Intel Corp., the world's largest computer chip maker, launched the first implementation of its redesigned processor architecture last week, aiming to take back the market share snatched by its smaller arch-rival, Advanced Micro Devices, Inc.

Intel's move is the latest in the ongoing battle for chip supremacy.

The semi-conductor giant promises that the new processors †which will power laptops, desktops and servers †will not only be more powerful than its previous chips, but will also trump the competition in efficiency, a key category where AMD has taken the lead.

Mobile users are expected to see longer battery lives. Desktop users would benefit from cooler running computers. Meanwhile, businesses †some using large-scale servers with hundreds of chips †would see their electric bills reduced.

Pat Gelsinger, general manager for Digital Enterprise Group, Intel’s computer and network solutions division for large businesses, is touting the new chip technology as “a technical marvel” that is “driving a new era of power efficiency.”

Competitors From the Start

Intel and AMD have always been toe-to-toe in the processor market. Consumers in the late 90s were caught in between the two largest competitors as they battled to see who could make the fastest chips.

Armed with new chip designs at the time, both companies raced to increase the clock speeds to win the hearts and minds of the mainstream market. However AMD found itself outgunned by Intel's manufacturing prowess and conceded defeat in the clock speed competition.

The result was not fully surprising. The Intel architecture at the time was designed for speed, Mercury Research analyst Dean McCarron said. The Netburst architecture, used in Intel's Pentium 4 lines were designed to do a little work each clock cycle, essentially paving the way towards higher speeds. The P4 chips had been designed to run ideally at speeds of up to 10ghz, had they not been limited by thermal problems, and other issues.

The defeat left AMD bruised, but not disheartened. They responded by switching to a new philosophy, no longer following Intel, but paving their own path.

Instead of designing a central processor that did small amounts of work at high speeds, AMD aimed at creating a solution that would do a lot of work at lower speeds. The resulting technologies led to “64-bit” processors that not only outperformed Intel’s Pentiums, but did so at lower clock speeds - meaning less power was needed, and less heat was generated.

The philosophy shift to an energy efficiency focus paid off.

IT managers seeking to placate cost-cutting bosses in corporate data centers and IT departments around the world were beginning to become weary of burning watts of power that sent bigger payouts to utility providers and reduced profit margins.

As the industry began using more power efficient, server-class Opteron chips from AMD, Intel saw its grip over the market loosening. As recently as the first quarter of 2005, Intel’s competition in the server sector was negligible. They had over 90 percent of the marketshare, with AMD taking only 7. But by the first quarter of 2006, Mercury Research reports that Intel’s share had dropped dramatically to 77.9 percent. Wall-Street noticed and sent share prices tumbling 26 percent this year.

Triple Threat

Intel has not been idle, however. It has been developing the technology to surpass its current Netburst architecture that has powered all of its chips for the last several years. Their answer: a new micro architecture dubbed Core.

The new advance is part of the most significant product overhaul for the company in over two decades. Learning from the previous generation server chip know as the Itanium Processor, the new chips now support 64-bit operations as well as 32-bit, meaning customers don’t have to bother with the expense of re-writing their computer software code to take advantage of the new generation.

The competition with Intel may have also prompted the company to change its focus from getting work done quickly, to getting work done smarter. Intel’s ‘Core’ based chips have adopted what are called ‘dual-cores.’

The architecture is similar in approach to what AMD had done, focusing on more, said Mercury's McCarron, adding that the new approach had resulted in a better processor for Intel.

The chip giant will introduce this new technology across all of three of its major processor markets, a move aimed at keeping AMD at bay in every area of contention, and proving to customers and investors that they have the technological edge.

Last week, Intel fired its first salvo at AMD with its flagship processor, known as Woodcrest, which specifically targets the high-margin server processor market.

Initial testing has shown the AMD Opteron systems drew more power, between 61 and 75 watts, depending on the specific application, Eric Gomberg reported in his research notes for Thomas Weisel Equity Research.

Intel clearly appears to be in a strong, if not leadership, position, said Gomberg referring to Intel's processor energy efficiency.

With its prime server chip in place, Intel plans on incorporating this new technology across all theaters of war.

In the desktop market, Intel's Conroe processor is slated to go head to head with AMD's Athlon line. In the mobile arena, AMD's Meron will try to expand upon the ground Intel's popular Centrino line captured.

These chips are due in the next few months, Intel stated.

Enduring Struggle

AMD is not staying still. It is set to come with its own new processors as early as July. The new chips are just a product refresh of existing ones, not a major architectural overhaul.

And though Intel may have the current lead in terms of speed and power efficiency, it should be noted that Intel's latest offering is done on a 65nm manufacturing process, whereas the Opteron is done on a larger 90nm process. McCarron explains that the smaller design from Intel results in an improvement in power consumption.

All in all, the companies are very competitive, said Doug Freedman of American Technology Research. Over the next few years he expects the companies to technology leap frog each other in an ongoing war for the top spot.

He expects AMD to go the way of quad-core CPU's, doubling Intel's current dual-core offerings. He also expects Intel to eventually integrate a memory controller to its processor, an advantage that AMD already carries.

More Than Technology

Despite the advancements, in the end the marketshare battle will ultimately be decided by Original Equipment Manufacturers (OEMs) and Chief Technology Officers, with many additional business factors Gomberg said.

To its dismay, Intel has seen many of its once exclusive OEM customers open up relations with AMD. In 2005 Hewlett-Packard and IBM began building servers based around the Opteron, and as recently as last month Dell ended its Intel-only status to offer both Intel and AMD chips.

In addition to new technology, Intel is engaging in aggressive pricing to help lure its customers back and stop them from leaving.

It will help them regain some market share, Freedman states, but it more importantly will stop the losses.

Intel