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The Computer Buzz February 5th, 2009

Nome and Paul Van Middlesworth - owners - The Computer Fact


CPU Wars

From the early 1980s through most of the 1990s AMD manufactured Intel designed CPUs under a license agreement. As a result of AMD's successful lawsuit against Intel in the mid 1990s, Intel cancelled the agreement and AMD was forced to design its own CPU products. By the year 2000, coincident with Intel's release of the Pentium IV, AMD had become the performance leader. AMD continued to widen both the performance and value gap with Intel for the next several years.

AMD's technological superiority over Intel's Pentium IV forced Intel to slash its prices. By 2004 AMD had captured over 50% of the CPU market. Intel was forced to abandon its practice of "premium pricing" for its CPU products. The "Intel Inside" label on a PC meant only that there was a second rate CPU "inside." Intel's profitability tumbled.

In mid 2006 Intel regained the technology lead with the well-designed Core 2 Duo CPUs. Had Intel kept the pressure on AMD by holding down pricing, Intel probably could have recaptured the 80% of the CPU market that it enjoyed prior to 2000. Instead Intel resumed its premium pricing strategy allowing AMD to maintain its value leadership (best bang for the buck).

At any given clock speed, the Intel CPU outperforms an AMD CPU by about 15%. Unfortunately it costs 100% more. An Intel 2.66 GHz Core 2 Duo is the performance equivalent of an AMD 3.1GHz Athlon. The price of the Intel is $145 the price of the AMD is $100. Thus for the vast majority of home and business users AMD is a better deal. Since our customers tend to be fairly practical, over 80% of the PCs we build are based on AMD's CPUs.

Both AMD and Intel make CPUs for many desktop, laptop and server applications. For desktop PCs I counted 106 Intel and 37 AMD CPUs in our distribution channels. Over half of Intel's CPUs are the low end Celeron, Pentium IV and Dual core (not Core 2 Duo). These processors like the AMD Sempron CPUs are typically used for the low end (under $400) PC market.

Both Intel and AMD make 4 core (Quad Core) CPUs. AMD also manufactures a tri-core CPU called the Phenom. The tri and quad core CPUs can enhance performance on some specific applications like high end gaming, CAD/CAM, solids modeling and audio/video editing, but for the vast majority of home and business users these exotic CPUs offer no advantage.

While most new PCs today contain multiple core CPUs, many applications actually benefit little. Unless the program you are running is designed to utilize multi core technology (and most aren't), your three year old PC with a 3.0 GHz single core AMD Athlon will be as fast as a new multi core PC and significantly faster than a new PC with "Vista."If your PC has the XP OS and a CPU with a clock speed of 2.0Ghz or better you should keep it alive as long as repair or upgrade costs are under $200.





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