The company announced the availability of a new microprocessor, geared for the lucrative server market, in a pair of simultaneous briefings with press and analysts here and in New York.
Santa Clara, Calif.-based Intel is scrambling to enact a variety of measures to jump-start its flagging sales and stock price, including a massive corporate restructuring and aggressive price cuts across its product line.
But the chipmaker believes the new Xeon 5100 microprocessor, formerly code-named Woodcrest, will offer the first and most tangible evidence of its comeback.
"We're back," said Tom Kilroy, the general manager of Intel's enterprise group.
Not all observers share Intel's same sense of optimism and fate that the company is on the brink of turning a corner. There is little disagreement, though, about the pressing need for Intel to show that it still has the innovative drive and discipline to be a leader in the tech industry.
The dual-core processor is designed for computer servers found in corporate data centers, where rival
Advanced Micro Devices
has made some of its biggest gains, thanks to its popular Opteron processor.
The Xeon 5100 gives the industry its first taste of Intel's new microarchitecture, which will also be featured in the forthcoming processors for desktop and laptop PCs released later this summer. All three processors will be manufactured with 65-nanometer circuitry, the most advanced in the industry.
At the briefing with press and analysts, Intel executives outlined the technological merits of the new Xeon processor and its overall platform, ticking off sundry technological traits like a 4-MB shared cache, the use of fully buffered DIMM memory and the efficiency of the front-side bus.
More than any single component, Kilroy stressed that the platform approach spearheaded by CEO Paul Otellini is the key to delivering the optimal system-level performance.
"We have not blinked on our commitment to platforms," said Kilroy.
Intel shares, which have traded at their lowest level in three years recently, finished Monday up 1.6%, or 28 cents, to $18.28. AMD shares, which are down about 32% since mid-March, finished the day down 1.9%, or 48 cents, at $24.66.
Kilroy acknowledged that there was a much greater sense of urgency to this product launch than previous launches, noting that Intel was not accustomed to "playing catch-up."
In the three or four months prior to Monday's product release, Intel distributed about 1,000 test machines based on the new Xeon chip, giving preference to customers in markets where Intel has lost share recently, such as financial services and high-performance computing.
So far, Intel said that more than 150 companies will be shipping machines based on the Xeon 5100, the fastest ramp-up for this class of processor in company history.
The early acceptance among customers was a positive sign for Intel, says Insight 64 microprocessor analyst Nathan Brookwood.
"The ultimate test of any of these technologies is, will the dogs eat the dog food? And it would appear from what Intel talked about today that they have got a lot of happy dogs out there," Brookwood said.
But while Brookwood believes the new processor is a dramatic improvement for Intel, making the company more competitive than it has been for the last two years, he noted that it might not translate into immediate market-share gains. The customer relationships that each company has developed over the years don't instantly flip-flop each time each time a new processor comes out, he noted.
Indeed, AMD said it is not seeing any dropoff in demand from its customers. According to AMD worldwide commercial marketing director Bruce Shaw, AMD expects to finish 2006 with twice the number of server platforms than the company began the year with.
"Our partners are adding more platforms based on our technology, in spite of Woodcrest," said Shaw.
And while Intel has beat the benchmark drums lately, claiming the new Xeon outperforms AMD by significant margins, some people wondered how the two chips would compare once AMD begins manufacturing its processors with its own finer 65-nanometer circuitry later this year.
Intel's Kilroy dismissed the notion that a manufacturing advance by AMD would make the Xeon less competitive.
"When AMD is shipping 65-nanometer we're still going to show leadership in many of these benchmarks that we talked about today," said Kilroy.