A Tale of Two Rivals
There are few companies which have such a long history of competition as AMD and Intel. The market for computer processors is a hard one for new companies to enter, and as a result the market has largely been left to Intel and AMD to fight over. As is often the case when two sides comes to battle over something, enthusiasts have become split over which company’s products they prefer. This rivalry is as much a part of day to day business for both companies as cheese is a part of a grilled cheese sandwich.
But how did this rivalry start, and how do the two companies really compare?
Intel has been a well know name for about two decades, but Intel actually began much earlier than that. The company was founded in 1968 as the Integrated Electronics Corporation. The original focus of Intel was on memory, which was as much in its infancy as anything else, but Intel was contracted shortly after the company’s foundation to create a general-purpose processor. This processor, called the Intel 4004, was successful. Even so, there were many companies making processors in those days. It wasn’t until the mid 80s, as Intel continued to make processors using a common instruction architecture, that Intel started to emerge as a leading force in the market. This common instruction architecture, called x86, meant a program built for one Intel processor should work on all of them, and it was a major advantage over the one-off designs competitors were making. As competitors succumbed to the high costs of researching and developing new processors, Intel’s market share grew. By the 90s Intel competitors had been conquered and had left Intel with about 80 percent of the processor market.
Advanced Micro Devices, or AMD, incorporated in 1969. AMD’s early history included design and production of logic chips and computer memory. As was the case with Intel, the 80s were an important decade for the company. In 1982 AMD signed a lucrative contract to produce Intel’s microprocessors for use in IBM branded computers. This contract with Intel led to the first rivalry between the companies, as Intel wanted out of the deal in 1986. Through a series of court battles, however, AMD won the rights to continue producing and selling Intel based chips, a business which carried AMD into the 90s. In 1996 AMD debuted its first in-house architecture, called the K6. The K6 was the first processor to seriously challenge Intel’s products for years. Since then AMD has regularly introduced new architectures to compete with Intel.
There is a significant difference in size between Intel and AMD. In terms of market share, Intel generally has a grasp on eighty percent of the market, while AMD has between fifteen and twenty. The remaining few percent of the market consists of very small processor companies like VIA. The difference in market share translates to drastic differences in corporate size and revenues. Intel currently has around 90,000 people on its payroll world wide, and the company brought in about 35 billion dollars in revenue for 2009. AMD only has about 10,000 employees world wide and brought in around 5 billion dollars of revenue for 2009.
Another notable difference in size between Intel and AMD is Intel’s manufacturing capability. Intel produces its own processors using the fifteen fabrication facilities it runs across the globe. These state-of-the-art facilities give Intel a serious edge in developing new production processes for its CPUs, but they’re incredibly expensive to operate. AMD used to have its own fabrication facilities as well, but due to its small size and the huge overhead costs of operating them AMD has now spun those facilities into a new company called Global Foundries. Global Foundries will make future AMD chips, but will also make products for other companies.
While both Intel and AMD are mainly rivals in the processor market and are generally thought of first as processor companies, both companies make a variety of other products.
Intel’s stable of products include integrated graphics chips, chipsets, and solid state hard drives. Intel also uses its financial might to get involved in special projections and to fund start-up companies which are developing technology which Intel believes to be important. For example, Intel’s Classmate PC project created a special-purpose computer aimed for use as an educational tool.
Besides processors, AMD produces chipsets for its processors and produces ATI branded video cards. AMD purchased ATI outright in 2006, but has left the brand name intact. Although some observers are unsure if that purchase was a wise move, AMD has been making strides towards integrating GPU functionality into its processors and hopes to release a product called an Advanced Processing Unit, or APU, in 2011.
Although the future is naturally hard to predict, it is probably safe to say that the gap between Intel and AMD won’t be closing soon. Intel is undeniably a larger, more profitable company than AMD, and this will probably remain the case for the next decade no matter how the future processors from each company perform. The processor market is entrenched, and change comes slowly when it comes at all.
The real element of uncertainty surrounds the future of Intel and AMD’s non-processor related businesses. There is still plenty of room for ATI to grow under AMD’s command, and Intel’s numerous investments into other companies and into a wide variety of technologies means that Intel could grow in countless different ways. It will be interesting to see if the growth of each company into areas beyond the traditional computer processor market will increase or decrease the rivalry between these two companies.