a server or workstation needing a quad core part not evaluating it regardless of anything I or any other analyst says.  

However there were a couple of things at  the event I thought were unique and memorable and they speak to how I think we all should be looking to evaluate any technology.  They also speak to AMD’s sustaining strength, their ability to create strong bilateral partnerships.  Let’s take partnerships first and then drop into what was said at the launch that suggests AMD may have actually launched a superior offering.

Lucas Films/Industrial Light and Magic

You can often gauge the depth of a partnership by the emotional connection of the partners to the vendor they are supporting at an event like this launch.   There were four talks that stood out and I’ll be addressing all four in this piece.  The first was from the top operational executive at Lucas Films and he almost had tears in his eyes as he told how his relationship with AMD started.  

According to him, early on they needed help (hard to imagine given they have nearly 70% of the market for high end movie computer generated graphics today) and went to Intel as the biggest player in the segment.  Intel, evidently, after spending a lot of time looking at the business, basically blew them off and nicely said they really couldn’t help create the technology Lucas needed.   

Had not AMD stepped in, the implication was that much of what we have seen come out of that company probably wouldn’t have ever existed without AMD and, as a result, Lucas won’t do business with Intel and indicated that was the case with their entire industry.  Now, granted this isn’t a huge number of companies, but they are incredibly influential in the movie industry and I’d been to a similar event at DreamWorks, where exclusive support for AMD (and HP) was also strongly stated, suggesting there is some degree of truth to this statement (though it is hard to believe Intel hasn’t made at least some inroads).  

The point is, and I hear this over and over again with AMD, that they are an excellent partner and even if they don’t have the leading technology the strength of the partnership is valued, more highly.  While this doesn’t speak to Barcelona’s competitiveness, it does speak to the competitiveness of AMD and suggests that this partnering capability may be AMD’s sustaining strength easily overcoming anything they do individually with technology.   They helped Lucas get started and become successful, there is no value I know of to anyone that is any higher than that and the very real emotions, and the fact Lucas was doing this at their own facility, is testament to this sustaining value.


VMware:  Benchmarks that mean something

We were very skeptical of the virtualization benchmarks from AMD that reported to measure a future VMware product on a yet unreleased faster version of Barcelona.  I agree that you can’t really apply the numbers to anything and hope to survive a challenge.   However, the speech from the VMware CEO indicated they supported the results on AMD and the fact they existed with VMware’s support indicates AMD and VMware have a surprisingly deep collaborative partnership.   

The result of this partnership should be products from AMD that better work with VMware and the fact they are already aggressively testing both companies next generation products together more than implies the two will be tuned to work together.   This may point to Barcelona’s sustaining advantage and that is as a virtual machine platform.   In fact, for all quad core products the best use near term is as a platform for a virtual machine server.   That is really the only thing that will consistently consume the power represented by a product in this class near term in large numbers.   

You don’t typically see a major segment vendor aggressively support any one processor vendor and we’ll have to wait and see what VMware says about Intel in the future before you assume this position is exclusive, but it was a very powerful statement.   

Michael Dell advocates AMD

This was probably the most powerful, in terms of AMD support, presentation of the night.   I have rarely seen any vendor in Dell’s class publicly support any component vendor in the way Michael Dell supported AMD.   

First he indicated that he had created a unique server designed around AMD and uniquely designed from the ground up to be the most powerful pre-configured virtual machine server ever created.   He claimed a better than 40% performance advantage over anything else (and that anything would include Intel).  Now, while you may rightly question whether he will be that much faster than anything from Sun or HP he is credible on Intel in that he was once Intel exclusively and still has a major commitment to both vendors.   
This was probably the most aggressive I’ve seen Dell in some time and to have Dell go from an exclusive supporter of Intel to an AMD advocate is almost surreal.   This further supports there is a performance advantage to Barcelona and, given this was unique hardware created along with AMD, further supports the unique strength of an AMD partnership.  

I couldn’t help but conclude that it was, once again, the partnership and not the technology that resulted in Dell’s advocacy and what may be a market leading product for them.   


HP:  Powersavings’r Us

HP has been the most aggressive company in segment on green and the message that they are improving their profitability by being green.   Now, I’m a fan of green as well but think most vendors give the topic lip service and know that when green and profits bump heads it’s generally the profits that win.  But when a company represents that they are more profitable because of their green initiatives they are more likely to truly support them.  

HP was more measured than Dell in their praise of AMD but did indicate there was no vendor who did a better job they worked with in terms of performance per Watt.  Now HP and AMD have collaborated to create, previously for their bladed PC offering, a unique part designed from the ground up to be used in highly dense blade environments so the two companies have a deep history in this area.  

HP is credible on green and they co-developed Itanium with Intel which means they clearly have their feet in both companies deeply.   Once again it was the partnership between them that appears to have created the sustaining value and any performance advantage didn’t result from AMD alone but from both firms together.  

Sun: Sidenote

Sun, much like Apple at Intel’s IDF event last year, was mostly selling themselves and their comments on AMD really didn’t seem to be that different than what they would likely say about Intel.   What made their talk interesting is they are really starting to look like two companies with their hardware and software groups increasingly acting independently.   Software has moved to aggressively embrace IBM hardware and Sun hardware recently moved to aggressively embrace Microsoft.  While I think they may be on a path to separate the company into two distinct parts, physically or virtually, to assure the success of these strategies they are becoming, for good or ill, it is one of the most interesting companies to watch in the segment.  

In short; they bear little resemblance to the Sun we’ve grown to know over the last several decades.   While this really doesn’t imply anything about AMD, I thought it is interesting enough to mention in passing.  


Wrapping up

Next week is Intel’s IDF and their chance to respond.  If it is like most IDFs, it will be solid on Intel technology and while partners will be presented, it will likely be a more typical supplier relationship where deep collaboration is more the exception than the rule.   
This isn’t to say I think Intel will do badly, they are clearly on a powerful roll and don’t seem to be missing on much of anything.  But it does showcase what I think is a distinct difference between the two firms.   Intel’s successes and failures largely are contained in Intel where AMD’s power appears to be in their partnerships.   

This suggests that, rather than benchmarks, we should be looking at these vendors for their respective strengths and choose one over the other when that strength matches our needs.   

In addition, when it comes to assessing a product I’d recommend that, rather than using questionable benchmarks, you talk to your hardware vendor and the software provider that will be supplying what you’ll be running on the hardware and factor their feedback into your decision with regard to choosing between AMD and Intel.   That way you’ll likely end up with the best solution for your needs based on credible third party information.  

 

Rob Enderle is one of the last Inquiry Analysts.  Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them.  Currently he provides his services to most of the major technology and media companies.