Investment

I have just read a very nice article:
http://www.geek.com/news/geeknews/2006Mar/bch20060331035576.htm

Although the author makes the mistake of not understanding how investments are accounted, his point holds.

He compares all the hardships AMD has experienced along these years to the family that struggled to put through college all the children, and got to the graduation year in very good shape. The oldest of the family is already having a top-flight job, and this is just the beginning of the new situation of prosperity.

The miracle is that this family believed so much on the kids. Not everyone was born to go to college. But AMD's competitive advantages deserved full support. Since the days of the Athlon, in 1998, it has been a constant investment in a set of principles that didn't pay off perhaps until last year.

One of those principles is to respect the market.

I very well remember my days at the University when I was full of admiration for Intel. In those Pentium days, Intel was perhaps at its zenith, it was a company that innovated with vigor, it was an open company, it had an inviting attitude toward its products, and you could perceive a technical excellence not present in previous generations (which lasted only until the Pentium Pro, as was later proved). But of course, Intel has always been greedy. In any case, we reached the years of the incoming Pentium III with Intel being the undisputed leader of the computing necessities of the world, when my great dissapointment happened: Intel started to promote the Pentium III as "optimized for a fast internet experience". That is, it was not enough to supply everything that the market asked for, greed pushed them to *lie* [there is no connection between any of the features present in a Pentium III and a fast internet experience, if anything, it would be the MMX (the integer SIMD extension) already present in the Pentium II, SSE (floating point SIMD extensions) was something different aimed towards computing that didn't have to do with "Fast Internet Experience"].

Then, AMD put in the market the Athlon, and because it had superior architectural features, it took the performance lead from the Pentium III. Intel, who apparently succeeded in fooling the market, decided that they were not going to do actually superior processors to those AMD was doing, but that they were going to do inferior processors that they could sell as if they were superior by lying and deceiving the market. So, what I call the "gigahertz obsession", was born.

The gigahertz obsession was simply to do processors with ever increasing switching speeds, regardless of how much useful computation (real performance) the processor could deliver, and later on, regardless of how much power it would consume.

By this antics, deceiving the market, Intel substantially helped AMD to have a close encounter with bankruptcy.

Then it came the transition to 64 bits, when, because of greed, Intel wanted the whole world to go their propietary architecture route (Itanium) and didn't do an extension to x86.

But AMD got in their way again, it did the extension, with striking simplicity and elegance, so AMD64 was born.

What has done AMD about AMD64? has it fooled the market telling it that it is imprescindible? no, of course not.

What is Intel doing with V//V nowadays? V//V == snake oil

Live! is an entirely different approach.

That's how Intel's credibility decays exponentially under AMD's respectability pressure.

Engineering:

Intel got to where it is because it actually had very good products. But in an indeterminate moment, marketing took charge at Intel. Perhaps with the Pentium III they were convinced of the fallacy that you can fool the market, so, marketing at Intel began to think that the products sold not because they provided value to the customers, but because they, the salesmen, could find all these clever lies to misled the public to buy their products.

So, they lost the technical focus and were unable to do something even remotely worthy ever since.

The promotion of merit: Current CEO, and current President are people with undoubted merits to have arrived to their positions, and this culture is very evident at the different levels of management.

But Intel is a different story. The fact that a young Israeli team, operating so far from the corporate power center, was the one who received the challenge and responsibility to design and develop the flagship products for the next two years means that top management is not focused nor concerned about providing the absolute best products. It is evident that top management concerns itself with politics and financial manipulations.

AMD was nearly bankrupt, but stood on the principles. And demonstrated, beyond any doubt, that that is the way to succeed.

Right now, we are in the harvesting season, all of what AMD sawn has grown and is ready to be turned into profits. The neighbor doesn't have anything but weeds. There is still a lot of people who has faith in the gigantic neighbor, he says that in the remote corner it has the greatest grain ever grown in these fields, but that just seems to be him once again bragging about what he doesn't have. If his harvest were good, he would be very busy, as we are.

Intel is not even aware of when or why it went wrong. They are just awakening to the fact that they went wrong.

Wall Street is even more pathetic. Wall Street is just complaining that it doesn't have anymore the cash cow it used to milk

15% Haircut, why?

Why is AMD down 15% in four trading days without any bad news whatsoever?

The answer is simple: To put the money in AMD is speculative, that makes it vulnerable to influences. In this situation, one has to remember that AMD is a member of many indexes where Intel is a major component, and Intel went down heavily. That means that even though the reason why Intel is down has been the competitive pressure AMD is putting on (meaning that AMD should be doing things extraordinarily well), the fact remains that beause of Intel the indexes where AMD and Intel are members are down. So, there is that bit of negative sentiment, that gets amplified and a sell-off happened. The following words are the explanation of this phenomenon.

1) AMD investment is speculative: I am convinced that AMD is going to take the absolute leadership of the processor market from Intel in about a year and a half. But the fact remains that AMD is NOT the leader today, that it hasn't been at the top for decades as Intel has. So it takes a leap of faith to believe that the semiconductor market is going to be changed so radically. Actually, there are solid rational reasons and for those in the know such as yours, truly, for it to be a simple prediction, but for the vast majority of investors and for those who handle most of the money in The Street, it is not a simple fact. While they don't understand the significance of advantages such as Direct Connect Architecture with Hyper Transport over the classical Front Side Bus, they at least can barely hint that AMD seems to be on a roll and put some money on it. But that conviction is not as solid as having seen Intel double and double over and over for decades, giving dividend yields in a reliable fashion. Other things equal, the money put into AMD is the money to "spare". That's why as soon as the Dow Jones or any index is down half of a percent or that a stock market recession looms in the horizon, due to bad economy, a political crisis, or the Federal Reserve raising the interest rate half of a percent, it always happen that the money put into AMD is seen as not safe and the urge to "secure the profits" arises.

2) Intel is being killed by AMD, the competitive situation of Intel is truly pathetic, and all negative options for its future are on top of the table, including bankruptcy. Thus Intel pulls down with some strength all the indexes it is a member of, carrying AMD down.

3) But is AMD's success what is taking down Intel!!: Yes, but Mr. Lemming Nilvestor and Joe Sixstock doesn't believe this despite all the evidence, because they are utterly unable to understand the evidence. And not even in a million years if Intel says that the market for computers or processors is weak. That fits very well into the formerly successful hard coded rule that if Intel is doing Ok., then the market for semiconductors is Ok., and viceversa.

4) But if AMD is still doing great and is Intel's main competitor, then the money that gets out of Intel has a natural place at AMD: No, not really. Intel and AMD may be the two players in their market, but they are companies as different as it gets: Intel appeals to the greedy investors looking for a predatory company that juices every possible penny from their customers, that ruthlessly squashes competition and has no morals. Technological Leadership? as long as it becomes earnings per share and dividends, otherwise, they couldn't care less. AMD is the opposite: A thrifty company that doesn't even aspire to milk the customers but to create an ecosystem where all can share the profits (look at Hector's speech). Note: Not being greedy is not an innefficient strategy, nor it is the aspiration of creating an ecosystem where all share the benefits, it is just a different strategy aiming at sustained growth through cooperation rather than in a zero-sum game (Intel's approach). More to the point, an investor looking for dividend yields may go to Intel but not AMD. Thus the money leaking out of Intel is *NOT* moving to AMD

5) There is also this issue of the historical transition from Intel to AMD. Whenever there is an underdog that manages to score the win against an intimidating opponent that looks as invincible as Intel, a lot of disrruptive processes have to happen. Disrruptive processes are difficult to predict, that's why those of us who are betting on AMD have the merit to gain 5X our investments, because through our Due Dilligence we understood some of those processes while others couldn't.

Look at http://drge.blogspot.com. That's the blog of a guy with multiple acclaimed university degrees. But he just can't accept that AMD could have a lead of perhaps 5 years above Intel... Aristotle: "It is the sign of an educated mind to entertain an idea without necessesarily accepting it", well, Dr. Ge couldn't entertain the thoughts that AMD is crapping Intel with both AMD64 and DCA/Hyper Transport at 90nm. He can't understand that Intel has lost successively in all of its attempts to diversify beyond their core products of processors: They were beaten to humilliation at the 3D graphics accelerator game some years ago, that despite appereances AMD has had the lead in processors since the Athlon 550 MHz in 1999, that the Pentium 4 approach of meaningless gigahertz was actually a doomed marketing response to a concrete technological challenge, that a company that is not able to understand Itanium's failure and keeps pumping billions more into that catastrophe without ever entertaining the idea of killing it for good can't possibly be well managed. The Dr. Ges are not able to understand that it takes years upon years to develop all the concrete performance advantages AMD has developed or is using: Strained Silicon On Insulator processes, AMD64, DCA/ccHT, multicores, Pacifica, etc. Meanwhile, Intel distracted and keeps distracting entire mid-size national budgets into dead ends such as the gigahertz obsession, the Itanium, 32 bits, Front Side Bus, etc; and the Dr. Ges keep thinking that all Intel has to do is to wave a wand and AMD will be dead. Dr. Ges don't understand that at Intel they haven't come up with nothing good in a very long while, that they are going back to the Pentium III (because the high gigahertz obsession in Pentium 4 derailed them from their evolution path) and keep being confident that Intel is going to keep succeeding in the platform business now that AMD broke their dominance in the processor market and they don't have nothing to leverage things such as the Centrino platform, V//V, or any buzzword they can come up with... because they don't see much more dynamic companies such as Broadcom, ATI and nVidia getting into platforms for the duration with far better offerings than what Intel can come up with...

6) Nevertheless, they have become good at Intel at selling "Blue Crystals", "Snake Oil", "Vaporware" and related products. They are good at promising, because they promise so much and deliver so little that that some people still believes them is remarkable. So, they have their IDF, pump Conroe, Merom, Woodcrest as the nukes that are going to destroy AMD (magically, because there is no indication about how that may happen) and panic ensues in some AMD investors. And to top it off, a good PR stunt of some rigged benchmarks and the panic waves add to the other phenomenons and induced a 15% haircut on AMD without that company having bad news at all and having concrete good news...

Now, this are the good news for us, the AMD investors: Once that the weakling money is out from AMD, the proportion of those of us who understand what is going on among the investors will increase and that will give the stock price stability with higher growth just as happened until mid Jnauary when the vapor downgrades began thanks to Wall Street gazing their greedy eyes in our direction. Learn the game: After a sell-off, stable growth for a while, until AMD becomes noticeable again, and the roller coaster will begin again, until another sell-off.

Another positive thing to mention of this episode is that management demonstrated calmness but just ignoring Intel's shows. They keep speaking not with words, but with facts, with products in the market that everyone can test and benchmark.

The Live Intel Lies Thread, AMD Truths

1. Gigahertz is the only thing that counts
2. Deep pipelines is the proper way to do processor architectures
3. Nobody needs 64 bits computing
   
4. Itanium will conquer the world
5. 64 bit computing as done in AMD64 is no good, Itanium is the way
6. We are not copying AMD64, and will not ever support that instruction set, we will focus on Itanium
7. AMD's dual cores are as good as ours (Intel didn't even have proper single die dual core, but dual dice), ditto for quad cores (dual dice dual core)
   
8. Core Duo will be 64bits
9. V//V is 64 bits
10. Paxville will whip Opterons
11. Intel will regain the performance crown in 2005
12. We lost just 1% market share to AMD in last quarter
13. SOI (Silicon On Insulator) is unnecessary and expensive, plain Strained Silicon is better
14. Skype can't do 10-way conference calls without an Intel Core Duo (this may be a lie from Skype)
    

Please, extend the list with a comment, and I will update the post. You may also comment, document the source, whatever.

Also, don't forget to leave a name to address you in the post and to give you proper attribution.

According to Intel, AMD would be worth $189 in a price war

For those of you concerned about a posible price war among Intel and AMD, I have prepared an original analysis.

The fundamental assumption is that this would be a war for market share only. I subscribe to the opinion that AMD simply doesn't have to lower its prices in the case Intel chooses to do so, but assuming that AMD doesn't even want lose market share and just wants to keep the status quo, this is how I see the things unfolding:

1) Intel has about 75% market share. If they cut one dollar their average selling price in all segments, then for every $75 that Intel is not winning, AMD doesn't win $25, a 3 to 1 ratio.

2) But it is not quite like that. A gamer won't use a shitty Intel, a datacenter won't use shitty Xeons, no matter how cheap or free they are.

a) A gamer who pays $5000 for a computer won't use nothing but the best in the most important component. Look at what Dell is doing with the XPS line to have an understanding: they are so desperate to get rid of their Gaming computers that they have to give fabulous pricing/loan terms for customers to purchase them. This is so extreme that I wonder if it is not just a Dell book-cooking scheme to hide losses and weak sales. So, the multiplier may be another 2, that is, a 6:1 ratio in Gaming computers. But gamers are the makert tracers: The gamers are the people other people ask what to buy. So, if gamers keep buying AMD, recommendations will keep flowing to AMD.

b) Servers: It doesn't matter how cheap, Intel Xeons have actually **NEGATIVE** price (Intel is the one who has to pay to sell them, not the customer). Besides, Server Customers are buying today their upgrade path for 64 bits, multicores, virtualization, etc. Intel is not even claiming it is going to be competitive there anytime soon. I won't increase the multiplier here, but understand that I am being extremely conservative.

c) There remain Desktops and Laptops: Desktops: Tracers will keep biasing the market toward AMD, look at how deep AMD has penetrated the computer enthusiast spectre, since 2003, 2004, 2005, thus, the factor could be higher than just the base of 3. But that's not all, take Vista into account, and shitty EMT64s become inappropriate, Video editing. So, in desktops the ratio could be 1.5*3 = 4.5 : 1 or 9:2

Laptops: With a relationship of 80% to 20%, it has a base of 4:1, but what is Intel going to accomplish by dimishing AMD's market share? AMD itself is caring not all that much about this segment, that's perhaps why they don't have any dual core Turion, while they have dual cores in all other segments. But there is a problem: There is resilient demand for Turions. Some people such as me actually care about the 64bits, it doesn't matter what Intel does in this regard. So, the multiplier for Laptops is again 4.5:1, 9:2 just as desktops.

3) AMD's growth has a momentum, that is, current partners and key customers are increasing demand, so Intel's price war won't actually decrease it, just its growth; in other terms, demand is strong. Include another 1.3 multiplier.

4) Think again what will happen if Intel cuts a 25% their prices: It will automatically become in the minds of consumers, customers, partners and analysts a confessed inferior provider of chips, and will legitimize AMD as undisputed leader. Then, this effect will push forward AMD's marketing (to have the leviathan of the semiconductor business desperate slashing prices is excellent advertising), and will give AMD a "cool underdoggie" aura. So, the multiplier is higher, let's say another 1.2 to the numbers already mentioned (4.5*1.3*1.2 = 7).

5) Since AMD already has about the same profit margins as Intel, it would be Intel the one that goes into losses first than AMD, and being AMD so historically thrifty, with a not so distant encounter with the possibility of Bankruptcy, I would give it better chances to survive a price war than the spoiled kid of Intel.

A long etcetera, but this is the core of my argument:

Intel would be not earning (or virtually expending) 7 dollars to prevent AMD to earn 1 dollar, that demonstrates the confidence that Intel has in AMD as a threat; Said in another way, for Intel, AMD's earnings have an strategic value SEVEN TIMES GREATER than its face value. By the way, a price war would distinguish Intel as much more confident in AMD than most longs.

Expressed into the terminology of publicly traded companies, Intel's current share price to earnings per share ratio of 14.5:1 means that, for investors, every dollar Intel earns is worth $14.5 per share. Since every 7 dollars in Intel earnings are worth one dollar less in AMD, then according to Intel, the proper P/E ratio for AMD would be 101:1; so, using yahoo finance numbers for AMD, trailing P/E of 100.3 and forward P/E of 21.36, the valuation for AMD would be 101/100 (trailing) * $40 ~= $40; completely justifying current market valuation, or forward 101/21.36 * 40 = $189 (!!)

65nm is just Intel Marketing

There has been a lot of nonsense talk about the supposed advantages of intel processors at 65nm. I am fed up of watching my friends at AMD repeat the mistake. Read if you want to get out of the darkness, bear with me about the technicalities:

First fallacy: It is cheaper to manufacture the same number of transistors at 65nm than 90nm:

It is clear that a wafer of 65nm has the potential to have 92% more transistors than a wafer of the same size with 90nm features. But wafers at 65nm are much-much-much harder to do. In particular, to obtain the same yields (percentage of perfect circuits), you have to expend much more. A quick an easy way to do 65nm, or 45, or whatever, is just do them, and allow the yields to crash through the floor. If AMD wants to rush to 65nm, it can do so sacrificing the yields. Therefore, I am not impressed by Intel's 65nm tech. before knowing about the corresponding yields. I see something very interesting: Intel's dual cores have been dual dies before Yonah/Sossaman, that is, two different circuits glued toghether. That tells me that Intel's yields should be significantly worse than AMD's 90nm 95%. A bit of technicallity: The larger a circuit is, the greater the probability of having a defect in manufacturing. Specifically, for a single die dual core to be perfect, both cores should be perfect too, therefore, the probability of defects is squared. I don't know the exact numbers, but Intel's yields at 65nm shouldn't be more than 60%. That means that single die dual cores would have about 36% yield, roughly half of single dies. There it goes the 65nm size advantage. But the process is still much more expensive. And because Intel has this huge architectural deficiencies, such as the Front Side Bus, it has to abhor to use memory and is forced to compensate with large caches, that once again have the yields decreasing at its square.

[Full analysis: Let's say one cache has a yield of 3/4, and unitary cost. A cache double the size, costs twice at the same yield level, but since the yields becomes (3/4)^2 = 9/16 ~= 1/2, or a cost increase of (3/4)/(9/16) = 4/3 due to yields; then the total cost of a cache twice the size is 2.66. With 50% cache yields, (1/2)^2 = 1/4; (1/2)/(1/4) = 2; a total cost of 4, four times an unitary sized cache].

Things get really interesting when you consider QUAD cores: In the case of AMD, a 95% yield becomes a bearable 81%. Intel's... a 13%. The fact that Intel demonstrated a quad core which was in reality a double die of single die dual cores what proves is a) Intel wants to fool the industry with Public Relationships marketing shows, and b) very probably they don't have the capacity to do quad cores, therefore, the yields should be very small, and c) commercial products should be very far. Really, what did Intel do? they admitted defeat!

Thermal dissipation: It used to be that smaller transistors consumed less power. But not anymore. Before, the supporting infrastructure for integrated circuits consumed negligible power compared to what the transistors themselves consumed. But nowadays, because there are so many millions of gates in a microproc., and the internal buses are 64 bits wide at least, the consumption of the tiny wires has become significant. There is no way out of this: The wires are thinner, the resistance is higher, the lost power greater. Thus, the brute force approach, miniaturization, is becoming less and less attractive, because it has less to be gained. Comparatively speaking, and most importantly, Intel does Strained Silicon while AMD does Silicon on Insulator. SOI gives additional protection against another plague of the sub 100nm world: migrating currents. The gate, collector, and drain of transistors are so close that the transistor has trouble to really cut currents. This is an exponential problem, because the only way to compensate for the background electrical noise is to raise the voltage, raising migrating currents, a vicious cycle.

Switching speed: Oh!, yes, at 65nm is much faster. But the additional speed has a price. That's why all other processor manufacturers chose to improve the architecture rather than insist in the miniaturization, but Intel did kind of the opposite: Simplified the architecture to streamline it and make it more suitable for high speeds. The result? Eunuchs such as the Pentium4 that can't even do multiplication with a barrel shifter. Or the super deep pipelines that are just inefficient. For Intel, this was all a marketing game: To have the greater speed, the smaller feature size, because to evaluate performance is difficult, while the megahertz/nanometer number is catchy.

Intel has a manufacturing tech. of cloning factories to the cafeteria that simply is primitive, such as Sharikou detailed himself in one of his posts. AMD has APM, a robotic tech. for chips production, leaps and bounds ahead of Intel's. That's why when I hear Hector Ruiz saying that basically they will do 65nm as soon as AMD feels like it, I believe that it will be a success.

The bottom line is: Why would AMD want to disrrupt sold-out production of 90nm products to fiddle with inmature yields at 65nm? Let us the competition to rush and crash

Sun Microsystem's multiple personality complex

[Update April 21: I no longer subscribe to the point of view expressed here, for historic value I leave the rest as it was when published. I would say that Sun is managing to adequately walk the sharp edges of Sparc/Opteron and Java and has thus become a company with long term potential]

Sun Microsystems is a leader of technology, their products rock and fly, but it is not advisable at all to invest in it, because it is a company with a multiple personality complex.

Sunw tires to sustain its business of selling servers at a premium because of their unique architecture, Sparc; but at the same time they are the owners of Java, the technology that makes irrelevant the hardware to run applications. This conflict harms them a lot, especially their Sparc line of business, which is the bread-and-butter one. Now, they are doing the best AMD Opteron servers, that can be explained by the special AMD processors Andy Bechtolsheim says mentioned, so they in effect are becoming yet another x86 server company. What about Sparc? Isn’t it true that if they were capable of doing low cost (commodity or zero-premium) Sparcs they wouldn’t need to do Opterons for entry level servers? Or conversely, what does make them think that Opterons will not be able to scale to the heights of the best Sparcs?. The same duality/dilemma applies to Solaris/Linux/Windows

Java is a technology much more logical for IBM, that’s why they have embraced it so strongly as to become second leaders of it. They have computing hardware ranging from super main frames to less than pcs, therefore, Java, just as Linux does, actually helps them to focus. Sun’s reaction to IBM’s leadership challenge in Java is to extend Java with ever more absurd things, turning what once was small and beautiful into indigestible bloatware. That’s why Java has lost relevance.

I am not CEO of Sun, just a potential investor, so I can only see too many contradictions in that company but not solutions.

I agree with Sharikou: Journal of Pervasive 64bit Computing: SUN drives me crazy. In the mean time, the Ultra 20 makes me salivate.

Pacífica vs. Vanderpool

Virtualization is becoming a very important issue in the server market. One of the reasons is that to ensure availability of services, every computer has to be configured exactly as the service application recommends. If you have an Oracle database for critical information, you can't be fooling around installing every other nice feature on your server, everything in that server has to be conformant to Oracle's specification. Further than that, is actually desirable to have every computer running a critical service with a minimum of extra features, so that in the case of a problem, the process of locating/correcting it is greatly simplified. But at the same time, it is impractical to install three physical machines in a data center, each to do web serving, databases, and fileserving for a corporation. Virtualization is what enables the same physical infrastructure to be shared in a safe way among different services that each think have the whole computer for themselves. Try to understand this extending the concept of multitasking to computers: In multitasking, every task is not aware of the existence of other tasks, they just do their job, and the operating system is the one who switches tasks back and forth in the machine's processors for execution. With multitasking the computer seems to do many things at once. Equally, in vitualization, every operating system/service is unaware of the existence of others, they just do their job; but from the outside, the same machine behaves as if it were many different computers.

Virtualization can be done 100% in software, provided a little assistance from the operating systems that will run in that computer. An example of this is VMWare's line of virtualization software, and the excellent open source Xen. But of course, there are limitations, and help from hardware is so crucial that can determine whether a particular server machine can be partitioned into as many virtual servers as needed successfully or not.

Intel offers Virtual Technologies, VT, codenamed "Vanderpool", and AMD offers "Pacífica". Since this is an issue of relevance for the medium/long term x86 server markets, it is good to make a comparison among them.

There is an excellent set of articles published in "Theinquierer.net" about this subject, in three parts: 1, 2, and 3.

In part 1, we find the following:
"VT['s memory management] is a software solution [...]. As with most software virtualisation techniques, it is quite costly compared to doing the same thing in hardware. [...] VT manages memory in software."
Whereas Pacífica is a hardware solution that allows interesting advanced features without equivalent in Vanderpool such as the modes of "Shadow Page Tables and Nested Page Tables".

Second part explains that Pacifica's Shadow Page Tables (SPT) mean that all accesses to the microprocessor's page directory address (where the actual translation between addresses the tasks require and the physical adresses), or CR3, are shadowed by Pacifica, which activates the Virtual Machine Manager (VMM) to put the right value into the CR3 that each virtual machine sees.

In the third part, it is explained that Nested Page Tables (NPT) adds another level of indirection, but in hardware, to account for the Virtual Machine Management. Therefore, there are three levels: Application, that manage their own space, the Operating System, which manages many application's memory, and the VMM. Since this is done in hardware, the performance hit can be made negligible, for instance, through caching.

It also mentions the Device Exclusion Vector, a table that allows/forbids devices to put data through DMA into memory when the wrong virtual machine is running. This is another result of Hypertransport/Direct Connect Architecture.

The article summarizes:
"Looking back over the Pacifica spec, it is clear that it is indeed a bigger body of water than a Vanderpool. The basic architecture of the K8 gives AMD more toys to play with, the memory controller and directly connected devices. AMD can virtualise both of these items directly while Intel has to do so indirectly if it can do so at all."

Hasta la Vista, Windows

There is a lot of speculation about the coming of Microsoft's Vista. I want to contribute some speculations of my own to the pool:

Vista is not going to be a smash such as Windows 95 was, but something that markets will grow used to, such as happened with XP, because of similar reasons. It can't be any other way, because Vista is going to be a complicated, buggy and unstable Operating System at the beginning. As long as enough early adopters and Microsoft junkies are able to catch the bugs and Microsoft to employ legions of programmers to patch them, it will be improving until becoming mainstream usable, emulating what happened with Windows XP, Me, 2000, 98SE, and 98. Windows 95 was also very-very buggy at the beginning, until Windows 95 950B, but it was such a huge improvement over Windows 3.11 that it became an instant success.

The problem of Bugs and Microsoft has its roots in their oblivious disregard of good software engineering practices. If you look at DOS you would see a bad design of an extension for CP/M. Windows was an awfully preposterous bad copy of ideas that were circulating in the mid 80's, and substantially was a tower of patches over patches on top of DOS. Windows 95 and the Windows 32 Bit API was certainly an improvement, a serious attemp at simplification, but first, they inherited too much from the 16 Bit API; and the whole thing went the path of inconsistency because of the fundamental design problems of Windows 95 that didn't allow it to well-behave as an API for Windows NT would have demanded, so there was this fork between the Windows 32 API for Windows 95/98/Me and NT3.51/4/2000/Xp. As a matter of fact, that's what prevented Windows 2000 to be the real convergence between the branch of 95 and the branch of NT. Windows XP wasn't either, but by 2001 the stentch of Me was so bad that Microsoft allowed the branch to die.

Since the Operating System is so badly designed, so inadequate, some applications have to implement Operating System services themselves, and that lead to the problem of inconsistencies and mesmerizing bugs. For instance, where I work, six months ago we set up 100 recycled computers with a fresh install of Windows 2000 and Office Xp to serve as Internet/Word Processing/Presentation/Spreadsheet computers. For those computers we installed everything, Windows, updates, antivirus, anti spyware, etc. But soon enough the users began to report that the computers froze whenever they tried to save a file to diskette directly from one of the MS Office applications. We lost an inordinate amount of time trying to identify what seemed to be a virus, or spyware, until we realized in dismay that it was a bug the Windows Update Rollout 1 of Service Pack 4 for Windows 2000 introduced. It seems that Office doesn't use the operating system to deal with diskettes, but assumes directly the diskette management. That's preposterous, but very Windows-Style.

So, there are zillions of applications that misbehave in that fashion, thus, it will take months and years to make them work in an improved Operating System at 64 bits. It is not simply a matter of developing the Operating System and supporting all of the old API, but of getting the bugs reports to open new holes in the new OS so that the old applications can plug into those holes and run. Of course, some years down the road, the holes are still there, but it is malware what plugs into them, and the system is a nightmare of insecurity, until Microsoft decides that enough is enough and releases a Service Pack that cures some of those holes (while opening others, of course). That's what Microsoft has been doing ever since DOS 3.0.

What is the end result? -- Bloatware.

To use an analogy with cars, to carry all that bloatware, it would be needed an engine as powerful as a train, but in the envelope of a sports car. Only an AMD64 would be able to pull that trick off.

Good News for AMD investors

Intel is not getting it. The parents of Itanium, the mutant architecture, have decided to toss some 10 billion dollars to try to increase adoption. That is excellent news for AMD investors because there is no way under the sun to make that dead horse run, and if possible, even more field will be left open for AMD's products to colonize the server market. Tom Kilroy, general manager of Intel's Digital Enterprise Group, is quoted in that article saying that "This is a $140 billion opportunity on hardware. It's dwarfed by the opportunity in software and services on top of that". Well, if I am right, a quite significant part of those 10 billions will definitively go to waste (sorry for HP about that), but more importantly, AMD, which has the absolute best products for the $140+ billion market, will have the best opportunities.

[Update Saturday 28 #1] To exemplify how the Itanic performs in the market, take a look at the last paragraph in this link:

"According to IDC, unit sales of Itanium-based systems totaled less than 9,000 in the third quarter of 2005. Compared to the x86 server market, these numbers are worse than terrible. [Although competing in revenue and growing faster than Sun Sparc and IBM's Power,] this may all be a moot point if Opteron-class x86-64 hardware winds up dominating the server market. Will Intel continue to chase its proverbial white whale?" [End of Update #1]

I studied in depth the Itanium architecture while it was called IA-64 six years ago. While fascinating, with very good ideas, there are there too many mistakes at all levels, making it quirky, complex. I feel ashamed to have expent months studying it on my spare time without ever realizing that it was a dead end. I now feel thrilled that my understanding of the futility of those long hours expent in the Itanic are paying off, because I have the detailed knowledge to understand why it is futile to try to push that abortion of µ-proc arch. One of the problems with the Itanic is that it is unnecessarily disrruptive. As Linus Torvalds was quoted in 2003 by "The Inquirer", Intel, doing the Itanic, "threw out all the good parts of the x86 because people thought those parts were ugly. They aren't ugly, they're the 'charming oddity' that makes it do well". In comparison, it took me three days to grasp AMD64, clean, lean and mean arch. Of course, it has its limitations, but it has "the charm" that makes it work. I feel confident that if AMD keeps working with the same daring creativity as in AMD64, Direct Connect/Hypertransport, Multi Cores, then the extensions for virtualization (Pacifica) and the evolution of the architecture will take it to new heights that will be banned for good to Intel.

In any case, just like another quotation by "The Inquirer" of Linus, "The [Itanic] is a failure on so many levels. Let me count the ways" makes me think about something that I have understood ever since I became an engineer: Engineering companies must, by all means, be run by engineers. When that is not the case, then it happens that something fairly obvious a failure, such as the Itanic, instead of being terminated, endures a lingering existence that sucks resources from its company because no one at the top management has the technical criteria to say when enough is enough. [Update Saturday 28 #2] Even Hewlett Packard, one of the parents of the "creature" is allowing it to die, they even won't do any more Itanium workstations [End of Update #2]. It is so easy to understand how marketroids such as Otellini and his predecessors who couldn't realize that they have a carcass of an architecture, were capable to delay a real 64 bit improvement to x86, to open the door to AMD to come out with AMD64, to cripple their 32 bit product lines with stupidities such as PAE (Page Address Extension) done to give the Itanic another chance, only to succumb to Microsoft pressure to get in line with AMD64 once the omnipotent software house decided that it was the path to be followed.


My understanding of the Itanium arch. tells me that the very best and brightest of Intel designers are there, but in a futile effort to make the dead horse run. No wonder they only have advantage in the "brute force" of going to the 45 nanometers.

But the 45 nanometers is not the solution to Intel's problems. Despite what some ignorant "analysts" say, at the sub 100 nm scale, the power consumption problems are going to become worse, and may cancel any performance gains such as it is happening with the Core Duo (Yonah), the "Dual Dissapointers", and other 65 nm offerings that are squarely out performed by AMD's 90 nm products. This thing of the advantage in miniaturization is smelling more and more as a simple marketing ploy to instill confidence in partners and customers than a real technical advantage.

Thus Intel's engineering is in confusion and disarray. Maybe it will take more than two years to see something interesting coming out of Intel. Where would AMD be by that time?

On the other hand, the Silicon On Insulator tech, SOI, disdained by Intel, but featured by AMD, is becoming a very interesting potential advantage for AMD. If it is true that the zero-capacitor DRAM deal they signed with Innovative Silicon will give AMD the opportunity to cuadruple cache memories, I honestly can't imagine how "internet-quick" AMD is going to overtake the whole µ-proc market.

On the mean time, every company that is in partnership with AMD is doing excellent both in the market and stocks: Rambus, Soitec, Chartered, Innovative Silicon have all jumped ahead as a direct result of a deal with AMD, and perhaps even Broadcom (confirmation in the works) are doing great. Whereas Apple is next to dissapointing, and I guess that Dell would too.

Does anyone want to buy Dell $30 puts for February?

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