The Computer Buzz

March 20th, 2008

Nome and Paul Van Middlesworth - owners - The Computer Factory
 

CPU Wars: AMD and Intel

AMD and Intel have produced PC "brains" for nearly 30 years. AMD produced CPUs under a technology license agreement with Intel. Although their CPUs were interchangeable, Intel maintained technological leadership and premium pricing by keeping AMD somewhat behind in technology.

AMD sued Intel. The 1995 settlement gave AMD cash but forced an end to the licensing agreement. AMD had two years to come up with its own CPU designs.

AMD was well prepared and began competing with Intel almost immediately. By 1999 AMD and Intel were running neck and neck in CPU performance. Intel was finding it increasingly difficult to maintain its premium pricing strategy.

Intel's Aug. 2000 release of the heat plagued Pentium IV was a massive strategic blunder. Even at twice the clock speed, the Pentium IV was actually slower than Pentium IIIs and considerably slower than the AMD Athlon CPUs. AMD vaulted past Intel and continued to widen the performance gap for the next several years.

Intel could no longer command premium pricing on the poorly designed Pentium IV. In 2005 AMD surpassed Intel in the sales of CPUs for PCs. With declining market share and margins, Intel was reeling. Then, in late 2006 Intel introduced the "Core 2 Duo."

The "Core 2" was Intel's first all new CPU design since the 1995 Pentium. With "Core 2" Intel regained technological leadership. At any given clock speed, the "Core 2" was 10% to 20% faster than AMD's new dual core CPUs. Overnight high end "Gamers" (the most sophisticated group of power users) switched from AMD to Intel.

Unfortunately for everyday users and fortunately for AMD, Intel reverted to its old practice of "premium pricing" both for their CPUs and the motherboard chipsets required to support them. Thus while Intel maintained the overall speed leadership, AMD CPUs are still faster in any given price range.

The Intel E4300 1.8GHz is equal in performance to the AMD A4200 2.2GHz CPU but the Intel powered PC will cost nearly $100 more. The same is true as we go up the line. An Intel E6850 at 3.0GHz matches the performance of the AMD 6400 at 3.2GHz but you will pay a $150 premium for the Intel.

If you want a high performance system that will outpace the fastest AMD CPU you will need to step up to the very high end Intel CPUs used in PCs costing $3000 to $5000.

Here at The Computer Factory, over 80% of our new PC sales are still based on AMD CPUs. AMD simply gives users "more bang for the buck" than Intel.

Quad core and eight core CPUs are now available from both AMD and Intel. Acceptance has been limited because there are few applications that can take advantage of multiple core technology.

Who's multi-core CPU is better? Intel has a faster processor and AMD a superior data bus structure. We won't know for sure until the next generation of application software arrives.