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By Arik Hesseldahl

AMD Sticks It to Intel -- Again

The chip company takes its quarrel to billboards on both coasts. But it will take more than clever marketing to fend off Intel's counterattack

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If there's one thing chipmaker Advanced Micro Devices knows how to do, it's make computer chips. And if there's another thing AMD knows how to do well, it's how to rib rival Intel in the media.

Last year AMD (AMD) took out full-page ads in major newspapers to challenge Intel (INTC) to a performance duel between their respective chips (see BW Online, 8/23/05, "AMD To Intel: Let's Rumble"). AMD did the same thing a few months earlier when it filed a federal antitrust lawsuit against Intel (see BW Online, 6/28/05, "AMD Hauls Intel Back Into Court").

TIMES SQUARE STANDOFF.  Now AMD is poking Intel in the eye over what may be an even more important issue in computing -- power consumption -- and doing it in a way that is sure to get attention. On May 2, AMD put up digital billboards which will tally what it says is the amount of money spent on electricity bills by companies running Intel-based servers.

They will run through the end of the year. The billboards are inspired by the national debt clock near New York's Times Square, and they started counting at the $1 billion mark, adding roughly $24 a second. One billboard is situated in Times Square only blocks away from the debt clock that inspired it. The other is along U.S. Highway 101, in a spot where it is sure to be seen by Silicon Valley executives on their daily commute.

AMD'S INSIGHT.  Sunnyvale, Calif.-based AMD says the first $1 billion in its calculation is related to the number of Intel-based server processors sold since April, 2003, when AMD introduced its competing Opteron line of server processors, through the end of 2005. It assumes those processors, which power the massive server computers that run Web sites and corporate data networks, were running at about 70% of their computing capacity, at a cost of about 13 cents per kilowatt hour.

"This campaign is all about raising awareness on a critical issue," says Marty Seyer, AMD's senior vice president for commercial business. "This is not a game, this is real."

Indeed, computer power consumption is no small issue -- particularly for large companies like Google (GOOG), which operate large banks of enormously capable computers that use expensive electricity. Last year, Google engineer Luiz Andre Barroso published a paper warning that power costs could outweigh hardware expenses if power consumption weren't brought under better control.

STEALING FROM INTEL.  And at least for now, AMD has the advantage over Intel on power consumption, says Nathan Brookwood, head of market research outfit Insight64, in Saratoga, Calif. "Over the last two years AMD processors have been using a lot less power than Intel's," he says. "The typical Intel Xeon or Pentium 4, based on the Netburst architecture, has been using 120 to 130 watts when running full speed, and when lightly loaded drops to about 70 watts. When an AMD Opteron is running at full speed, it's using about 90 watts, and when the load is lighter, that drops to about 25 watts."

Lately, AMD has had a lot to crow about. While Intel still holds a commanding lead in the market for computer chips of all kinds, AMD has been eating into Intel's market share. As of the end of the first quarter, servers running AMD Opteron chips accounted for 22.1 % of the servers sold, up from 16.4% in the previous quarter, according to market research firm Mercury Research. Intel has said that at least part of its share loss came as the result of a shortage of chipsets -- chips that accompany a microprocessor -- which caused some customers to go with more AMD-based servers than they otherwise would have.

An Intel spokesman fired back at AMD. "We sure hope the calculator on that clock can subtract or run backwards. Intel-based servers selling now offer leadership in both performance and energy efficiency."

THE BIG FIGHT.  Come later this year, it may take more than marketing gimmicks to keep up AMD's momentum. Intel CEO Paul Otellini promised improvements in power consumption at a meeting in New York with financial analysts last week (see BW Online, 4/28/06, "Intel On the Offensive").

Later this year, Intel will unveil a new generation of chips based on an architecture called Woodcrest, which will consume less power. "After the second half of the year, the race between them to consume less power will get a lot closer," Brookwood says.

Jim McGregor, analyst with InStat/MDR in Scottsdale, Ariz., said he thinks AMD is simply playing to the perceptions of Wall Street analysts and investors. "AMD needs a marketing overhaul," he says. "They can pull stunts like this, but it's not going to help them get a point across about how effective their product is, it doesn't help them address a new market segment. If AMD can learn one thing from Intel, it's about how best to use its resources toward effective marketing. AMD may have learned to be a technology leader, but it hasn't learned how to be a market leader. There's a big difference." Just how big may get a lot clearer in the second half.

Hesseldahl is a writer for BusinessWeek Online in New York

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