cM :: MORLEY|DIGITAL

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AMD last week announced a previously un-leaked SKU in the family of upcoming Phenom processors.  With all eyes on what AMD is going to do to compete with Intel’s dominating Core 2 architecture, AMD may have thrown the ultimate curveball before the game even begins.

Traditionally, multiprocessor configurations come in multiples of 2; in the case of the consumer desktop, your option is 1, 2, or 4 processing cores.  Currently, the most popular from both AMD and Intel on the mainstream desktop would be the dual core processor.  Intel has the Core 2 Duo, and AMD has the Athlon 64 X2, of the venerated and aging K8 family.  AMD’s new processor family, the Phenom, which will be released in the next couple of months, will span dual, quad, and now tri-cores. 

So what is the point of a three core processor?  The easy answer is that three is one more than two and that helps AMD space out their CPU portfolio in terms of price and performance. 

It all boils down to positioning.  AMD was smart not to go head to head with NVIDIA with their Radeon HD 2900 series.  Instead, they hit on popular price bands and features not found with their competitors.  It was a winning strategy that made up for publicly perceived architectural drawbacks with their advanced GPU.  With Phenom it may turn out to be a different story.  If AMD’s next gen processor has the luxury of competing with Intel’s current lineup for a couple of months before Penryn is released, it may be enough to regain precious ground lost over the last year.  All eyes are on Intel’s Penryn with its core tweaks, SSE4, and 45nm process, and that is where the protracted battle will be.  It remains to be seen just how fast Intel can bring this processor family to market.  However, AMD has created its own blue ocean with a tri-core Stars family processor.  Thanks to AMD’s Direct Connect Architecture, adding additional cores (in this case it’s actually subtracting) only requires a prerequisite number of HyperTransport links, or the communications protocol AMD uses for core to core transfer of information.  Intel is still using the tried and true Front Side Bus design, which currently limits the type of multi-core designs they can release to market.  Intel has no monolithic core design, and will be relegated to 2 or 4 cores on the desktop for quite sometime.

It is this competitive advantage that AMD hopes to leverage, and I believe it’s a winning strategy for a very large piece of the battlefield: the retail channel.  Walk into any Best Buy at the end of 2005, and you’d see a majority of the systems featured AMD processors.  For the first time in the company’s history, AMD actually beat Intel at something.  They had the larger share of the US retail market.  This increases mindshare which increases market share.  Blue Shirts, Best Buy employees, are a key group of market influencers that any company needs to court in order to be successful there.  Driven by enthusiast support in the gaming market – many of whom work at Best Buy – AMD was winning the hearts and minds.

Now, enthusiast support is firmly behind Intel, and AMD has had to play the old game of how-low-can-we-sell-these-things-for in order to maintain any type of hold in the market.  With a tri-core processor, AMD has the luxury of flanking the Core 2 Duo or Core 2 Quad.  It can compete with the former on horsepower, and it can compete with the latter on price.  Intel will have a hard time countering with its dual core offering when benchmarks show multimedia apps and certain games favoring more cores (watch 3D Mark 06 during the CPU test and you’ll see it only uses 3 cores – and 3D Mark is an IMPORTANT benchmark for retail customers.)   And with many of the Intel quad core chips filling higher ASPs (notable exception being the Q6600), Intel will have to cut lucrative margins it now enjoys in order to fend off customers who may not be willing to spend the extra cash on an extra core.

But CPU core count is only part of an AMD full court press that focuses on total platform performance.  The next three months will see many of the fruits of the new AMD/ATI effort, and Intel will have more to worry about than just CPU strengths as the focus shifts to the total platform.  However, both sides have brilliant people working for them, and Intel’s superior resources will be brought to full steam against any perceived threats by its smaller competitor.  The question is how fast they can execute, not IF.

The bottom line is I believe the tri-core is a Hail Mary retail play on AMD’s part that is likely to pay off.  We’ll see AMD tri-core machines occupying retail shelf space that may traditionally seat an Intel dual core system.   It’ll be an interesting 2008 for both companies, I’m sure.