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Processor War Between Intel and AMD

By Fahed Bakri, 8 March 1999

I first recognized the name AMD (or Advanced Micro Devices) when I was reading an article on 286 math co-processors back in the middle of 1980's. At the time, AMD was licensing the rights to produce the math co-processor 80287. The name did not mean much to me back then because Intel processors were dominating the PC market while Motorola processors were dominating the Macintosh and Unix workstation markets.

In late 1985, Intel introduced what is, then, the fastest microprocessor in the world, the Intel 80386. This processor also needed math co-processor in order to support applications with intensive calculations such as Modeling, CAD, Graphics, and others. AMD was also there to be a secondary supplier for 387 chips. In 1991, AMD introduced its own Am386 processors which where basically a replica of Intel product after 5 years courtroom battle with Intel.

In 1990, Microsoft introduced Windows 3.0 then Windows 3.1 operating systems. Personal computers based on Intel processors became more attractive than ever because they had intuitive user interface for the first time in the history. Intel was also ahead in the game and ready for the prime time by introducing the 80486 processor.

Intel 80486 was a revolutionary chip as it embedded the math co-processor in addition to many other features over the 80386 chip. AMD was also quick to reverse-engineer the 486 chip and produce it under Am486 processor with varieties of clock speed. However, Intel has always managed to keep its grip on the market share. In early 1990, Motorola was losing the processor war as Macintosh market share started to dwindle and Unix workstation manufacturers such as HP, Sun and Silicon Graphics built their processors.

I was then reviewing with great interests the development in the processor war. PowerPC from IBM, Apple, and Motorola made big headlines. Some have predicted that may take over Intel presence. But that obviously did not happen. On the other hand, AMD was pursuing its goal to build its own processor that is compatible with x86 platform and yet had a different design than Intel's Pentium generation. Again AMD was not successful with its K5 processors. K5 had  cold reception in the computer user community.

In late 80's or early 90s, a company named NexGen was formed by former Intel employees with a goal to build a powerful microprocessor that outperforms Intel's products while keeping the backward compatibility with x86 standards. Because of the weak technical and sales position of AMD K5 processors, it was imperative to AMD to take a quick action. Hence, they acquired NexGen in middle of 1990s along with its technology and the brains behind it. AMD K6 processor came soon after that to mark the first serious competition to Intel's strong hold on the market.

As you can see from this review, AMD has always been on the up and down swing. Even with K6 processor, which is a sound product technically, was unable to be a performer financially. It was faced with production problems and fierce price competition from Intel. AMD had always to keep its chips 25% cheaper than Intel's. But AMD K6 became ahead of Pentium II processors when AMD brought 3Dnow! Technology to K6-2 processors in 1998.

In fairness, AMD made excellent success in the low-end PC market. It managed to capture a commanding market share in the sub $1000 consumer personal computers. It also has succeeded in bringing all major computer manufacturers to its customer list including Compaq, IBM, Hewlett-Packard, Acer, NEC, Toshiba, and many others. As recently as February 1999, Gateway decided to build entry-level computers based on AMD K6-2 and K6-III processors.

The competition between Intel and AMD is stronger than ever. Intel has brought a new line of processors in 1998 called Celeron to compete with AMD K6 in the consumer PC market. Intel Celeron processors were not successful enough to topple the K6 from its throne. In January 1999, AMD had over 43% share of the consumer PC market. In February 1999, Intel introduced a new line of Celeron chips as well as the all-new Pentium III processors. Few days later, AMD announced the K6-III processor claiming that it will outperform the Pentium III and plans to Introduce K7 processors later in 1999.

The processor war will continue. But whom do you want to win? In my opinion, the real winner is you, the consumer or the business user. You shall be able to get your PCs at much lower prices and far better technologies.