For more than two decades, chipmaker Advanced Micro Devices Inc. was dismissed as a "socket stealer," a company that gained share in the desktop PC market by producing processors that copied chips made by market leader Intel and sold for a lower price. In the past year, that perception has changed. AMD has brought out innovative products that have been embraced by computer makers and customers. And Intel has been forced to follow the lead of its much smaller rival to slow AMD's gains in the enterprise server market.
Intel provided AMD with an opening last year when it introduced Itanium, a 64-bit chip that isn't compatible with Intel's 32-bit chips and can't run software written for the x86 standard without being recompiled. As appealing as 64-bit power might be to computing-hungry businesses, adopting Itanium would force them to make a clean break from their 32-bit systems and their huge installed base of applications, a costly move that many business-technology managers are reluctant to make.
AMD responded to that opportunity with Opteron, a chip that can run 32-bit and 64-bit x86 code. And it's paying off in a big way. In the past six months, top-tier computer makers such as Hewlett-Packard, IBM, and Sun Microsystems introduced enterprise servers based on the Opteron chip.
"Intel left an opening big enough to drive a truck through, and we put Opteron in it," says Barry Crume, director of AMD's server and workstation group. "We've taken a page out of their book. We did the exact thing that made Intel a success--paid attention to the existing software base."
AMD is on a roll, but the chipmaker still faces many challenges ahead, says AMD CEO Hector Ruiz. "We have lofty ambitions."
AMD CEO Hector Ruiz, who became chairman in April, says the company is on a roll. "For perhaps the first time, we're actually seeing AMD focused long term, not on a skirmish or a battle in a particular quarter," he says. "There's a method to our madness in 64-bit computing, and we'll capitalize on the position we've created."