Mark Seager, a contracting officer at the Energy Department's Lawrence Livermore National Laboratory, will change the wording in the next solicitation he issues for servers. In previous purchases, Seager specified the particular make of processors to be used in the servers, often naming market leader Intel Corp., Santa Clara, Calif. But an eager challenger, Advanced Micro Devices Inc., has produced a microprocessor that could serve just as well, if not better, for the needed servers.
So when Lawrence Livermore puts out a solicitation later this year for equipment to build a 10-teraflop system for modeling nuclear blasts, it will call for servers that use microprocessors from either Intel or AMD.
"We typically are very specific about what it is that we want, and that's worked well for us," Seager said. "But that does present a problem now that AMD can bid competitively. So we will have to change that strategy."
This change is welcome news to Rick Indyke, federal business manager for Sunnyvale, Calif.-based AMD. The company is lobbying contracting officers such as Seager to amend the wording on government procurement contracts to include AMD and not just Intel.
Better yet, from AMD's point of view, government contracts should specify the performance level needed rather than a specific microprocessor to do the job -- performance-based contracting applied to hardware procurement.
For contractors competing for large hardware procurements, such changes can help them bid more competitively, Indyke said. AMD claims that its microprocessors can offer equivalent performance at lower costs, which would give integrators and resellers a way to lower bids for hardware solicitations without sacrificing quality.
Indyke has taken his case to the General Services Administration, the Office of Management and Budget and members of the federal Chief Information Officers Council, as well as to the more technically oriented program officers of the individual agencies.
Even as AMD guns for more opportunities to compete, the company faces an uphill battle to displace Intel, which holds a dominant position in the field of desktop and server computer processors.
Intel reported revenue of $26.8 billion in 2002, with earnings of $3.1 billion. In contrast, AMD had $2.7 billion in revenue for 2002, against which it lost $1.3 billion.
To wedge itself into this market, AMD has begun offering chips that can offer the equivalent or greater processing speed of Intel's chips at a lower price.
While AMD has made some inroads in the consumer markets, government customers have been a tougher sell, Indyke said. So far, systems builders have used AMD microprocessors to supply computers to the U.S. Naval Academy, the Army's Personnel Command, the Occupational Safety and Health Administration, the GSA's building management design group and the Department of Veterans Affairs' material management office, he said.
On the integrator side, Raytheon Co., Lexington, Mass., has added an AMD processor-based solution to its line of high-performance computing offerings.
For AMD, a key to gaining widespread acceptance among agencies will be gaining more acceptance among tier-one computer builders. Many government contracts specify that computers must be from tier-one providers, such as Dell Computer Corp., IBM Corp. or Hewlett-Packard Co., Indyke said.
Consequently, AMD last month scored a big coup when IBM announced it would use AMD's new 64-bit Opteron chip for a line of its servers.
The competitive cost of AMD chips has worked well for systems builder NCS Technologies Inc., Manassas, Va. About 60 percent of its sales come from the federal government, through the GSA schedule and through competitive contracts.
The privately held NCS, which does not disclose revenue, employs 62 people and sells about 24,000 in-house built computers a year. About 15 percent of NCS sales are for boxes that come with AMD inside, said An Nguyen, president of NCS.
For NCS, AMD provides a good price in comparison to equivalent chips from Intel. In several cases in the past few years, the company has won contracts to provide computers by using AMD chips to lower the cost of its bid, Nguyen said.
Responding to AMD's marketing campaign, Intel contends that microprocessor performance and cost are only one measure of its overall value. Bill Kircos, a communications official for Intel, said the company focuses considerable resources on standardizing the underlying platform to make large-scale deployments as easy as possible.
"We want to make it as easy to deploy and continue to deploy down the road. That has nothing to do with chip speed. It has more to do with stability and reliability," Kircos said.
For example, a large enterprise may have thousands of computers running at any time. A systemwide upgrade may take longer than a year. Therefore, it is important to have the same platform at the beginning of the rollout as it is at the end, when newer models are purchased and installed, he said.
When a manufacturer makes changes in chip design halfway through the roll out, "an IT manager has to retest the PC to make sure it is compatible with other stuff, such as printers or keyboards," Kircos said. "This aspect is important to an IT manager who doesn't want to spend a lot of time revalidating and rechecking to make sure everything works in unison."
Martin Reynolds, a fellow at IT research firm Gartner Inc., Stamford, Conn., agreed that platform consistency is an important consideration in purchasing for an entire organization.
"Intel maintains generally a tighter control over the overall system," Reynolds said. "AMD's message is more around performance, so whenever there is an opportunity to tweak performance, AMD and its chipset partners will take it. That means the designs may change a little more often."
And design changes can mean potential problems for IT managers. "Just little changes can cause all kinds of trouble," Reynolds said.
Nampa, Idaho-based MPC Computers LLC, formerly MicronPC, gets requests from government customers for AMD-based solutions, said Paul Petersen, vice president of development and product marketing for the company.
However, most of its sales come from its managed clients line of computers, which is Intel-based. About 50 percent of this company's revenue comes from government sales. MPC is owned by Gores Technology Group, a privately held international acquisition and management firm.
"Our position [on AMD] is that competition is a good thing. It means more aggressive pricing and higher levels of service," he said. *
Staff Writer Joab Jackson can be reached at
jjackson@postnewsweektech.com.
