AMD Strengthens Server Portfolio With New Opteron Chips

After adopting HP’s (NYSE:HPQ) networking solution and technologies to consolidate its data center offerings last month, AMD’s (NYSE:AMD) server portfolio is in the limelight again this month as it launches its new server chips. The new improved version of Opteron chips promises to provide better performance without consuming extra power, and the company has already announced around the integration of 11 servers. AMD’s server portfolio, which contributes close to 12% to our price estimate of $8.40, has registered a significant decline in revenues since 2007, but we feel the revenues bottomed out in 2011 and forecast an uphill journey hereon.

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AMD Adds Power To Server Portfolio With Improved Opteron Chips

Early this week, AMD announced a new line-up of its Opteron server chips based on the Bulldozer micro-architecture. The five new processors launched include two new versions of its Opteron 6200 series and three new processors for its Opteron 4200 series. The processors boast a 100 MHz performance advantage over their predecessors without any increase in power consumption.

The new Opteron chips are aimed at high-performance computing and demanding applications such as databases. While the Opteron 6200 series come with new 16-core chips, the Opteron 4200 series chips up to 8 cores for tasks such as those involved in cloud computing. The large number of cores in these processors would help data centers by allowing them to efficiently deploy more virtual machines.

The new chips underscores the companies commitment to create a broader portfolio of processor options for its customers while aiming to create the best price/performance offering of x86 server processors.

Latest HP ProLiant Servers Integrate New AMD Opteron Processors

In sync with the launch of the updated Opteron processors, AMD announced that about 11 servers from its customers will be integrating the new versions of its high-performance Opteron 6200 series and the low-power AMD Opteron 4200 series.

Out of the 11 servers, two are the recently launched HP ProLiant Gen8 servers that use the new AMD Opteron processors, and HP plans to further refresh two of its ProLiant G7 servers later this year. Additionally, Dell is also expected to refresh its PowerEdge series with the latest AMD Opteron processors.

AMD To Regain Some Of The Lost Market Share From Intel

For over two decades, Intel (NASDAQ:INTC) has been AMD’s arch rival in the PC and server microprocessor market. Historically, AMD enjoyed a 15% share in the server processor market but has witnessed a continuous downfall ever since. In the past four years, AMD has registered a 10% decline in market share as a result of execution issues. The fightback from Intel, with the launch of its Xeon processors, puts additional pressure on the company and almost all the market share that it lost over the years has been grabbed by Intel.

The Xeon chips have been a good strategic addition to Intel’s server portfolio, and the company recently started shipping an improved version code-named “Romley,” which HP and Dell have already implemented in their servers. Early last month, Intel further expanded its capacity with the acquisition of Cray’s interconnect assets. (See: Intel Expands Server Portfolio By Acquiring Cray’s Interconnect Assets)

However, since the launch of its Bulldozer architecture, AMD has seen a steady increase in demand for its high-end server processors. The company is showcasing speed and throughput of its Opteron chips in the world’s third fastest supercomputer Jaguar. ^[1]. Last month, it announced its decision to join hands with HP to consolidate its data center offerings and improve virtualization – a move slated to enhance its network capacity and improve performance. (See: AMD Adopts HP’s Networking Solution & Server Technologies)

The new product additions further strengthen the company’s ability to offer greater choices to a data-starved base of enterprises and growing cloud customers. We think that the company has reached a trough and will see a y-o-y increase in its market share through our forecast period.

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1. AMD adds horsepower to server processors with new 16-core chip, IT World, June 04, 2012 [↩]