IBM Puts AMD Inside

IBM(IBM) and Advanced Micro Devices(AMD) are set to team up in an alliance designed to boost both companies' share of the lucrative market for corporate servers.

According to news reports, IBM is expected to unveil mainstream servers based on AMD processors at an event in New York on Tuesday.

A representative from IBM would not comment on the reports first published earlier this month by News.com. A representative from AMD was not immediately available for comment.

The move would further AMD's penetration into the server sector, where it has enjoyed its greatest commercial success, and represent another milestone in the Sunnyvale, Calif., chipmaker's battle with Intel(INTC).

IBM and AMD already have various partnerships in place involving semiconductor research and development and manufacturing. But IBM currently uses AMD processors in only a small percentage of its servers, opting for chips by Intel, as well as its own Power processor, in the vast majority of its systems.

By contrast, Hewlett-Packard(HPQ) and Sun Microsystems(SUNW) offer AMD processors in a wide range of their server products.

And in May, Dell(DELL) announced that it would use AMD chips in its class of high-end servers that feature four processors under the hood. The news was a blow to Intel, as Dell has been one of Intel's most loyal customers, selling exclusively Intel-based systems until that point.

Dell's move, as with IBM's expected announcement, are particularly significant as they come as Intel rolls out its newest server processor. The Xeon 5100 features a new microarchitecture that Intel says erases the performance and energy-efficiency advantage that AMD's Opteron chip has enjoyed for the past year or so.

Gordon Haff, an analyst at industry research firm Illuminata, says the Xeon 5100 does indeed put Intel's server processors on more-or-less equal footing with AMD. But during the time Intel was catching up, the server market changed.

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