April 16, 2002 By Steve Towns
Pentium chips represent proven reliability and performance to CIOs in large government organizations, said Intel spokesman George Alfs. "Corporate buyers historically have liked Intel platforms because you get the whole thing: the CPU, the motherboard, the software stack. It's all Intel and it all works together," he said. "Corporate IT is much more comfortable with the full Intel stack."
CIOs are unlikely to trade that comfort for a small price cut on PCs, Alfs said. "One thing to remember is the prices on client desktop systems have come down so much that there's plenty of inexpensive hardware to be had with a lot of performance. The IT managers I talk to are concerned about infrastructure compatibility and reliability."
Gartner analyst Mark Margevicius said AMD faces several challenges to capturing a bigger slice of the corporate computing market.
Even though Intel doesn't sell chips to end-users, the firm has created huge brand awareness among corporate buyers through its "Intel Inside" advertising campaign, he said. Thus many of those customers prefer the Intel name.
"No one ever got fired for buying from Intel. So from a CIO's perspective it's the safer choice," he said. "The brand is a big deal. [AMD] has to create desire for their platform."
Computer manufacturers also see little reason to commit the time and resources needed to develop and build AMD-based corporate PCs, given the current market conditions, he added. "What they get out of AMD doesn't differ a lot from what they get from Intel. So they need to decide why to do this if there's not much of a value proposition."
Part of that equation also includes reluctance among manufacturers to jeopardize long-standing relationships with Intel for potentially little in return. "I could see it if there were huge issues with Intel -- if the product was bad or availability was terrible or performance was lousy," said Margevicius. "But with AMD, I don't see any major differential."
Comparing Apples to Apples
Contra Costa's Steinbrecher said his jurisdiction attempted to compare Intel- and AMD-based machines after he convinced himself that the two chips offered comparable performance and reliability.
"I've absolutely satisfied myself on a number of fronts -- from software compatibility to failure rate," he said. "The only thing I would tell another CEO or CIO is go out and look at the research on the Internet. The data is there to support it."
Margevicius concurred, noting that AMD enjoys wide support among hardcore users of computer games, which represent some of the most processor-challenging PC applications. "It's not a matter of technical differentiation," he said. "AMD can tout all of the technical benefits over Intel, and they would be correct in doing so in most cases."
But technical parity is unlikely to loosen Intel's grip on the corporate market, said Margevicius. "The question is, is what's already on the market good enough, and the answer is yes."
Still, Steinbrecher anticipated that spurring competition between Intel- and AMD-based PCs could result in significant savings, regardless of which platform the county decided to buy. "By opening this up to AMD and other people, I may be able to save up to $200 per PC, and I buy 2,000 PCs a year," he said. "I can do a lot with $200,000."
Without a response to the AMD-based bid request, those savings remain unproven. However, AMD's Moore refused to call Contra County's experience a failure.
"It didn't reach critical mass, but it certainly woke up the marketplace," Moore said. He expects manufacturers to begin offering more microprocessor choices as demand for them increases. "A commercial desktop product line typically requires 200,000 units for consideration. So if you're a [computer manufacturer] and you want to build a certain type of computer, you need to see a market for 200,000 of them."
In a move to raise awareness of the issue among government policymakers, Steinbrecher will appear in a video discussing the merits of competition among microprocessor manufacturers. But although the CIO remains committed to the concept, he's less certain of when he will release another open-architecture bid.
Given his first experience, Steinbrecher wants assurance that his next attempt will generate a response.
"Unless someone can give me a pretty damn good rationale for putting my purchasing people through that, I won't do it again," Steinbrecher said. "When I believe that there is an opportunity for fair and equal competition, I will change our bids."
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