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Tuesday, November 14, 2006

Another Intel Trump Card (INTC)(AMD)(GOOG)

Intel has once again moved to take share back from rival AMD. In the process of releasing its new "four brains on a chip" Xeon processor, Intel is bringing out these next generation server chips several months before AMD releases its version.

The constant upgrades by both Intel and AMD now come so fast that they present an odd problem for companies like Dell and Hewlett-Packard who sell billions of dollars worth of servers each year to businesses around the world. Buy the new server with the new chip, or wait until an even better one comes out.

Of course, server upgrades are based in large part on when companies need a greater number of machines. Companies like Google are constantly expanding their "server farms" as they requires more computing power and storage for the zillions of web pages that need to be searched at served every day.

Software also plays a role. Some software is designed to run better on multiple core chips, so many companie upgrade to take advantage of the software/processor connection.

If both chip companies continue to release new and better products at the current, dizzying pace, it does open the question of whether the market will at some point say "enough".

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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